The Indian government's initiative to boost farmer incomes through Farmer Producer Organizations (FPOs) is gaining significant traction, with a notable number of these collectives achieving impressive financial milestones. Launched in fiscal year 2021, the central scheme aimed at forming and promoting 10,000 FPOs has witnessed over 340 of these organizations reach an annual sales turnover exceeding Rs 10 crore. Furthermore, approximately 1,100 FPOs have reported business exceeding Rs 1 crore, according to data from the Union agriculture ministry.
Key Drivers of Growth
Several factors have contributed to the success of these FPOs. A significant enabler has been the adoption of digital platforms like the Open Network for Digital Commerce (ONDC), electronic National Agriculture Market (e-NAM), and the government e-marketplace (GeM). These platforms provide FPOs with enhanced market access and opportunities to connect with buyers across the country.
In addition, many FPOs have actively participated in the procurement of oilseeds, pulses, and grains under the Minimum Support Price (MSP) scheme, which has further bolstered their business volumes. The government is also considering ways to reward high-performing FPOs to incentivize others to enhance their business prospects.
E-commerce Integration
A substantial number of FPOs, over 9,000, are onboarded on the government's e-commerce platform, ONDC. More than 200 collectives are actively selling their products on platforms like GeM, while sales of agricultural produce have also commenced on Amazon and Flipkart. This widespread adoption of e-commerce channels has significantly expanded the reach of FPOs, enabling them to tap into new markets and customer segments.
Success Story
A notable example of an FPO achieving remarkable success is the Gujarat-based Babra Khedut Utpadak & Rupantar Sahakari Mandli, which boasts 1,465 members and has reported a sales turnover of Rs 102 crore. This FPO's success is attributed to its procurement of groundnut and cotton at MSP from its members on behalf of government agencies. The organization is planning to expand its agri-inputs business to further augment its turnover in the current fiscal year.
Government Support and Incentives
The government provides substantial support to FPOs through various incentives and infrastructure development initiatives. These include financial assistance of Rs 18 lakhs to each FPO for management costs during the first three years, along with matching equity grants of up to Rs 2,000 per farmer member, with a limit of Rs 15 lakh per FPO. Additionally, a credit guarantee facility of up to Rs 2 crore per FPO is available to ensure access to institutional credit.
The "One District One Product" Approach
The central sector scheme also promotes a "One District One Product" (ODOP) approach, encouraging the formation of specialized FPOs focused on specific commodities in each district. This strategy aims to leverage economies of scale in input procurement, common services, and product marketing. The ODOP approach facilitates value chain development and alignment of support infrastructure, ultimately enhancing the competitiveness of FPOs.
Impact and Way Forward
The success of the FPO scheme is evident in the increasing number of farmer collectives achieving significant turnover milestones. These organizations are not only boosting agricultural productivity and incomes but also contributing to rural job creation and economic resilience. The government's continued support through financial assistance, digital platforms, and infrastructure development will be crucial in further empowering FPOs and transforming the agricultural landscape in India.
