FPO Full Form

FPO full Form is Farmers Producer Organizations. It is immensely helping the farmers in boosting the yields, increasing the bargaining and negotiating with the help of fundings from the central government. With FPO, the average growth has increased and the farmers are earning a better livelihood. Through various schemes, the farmers are reaping the benefits to increase the income in the country.

What is the Full Form of FPO?

The full form of FPO is Farmers Producer Organizations. Recently, as per the State of India’s Livelihood, commonly known as SOIL Report 2021 analyzed Farmers Producer Organizations (FPOs) which are registered under The Companies Act, 2013. Among the large majority of the organizations that have started in recent years, FPOs make up a large majority of the organizations. The collectiveness of small, marginal and landless farmers in the FPOs has helped in enhancing the farmers economic growth and have provided them the market linkages and exposure for improving their source of income. But, it was also depicted in the report that just 1 to 5% of FPOs have received the actual funding and grant under the central government schemes introduced to promote them in the past seven years which is very less in amount.

What is a Farmers Producer Organization (FPO)?

The Farmers Producer Organization is a type of Producer Organization (PO) where the members are solely farmers. A few key features of the FPO’s are:

• The ownership of the organization (FPO) is completely restricted within its members. Moreover, it is known as an organization of the producers, by the producers and for the producers.
• One or more institutions or individuals may promote the FPO by means of assisting in mobilization, registration, business planning and managing operations. However, the ownership control is always within the members of the organization and management is formed through the representatives of the members.

Benefits of FPO 

FPOs can provide a wide variety of benefits especially for marginal and small scale farmers. The benefits of FPO are providing greater bargaining power to farmers. Since FPOs allow its members to negotiate as a group, it will provide larger bargaining power in the purchase of inputs, receiving credit and also in selling the produce. With the FPOs, small and marginal farmers can easily get low-cost and high quality input products. Hence, the farmers are able to maximize higher returns for their production which in turn, helped India to double its farmers’ income.

For example, tribal women in the Pali district of Rajasthan together formed a producer company and they are getting paid the higher prices for their product which is custard apples. Similarly, various FPOs are located in the state of Gujarat, Maharashtra and Madhya Pradesh, Rajasthan and some other states have also started involving FPOs for higher returns for their produce.

The research conducting committee known as International Food Policy Research Institute’s (FPRI) comparative study of FPOs in Maharashtra and Bihar has depicted that FPO farmers are doing business on a larger scale and earning better than non-FPO farmers. Also, within FPOs, Organically evolved FPOs  commonly known as OFPOs are more beneficial than pushed or Promoted FPOs known as PFPOs. According to the survey conducted, the overall FPOs resulted in the steady increase in gross income while only 2% indicate a decline in the income. Whereas, only 32% of the non-members indicated an increase in the total gross income. 

The FPO engages farmers in collective farming. As per survey, in 1970- 71, the average farm size declined from 2.3 hectares to 1.08 ha in 2015-16. Therefore, promoting the maximum number of FPOs can result in farmers engaging in collective farming together and addressing the productivity issues arising from the small farm sizes. Moreover, they may also generate additional employment opportunities due to the increased intensity of farming under FPOs scheme.

The FPO can develop the Social capital. The important aspects where FPOs can lead to the generation of social capital are:

• Improved gender relations and decision-making of women farmers and avoiding gender disparity
• Enhance members health and nutritional outcomes as they are realizing higher returns
• Realize the power of working in cooperation and cluster instead of an individual level. All these innovations will improve the social capital of farmers.

Govt Initiatives for FPO

To boost the FPO sector, the government has taken several initiatives. Many farmers have  benefited from this. Few of the government initiatives for EPO are:

Equity Grant Scheme

The Scheme is operated by the Small Farmers Agri-Business Consortium (SFAC). The scheme aims to extend maximum support to the equity base of Farmer Producer Companies known as  FPCs by providing matching equity grants up to a maximum of Rs 15 lakh in two tranches.

But as per the recent data, over the past seven years, only 735 organizations have been given grants which marks just 5% of the total FPCs currently registered in the country. Maharashtra has received the highest number of grants sanctioned by the government, followed by Tamil Nadu and Uttar Pradesh.

Credit Guarantee Scheme

This scheme provides risk cover to the banks that issue collateral-free loans to FPOs upto Rs 1 crore. Till now only about 1% of registered producer companies have been able to avail the benefits of the current government schemes which is less than the apprehended numbers.

Formation and Promotion of Central Sector Scheme

This scheme was launched by the Ministry of Agriculture & Farmers Welfare to form and promote 10,000 new FPOs till 2027-28 which is the given target. The scheme is being implemented by organizations such as SFAC, National Cooperative Development Corporation commonly known as NCDC, NABARD, NAFED and others.

Under this scheme, the formation, application and promotion of FPOs are based on the two different approaches- Produce Cluster Area approach and Specialized Commodity Based Approach. While adopting a cluster-based module, the formation and application of FPOs will be focussing on ‘One District One Product’ for the growth and development of the specialized product.

Challenges Faced by FPO 

Apart from being a beneficial organization for farmers, there are many challenges faced by FPO. Few of the challenges that need to be highlighted are:

1. Problems in structural issues which include various issues such as inadequate and less- professional management, lack of technical and skilled skills, weak financial status, lack of risk mitigation mechanism to deal with and inadequate access to market and infrastructure sources

2. Receiving ‘institutional credit’ is another big problem for FPOs

3. Fragmented belonging of land in India

4. Poor participation of women segment

5. Isolation and disagreements of FPOs with various service providers

6. Small farm size