Centre plans a new FPO policy after 11 yrs, to link them with industry for direct sale of farm produce

The Government is planning to bring out a policy on farmer producer organisations (FPOs) after a gap of 11 years that will be aimed at creating a level-playing field for all those who are not getting financial benefits.

There was a need to revise the national policy for the promotion of FPOs as many more FPOs have been created after the policy was first unveiled in 2013, sources said. Besides, only those FPOs which have been created under the financial assistance scheme are at an advantageous position compared to those functioning independently before the rollout of the Centre’s scheme.

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The Centre in 2020 had launched the Central Sector Scheme for Formation and Promotion of 10,000 FPOs with an outlay of ₹6,865 crore as part of measures to increase farmers’ income. Over 8,000 FPOs have already been registered under the scheme till February, the agriculture ministry data show.

Under the scheme, FPOs are provided financial assistance up to ₹18 lakh per FPO over a period of three years. Besides, it also allows the Centre to release matching equity grant up to ₹2,000 per farmer member of FPO with a limit of ₹15 lakh per FPO. Further, the Centre extends a credit guarantee facility up to ₹2 crore of project loan per FPO.

“The need for a revision in policy was also felt as the cooperative sector has gone for a massive change with the Centre’s revised focus on primary agriculture credit societies (PACS). Last year, there was a meeting held for the convergence of PACS and FPOs and accordingly a model draft agreement has been created. Though the Cooperative ministry has made provisions for PACS, similar incentives are yet to be suggested for FPOs. This type of vacuum may be filled in the next FPO policy,” said a source.

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Once the policy is laid out, FPOs may get a priority in selling their produce in government set up, though they have to be at competitive rates, sources said. Citing the instance of organisations like government-owned Kendriya Bhandar, which has been preferring private companies over FPOs in sourcing farm-products, a policy may help the farmers’ groups to get access to such institutions.

Also, the policy may help create a linkage between FPOs and big retailers/exporters and improve the quality of agriculture produce.

The last policy had said that the provisions of it would apply equally to FPOs already registered and those FPOs which would be registered subsequent to the issue of the Policy.

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However, experts said that the intention is more important than policy as implementation is the key for its success. “There were several recommendations in the last policy, which the agriculture ministry never tried to implement in the last 11 years though it was its own policy,” said Rampal Jat, president of Kisan Mahapanchayat. He cited the case of procurement in which FPOs could have been involved to buy the produce at MSPs on behalf of the government.

The 2013 FPO policy had prescribed the government to appoint FPOs as procurement agents for MSP operations for various crops. “NAFED will take steps to include FPOs in the list of eligible institutions which act on its behalf to undertake price support purchase operations,” it said.

Further, it said that the agriculture ministry “will work with Food Corporation of India (FCI) and State Governments to encourage them to include FPOs as procurement agencies under the Minimum Support Price (MSP) procurement.”