National policy for Farmers Producer Organisations to be out soon: Official

HYDERABAD: An integrated new policy for Farmers Producer Organisations (FPO) is on the anvil, Faiz Ahmed Kidwai, additional secretary, union agriculture ministry, said on Tuesday.

Speaking to the media on the sidelines of the fourth Samunnati FPO conclave here, he said the new policy, expected to be rolled out shortly, is an endeavour to ensure better credit access besides promoting a common branding of products that would essentially link the FPOs to the industry and also enhance the income of farmers.

State governments such as Tamil Nadu, Karnataka, Kerala, UP and Maharashtra already have separate policies in place to promote FPOs. So, a national policy would help in bringing in uniformity, Kidwai sought to point out.

Giving an example, he said, branded pickles are already known for their quality, whereas those produced by farmers’ collective end up tasting different while some of them could even have quality issues. However, branding the agri products would not only provide visibility but also make them viable.

The agri ministry, earlier this year, had formed an expert group under his chairmanship to draft the national policy on the FPOs. This was in the public domain in June for comments and suggestions.

Earlier, in his address, Kidwai said in June an effort to expand the membership of FPOs was made.

The government had launched a scheme ‘Formation and Promotion of 10,000 FPOs’ by March 2025, with a budgetary provision of Rs 6,865 crore. Currently, over 9,000 farmers’ collectives with 2.28 million members have been registered under the Companies or Cooperatives Acts.

Under the scheme, financial assistance upto Rs 18.00 lakh is provided per FPO for a period of three years. Also, there is a provision for matching equity grant upto Rs 2,000 per farmer member of FPO with a limit of Rs 15.00 lakh per FPO and a credit guarantee facility upto Rs 2 crore of project loan per FPO from eligible lending institution to ensure institutional credit accessibility to FPOs.

Now, there is a demand to raise this to five years, which is being considered as the endeavour is to help and guide the farmers’ collectives, Kidwai added.

Plans are on to expand membership of these FPOs to 5 million over the next 2-3 years, by adding more farmers as members. Equity grants of Rs 410 crore have been released to FPOs, as matching contributions to what they have collected and credit guarantee cover worth Rs 400 crore to them.

Also, seed licences for 1,600 FPOs have gone up to 4,000; fertilizer licences scaled up to 3,500 FPOs from 1,500; pesticide licences from 1,000 has risen to 3,000 FPOs; mandi licences provided to 600 now cover 1,700 while GST-registered FPOs from 1,730 has surged to 6,000.

Around 7,500 farmers’ collectives have been onboarded on the government’s e-commerce platform – Open Network for Digital Commerce (ONDC). This is to assist the FPOs from many states to sell unique agri products including rice, pulses, spices and millets.

He also mentioned that grading of FPOs is on the cards and talks are on with the Finance Ministry to facilitate credit access. Efforts are underway to have the Reserve Bank of India also issue a regular circular to banks to enable better credit flow to the FPOs.

Further, talks are on with the ministry of corporate affairs where some of the FPOs are registered as companies. But the objective is to bestow ‘special company’ status on FPOs so that they can function efficiently since the FPOs do not operate like companies.

Kidwai also spoke about the challenges faced by the cluster-based business organisations or CBBOs, which are meant to aggregate and provide professional handholding support to each FPO for a period of five years.