Formation and Promotion of Farmer Producer Organizations (FPOs)

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Context: National Agricultural Cooperative Marketing Federation of India Limited (NAFED) has been appointed as the 4th National Implementing Agency other than SFAC, NABARD and NCDC for the creation of 10,000 FPOs by the Department of Agriculture, Cooperation & Farmers’ Welfare (DAC&FW). 


  • A new Central Sector Scheme to form and promote 10,000 new FPOs for five years (2019-20 to 2023-24) towards handholding of each FPO for five years from its aggregation and formation has been launched by the Ministry of Agriculture & Farmers Welfare.
  • Initially there will be three implementing Agencies to form and promote FPOs, namely:
  1. Small Farmers Agri-business Consortium (SFAC),
  2. National Cooperative Development Corporation (NCDC) and
  3. National Bank for Agriculture and Rural Development (NABARD).
  • States may also, if so desire, nominate their Implementing Agency in consultation with DAC&FW.
  • FPOs will be formed and promoted through Cluster Based Business Organizations (CBBOs).
  • Priority will be given for formation of at least 15% of the targeted 10,000 FPOs in aspirational districts in the country with at least one FPO in each block of aspirational districts.
  • FPOs will be promoted under “One District One Product” cluster to promote specialization and better processing, marketing, branding & export by FPOs.
  • There will be a provision of Equity Grant for strengthening equity base of FPOs.
  • States/UTs will be allowed to avail loan at prescribed concessional rate of interest under Agri-Market Infrastructure Fund (AMIF) approved for set up in NABARD for developing agriculture marketing and allied infrastructure.
  • One of the focus areas of the Scheme is to promote agriculture marketing including exports through production of quality produce with the involvement of institution of FPOs.
  • FPOs should have 300 minimum number of members in case of plain areas; while in case of North-East and Hilly areas, it shall be 100 to avail the benefit under the scheme.

Farmer Producer Organization (FPO)

  • FPO is a generic name, which means and includes farmer- producers’ organization incorporated/ registered either under Part IXA of Companies Act or under Co-operative Societies Act of the concerned States and formed for the purpose of leveraging collectives through economies of scale in production and marketing of agricultural and allied sector.
  • However, FPOs registered under Cooperative Societies Act of the State for the purpose of this Scheme, is to be insulated from all kinds of interference including in election process and day today management through suitable provisioning in their Memorandum of Association and Bye-laws with a view to encourage healthy growth and development of FPO.

Central Schemes

  • The central schemes are divided into central sector schemes and centrally sponsored schemes (CSS).

What is a Central Sector Scheme?

  • Central sector schemes are schemes with 100% funding by the Central government and implemented by the Central Government machinery.
  • The central sector schemes are formulated on subjects mainly from the Union List.
  • Besides, there are some other programmes that various Central Ministries implement directly in States and UTs which also come under Central Sector Schemes.
  • In these schemes, the financial resources are not shifted to states.

What are Centrally Sponsored Schemes (CSS)?

  • CCS are schemes that are implemented by state governments but are largely funded by the Central Government with a defined State Government share.
  • Historically, CSS is the way through which the central government helps states to run their Plans financially.
  • They are basically special purpose grants (or loans) extended by Central Government to states to encourage them to plan and implement programmes that help attain national goals and objectives.
  • CSS is basically extended by the Central Government to States under Article 282 of the Constitution.
  • It mainly covers items listed in the list of the state.

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