The Farmer Producer Organisation (FPO) is a type of Producer Organization (PO) that consists of farmers as its members. It could be anything from non-farm products, agricultural goods, artisan goods, etc., as long as it was produced by a producer. In order to promote FPOs within the small farming community, the Small Farmers' Agribusiness Consortium (SFAC) provides assistance.

Through the formation of FPOs, marginal, small, landless farmers have been able to gain market access and increase their income, which has greatly improved their economic situation. This project is aimed at providing comprehensive and end-to-end services and support to small farmers. It includes marketing, technical services, agricultural processing, marketing, and other aspects of cultivation inputs. In the Farmers Producer Organisations, producers of agricultural products can form groups and register under the Companies Act, 2013.

FPO's goals

FPOs aim to increase farmers' competitiveness and access to emerging markets. Among the FPO registration primary activities are seed supply, market links, fertilizer, machinery, training, financial, networking, and technical advice.

Produced by producers, the goals of FPOs are to increase incomes through their own organizations. In contrast to large-scale producers, small-scale producers do not have the volume to utilize economies of scale. When we discuss agricultural marketing, a chain of intermediaries often works non-transparently. This results in a situation where the producer only receives a small portion of the value that the consumer pays for. FPOs will reduce the necessity for intermediaries in agricultural marketing.

A primary producer can benefit from the economies of scale through accumulation. Producer company has good bargaining power thanks to bulk suppliers of inputs and bulk buyers of produce.

FPO features

An FPO registration online is a voluntary organization controlled by farmer-members who actively participate in making decisions and setting policies on behalf of the farming community.
Applicants must accept the responsibilities of membership without discrimination based on gender, race, or religion.
To ensure that their farmer members, managers, elected representatives, and employees are capable of contributing effectively to the development of their FPO, FPOs provide training and education.
An FPO is usually promoted and formed through Cluster-Based Business Organizations (CBBO) that are engaged at the cluster or state level by implementing the agency.
'One District One Product' promotes improved branding, specialization, processing, marketing, and exports for FPOs.
FPOs provide support, and adequate training and CBBOs conduct initial training.
The formation of FPOs in aspirational districts has priority, with one FPO required in each of the aspirational blocks.

FPO benefits

Despite the decline in the average size of land holdings, the share of small and marginal farmers rose from 70% in 1980-81 to 86% in 2015-16. The FPOs can effectively engage farmers to find solutions to productivity issues, collective farming, and issues stemming from small farm sizes. Furthermore, if agriculture becomes more intensive, this is likely to result in the generation of additional employment.

Dealing with corporations: Farmers can benefit from FPOs if they want to compete with large corporate corporations when it comes to bargaining. Farmers who are members of the association can negotiate as a group to help small farmers gain access both to output and input markets.

In addition to providing low-cost and high-quality inputs to the member farmers, the FPO can also provide credit and loans for crops, agri-inputs (pesticides, fertilizers, etc.), and direct marketing activities after a market has been set up after agricultural produce has been procured. It will help members save time, distress sales, transaction costs, price fluctuations, quality maintenance, transportation, etc. Social capital will be developed in FPOs, improving women farmers' decision-making and equality within the sector. This will reduce social conflict and increase nutritional values.

Government promotion of FPO

Since 2011, the government has actively promoted FPOs under NABARD, SFAC, NGOs, and state governments. The 2018-19 budget included measures to support FPOs, including an exemption from taxes for five years. Budget 2019-20 spoke of creating 10,000 more FPOs in the next five years.

FPOs are supported through a grant of matching equity, i.e. cash infusion of up to Rs.10 lakh to registered FPOs, as well as credit guarantee cover for lending institutions.

In accordance with the Ministry of Agriculture and Farmers Welfare, FPOs are organized under 'One District One Product' clusters, where agricultural and horticultural products are produced for the purpose of improving market access and leveraging economies of scale.

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Companies Act, 2013 for Producer Companies

India has an economy that is based on agriculture, and it is a largely agricultural economy. The country has a 60% rural population who are primarily dependent on agriculture as their primary livelihood. Nevertheless, Indian primary producers and farmers have had to endure a long struggle for many decades.

To look into the matter, the Government of India set up an expert panel led by Y.K. Alagh, an economist. The Producer company concept was introduced in the Indian economy in 2002. Since then, they have helped primary producers access inputs, credit, technology, and markets.

Activities of authorized producers

There is an obligation on the Producer Company to deal with the produce of its members, and it has the right to conduct the following activities:

Taking care of the processing of the produce of its members (this includes, but is not limited to, preserving, brewing, vinting, drying, distilling, canning, and packaging);
Manufacturer, sale or supply of equipment, machinery, or consumables to its members who are producers;
Provide mutual assistance education to the producer company members and others;
For all purposes related to promoting producer member interests, providing consultancy, technical assistance, training, and R&D;
Power generation, transmission, and distribution, conservation and communication applicable to primary products, revitalization of land and water resources
Insurance for primary produce;
Promoting mutual assistance and mutuality;
Taking all reasonable steps to protect members' welfare, as decided by the Board;
This includes financing the procurement, marketing, processing, or other activities, such as extending credit facilities to its producer certificate or providing any other financial assistance to them.
In order to promote mutual assistance among producer members and the mutual vision of mutuality, the producer company may undertake any other related activity.