Farmer Producer Organisations are collectives of small, marginal farmers that work together to improve their livelihoods. Read more to find out who is eligible for FPO registration.
A group of farmers forms an FPO to improve their bargaining power, access better quality inputs, and increase their overall profitability. Farmers Producers Organisation is formed to provide support services to the farmers. It also covers marketing, technical, organisation and processing aspects of agriculture. lets check who is eligible for FPO below. The aim behind the formation of the Farmer Producers Organisation was, “Farmers who produce their agriculture products, can able to form groups to register by themselves under the Companies Act of 2013”. To facilitate this process, the three following implementing agencies can form Farmer Producers Organisation and they are SFAC, NCDC and NABARD.
The Agricultural Department and Cooperation Agriculture Ministry by the Indian Government mandated Small Farmers Agribusiness Consortium (SFAC) to support the State Governments in forming Farmer Producer Organisations. NCDC plays an important role as an implementing agency in the Central Sector Scheme for the formation and promotion of 10,000 FPOs. Under any Cooperatives Legislation, FPOs can be set up as cooperatives.NABARD provides effective financial support to the FPOs through an institution for the registration as a company and carrying out all activities throughout the initial years.
Who is Eligible for FPO?
The Ministry of Agriculture and Farmers Welfare has notified the rules for producing organisations called the Farmer Producer Organisations (FPO) Rules of 2018. The rules are available on the ministry’s website. As per the rules, any group of farmers with a minimum of 11 members can form an FPO. An FPO can also be grouped by ten producers or several more than ten producers with a minimum paid-up capital of ₹1 lakh.
A few eligibility requirements must be met to form a farmer producer organisation to be eligible for an FPO.
- The farmer must be a member of the organisation, and the organisation must be registered with the government
- Farmers must be small, marginal farmers with a landholding size of 2 hectares or less
- Farmers must be residents of the same district or village
- Farmers must cultivate the same or similar crops
- It is a legal body with a minimum membership of 10 and maximum membership of 500 farmers.
Guidelines by NABARD for FPO
The NABARD has notified the eligible farmers to form FPOs.
The guidelines issued by NABARD are as follows:
- Only primary producers (individuals, households, or groups of farmers) who are engaged in agricultural activities are eligible to form an FPO
- The minimum membership of an FPO shall be 200, and the maximum shall be 500
- The minimum area of operation of an FPO shall be 500 hectares
If you meet all of the above criteria, you can become a member of an FPO by applying to the organisation.
How can Farmers Register as an FPO
The FPOs registration can be done either through the Companies Act of 2013 or through the State Cooperative Societies Act. The handholding is to be done for five years by a professionally managed Business Organisation. Besides, the Government also assists FPOs in the form of the Equity Grant and Guarantee Credit Fund (GCF). The primary objective of the scheme is to develop agriculture entrepreneurship skills for farmers, thereby providing effective capacity building to become economically stable and self-sustainable. The cost of establishing appropriate management, registration fee (as a legal procedure) including compliance to all legal formalities, etc., will be provided under the fund subject to a maximum of ₹30 thousand per FPO.
Members of FPO
Initially, the minimum number of members in FPO will be 300 in plain areas and 100 in the Northeast and hilly areas. However, the Department of Agriculture and Farmers Welfare may revise the minimum number of members based on experience.
Goal and FPOs Objective
The primary objective of forming an FPO is mainly to improve the farmer’s competitiveness and increase the advantages of farmers in developing opportunities available in the market. Farmer Producer Organisation’s main function is to include the seed supply, linkages of the market, fertilisers machinery, training and related financial networking, and providing technical advice. Intermediaries chain will be there in terms of agriculture whose function are non-transparent will lead to the state, where the farmer receives a small part of the price, which the final customers pay. The intermediaries can be eliminated with the help of FPOs. The farmers can avail the benefits of the economies by forming groups under FPO. The farmer’s producers will have good power of bargaining during bulk supplies and buying any produces.
Benefits of FPO
FPOs can act as an aggregator for their members and sell through e-trading as one or multiple lots depending upon the requirement. Payment will be made directly to the FPO bank account. In turn, FPO can distribute. The small, marginal farmers’ share elevated from 70% during the 1980s to 86% by 2015. The FPOs will enrol farmers to address the issues happening during productivity.
