Government achieves milestone with launch of 10,000 Farmer Producer Organization to empower small farmers

In a significant boost to India’s agricultural sector, the government has successfully launched 10,000 Farmer Producer Organizations (FPOs).

The scheme, introduced by Prime Minister Narendra Modi on February 29, 2020, aims to empower small and marginal farmers by strengthening their collective bargaining power and improving market access. The initiative has a budget outlay of Rs. 6,865 crore, covering the period up to 2027-28.

The landmark 10,000th FPO, based in Khagaria district, Bihar, focuses on maize, banana, and paddy cultivation. Prime Minister Modi inaugurated the FPO during the release of the 19th installment of the PM-KISAN scheme in Bhagalpur, Bihar.

Since the inception of the scheme, Rs. 254.4 crore in equity grants have been disbursed to 4,761 FPOs, and credit guarantee cover worth Rs. 453 crore has been extended to 1,900 FPOs. Today, nearly 30 lakh farmers are part of the FPO movement, with women making up 40% of the total membership. The FPOs collectively engage in business activities worth thousands of crores across the agricultural sector.

FPOs play a crucial role in addressing the many challenges small, marginal, and landless farmers face, including access to quality seeds, fertilizers, technology, and financing. By pooling resources, FPOs provide farmers with greater bargaining power, improving market access and, ultimately, income levels.

Under the scheme, each newly formed FPO receives handholding support for five years and financial assistance of up to Rs. 18 lakh over three years to cover management costs. Additional provisions include a matching equity grant of up to Rs. 2,000 per farmer member (with a limit of Rs. 15 lakh per FPO) and a credit guarantee facility of up to Rs. 2 crore to ensure access to institutional credit.

Digital and Financial Support Initiatives

A dedicated Credit Guarantee Fund (CGF) has been established to provide credit cover to financial institutions, helping FPOs access formal financing. Nearly 5,000 FPOs have been registered on the Open Network for Digital Commerce (ONDC), which enables them to sell their produce online to a wider consumer base. Additionally, an MoU between CSC SPV and the Ministry of Agriculture will convert 10,000 FPOs into Common Services Centres (CSCs), delivering citizen-centric services and creating rural employment opportunities.

With a strong focus on inclusivity, the scheme emphasises the participation of women, SC/ST farmers, and other economically weaker sections to ensure FPOs are effective and inclusive.