What are Farmer Producer Organizations?

Last Updated at: Feb 02, 2021
What are Farmer Producer Organizations?
From the year 2021 onwards, the Tamil Nadu Government will award the best-performing farmer producer organisations to recognise their good work in governance and business performance. The award consists of a medal and a certificate.


Farming contributes to a greater portion of the GDP, and with this huge chunk falling in this category, it becomes important to look after the welfare of the farmers. The Government of India has taken various initiatives from time to time. One such initiative is by establishing Farmer Producer Organizations. These are established to help farmers in different ways. This scheme works towards helping the farmers establish market links, help in procurement, and assisting them.


The Small Farmers’ Agribusiness Consortium or SFAC established by the Government of India works towards the promotion of Farmer Producer Organizations (FPOs). The aim is to mobilize the farmers by helping them register as companies. As per the records on 31st May 2019, SFAC has helped around 816 Farmer Producer Organizations. Besides, the National Bank for Agricultural and Rural Development also works towards the promotion of FPOs. It has promoted 2154 FPOs.

In addition to the above mentioned two entities, the Ministry of Rural Development has also started the Deendayal Antyodaya Yojana – National Rural Livelihood Mission (DAY-NRLM). This also works towards the promotion of the Farmer Producer Organization scheme. It has registered 131 FPOs.

Why did the need to have a Farmer Producer Organization arise?

By now, we know about the different ways by which the government is trying to promote the farmers and help them such that they get the best rate of their produce. There are various entities across the nations that are working towards this. But the question that arises here is what is the need for FPOs.

It’s a fact that a large chunk of the Indian population depends on farming as their mode of income, but not all of them are large producers. There is a big proportion of farmers that have land which is less than 0.5 hectares. And this size of the land will not be able to suffice the family of the farmers. In such a case, the initiative by the Government of India is to bring together all such farmers. Moreover, since these farmers are small producers, they have—smaller bargaining power as compared to those who are big farmers.

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Very few farmers have access to information, and less than 4% of smallholders have an agricultural credit card. Many of these smallholders are not aware of the carry crop insurance against natural calamities, etc. All these factors put many farmers on the back foot, and they are not able to meet their daily needs. To overcome all these problems, the government has come forward to form a Farmer Producer Organization that will work towards promoting even the smallholders.

Various factors contribute to the agrarian crisis

  1. Lack of access to information
  2. No crop insurance
  3. No agricultural credit card
  4. Impact of environment
  5. Climatic impact on the crop growth

All these factors contribute to the agrarian crisis, and the farmers have been facing this problem for the past two decades, which has led to 87% of the loss for the rural household. It is because of these factors that a major chunk of Indian farmers are below the poverty line and are under the burden of huge debt. To overcome the agrarian crisis, the Government of India has taken the initiative to come up with a Farmer Producer Organization that will work towards promoting the farmers, giving them better bargaining power, access to information, and motivating them, thus ensuring a better life.

How is the government assisting the FPOs?

To motivate more and more farmers to set up FPOs, the government is providing a lot of assistance:

  • Equity Grant Scheme
  • Credit Guarantee Fund Scheme through SFAC.
  • FPOs can also get help from the government of India for various schemes like marketing assistance, Venture Capital assistance
  • The mission for Integrated Development of Horticulture (MIDH) Scheme. This scheme works towards promoting agricultural business activities.

The help to farmers is further strengthened by SFAC and NABARD that promote the training of the Board of Directors and their officers of FPOs so that they can function effectively. Besides, the Indian Council of Agricultural Research also provided technical support to FPOs via Krishi Vigyan Kendras established in the respective locations. The objective of all these initiatives is to help the farmers and motivate them towards FPOs.


1.  What is a “Farmers Producer Organization” (FPO)?

It is a type of producer organization. Most of the members of this organization are small farmers. It aims to promote farmers and provide the right assistance.

2. What are the different supporting organizations of FPOs?

Various organizations across the nation are helping the FPOs. It includes names like NABARD, Government Department, Ministry of Rural Development’s Deendayal Antyodaya Yojana- National Rural Livelihood Mission (DAY-NRLM) are few of the many organizations associated with it.

  1. Can an NGO work towards the promotion of a PO?

Yes, an NGO can work towards promoting the PO.