FPOs Promoted by Government
The Government has taken the promotion of FPOs under the SFAC, NABARD, State Governments and NGOs. In Budget 2018-19, there was an announcement of measures for supporting the FPOs, including a five-year tax exemption. The Budget 2019-20 stated for setting up an additional 10,000 FPOs in the upcoming five years. The ongoing support for the FPOs is mainly in the form of a grant of matching equity, i.e. cash infusion of up to ₹10 lakhs to registered FPOs, and providing credit guarantee cover to lending institutions, i.e. maximum guarantee cover 85% of loans not exceeding ₹100 lakhs. The Ministry of Agriculture and Farmers Welfare stated that the FPOs are developed under ‘One District One Product’ production clusters, where the horticultural produce and agriculture are cultivated or grown to improve market access for members and leverage economies of scale.
FAQs
Who is eligible for the FPO scheme?
The following requirements need to be fulfilled in order to be qualified for a farmer producer organisation (FPO) The farmer needs to be a part of the group The government registration of the organisation is required Farmers must own no more than two hectares of land, making them tiny, marginal farmers It is recommended that farmers register and oversee the FPO Activities pertaining to agriculture and associated industries should be the organisation's primary focus.
Who can become a member of FPO?
To establish eligibility for a Farmer Producer Organisation (FPO), certain criteria must be satisfied: Individuals seeking membership in the FPO must be farmers, and the FPO itself must be officially registered with the government Farmers eligible for inclusion in the FPO should fall under the category of small or marginal farmers, possessing a landholding size of 2 hectares or less The farmers seeking membership in the FPO must be residents of the same district or village, ensuring local community representation Members of the FPO should engage in the cultivation of the same or similar crops, promoting a shared agricultural focus within the organisation The FPO is recognised as a legal entity, requiring a minimum membership of 10 farmers and a maximum membership limit of 500 farmers to maintain its operational structure.
What is the minimum capital of FPO?
A group of farmers with at least 11 members can form a farmer-producer organisation, or FPO1. An FPO's minimum permitted capital is ₹5 lakh, and its memorandum of association permits an increase in capital. An FPO must have a minimum issue size of ₹10 crore and a minimum post-issue paid-up capital of ₹3 crore.
What are the needs of FPO?
To form an FPO, a person must be a primary producer (a farmer, a household, or a group of farmers) and must be involved in agricultural operations An FPO can have as little as 200 members, up to a maximum of 500 An FPO's minimum operational area is 500 hectares By submitting an application to the organisation, you can join an FPO if you satisfy all of the prerequisites.
How many types of FPO are there?
Two categories of follow-on offers (FPOs) exist: Primary FPO: The direct sale of recently issued shares of a business A public resale of existing shares from present owners is known as a secondary FPO. Whereas secondary FPOs are not diluted, primary FPOs are
Is FPO tax free?
The tax benefit associated with FPOs is not tax-free. The government has a tax benefit that includes a five-year tax exemption.
What are the benefits of FPO?
Cutting out middlemen in agricultural marketing Achieving economies of scale through collective accumulation Empowering farmers with strong negotiation leverage as both major input buyers and produce sellers Members' responsibility limited to the number of unpaid shares they possess Mutual benefits from professional management and cooperative society's success
How is FPO price calculated?
The pricing of agricultural produce by Farmer Producer Organisations (FPOs) involves a multifaceted approach, considering factors such as the cost of production, market conditions, quality standards, negotiation with buyers, transportation and handling costs, government policies, and value-added services.
What is the benefit of buying FPO?
Purchasing from a Farmer Producer Organisation (FPO) provides enhanced credibility compared to unregistered farmer groups, as FPOs operate as distinct legal entities with limited liability for their members. Registration as a production company streamlines the process, offering a straightforward administrative framework. Additionally, FPOs can possess property and accept deposits, further contributing to their organisational robustness and attractiveness for buyers.
Conclusion
The aim behind the FPOs is for the farmers who are the producers of agricultural products to form groups and register themselves under the Companies Act of 2013. And the primary objective of FPO is to improve the financial standing of the small farmers in India via collective effort and synergy. Through the formation of Farmers’ Producers Organisations, the farmer will get a better realisation of income.
