CENTRAL SECTOR SCHEME TO FORM AND PROMOT

Why is it in the news?

CCEA approved a Central Sector Scheme for "Formation and Promotion of Farmer Producer Organizations (FPOs) " to form and promote 10,000 new FPOs.

Background:

1. The Report on 'Doubling of Farmers’ Income (DFI)' has recommended formation of 7,000 FPOs by 2022 towards convergence of efforts for doubling the farmers' income. 
2. In the Union Budget 2019-20, the Government has announced the creation of 10,000 new FPOs to ensure Economies of Scale for farmers over the next five years, for which a dedicated supporting and holistic scheme as a Central Sector Scheme is proposed for targeted development of FPOs and its sustainability.

What is the aim of this scheme?

Scheme envisages 10,000 FPOs to be formed in a Five Year Period from 2019-20 to 2023-24 to ensure Economies of Scale for Farmers. Support for each FPO will be continued for 5 years. 

What are the Benefits of FPOs?

Small and Marginal Farmers do not have the economic strength to apply Production Technology, Services and Marketing including Value Addition. Through the formation of FPOs, farmers will have a better collective strength for better access to Quality Input, Technology, Credit and better Marketing access through Economies of Scale for better realization of income.

What are the salient features of this scheme?

1. Initially, there will be three implementing Agencies to form and promote FPOs, namely- Small Farmers Agri-business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD). States may also nominate their Implementing Agency in consultation with the Department of Agriculture Cooperation and Farmers Welfare (DAC&FW).
2. DAC&FW will allocate Cluster/States to Implementing Agencies which in turn will form the Cluster-Based Business Organizations in the States.
3. FPOs will be formed and promoted through Cluster-Based Business Organizations (CBBOs) engaged at the State/Cluster level by implementing agencies. These CBBOs will be a platform for end to end knowledge for all issues in FPO promotion.
4. Initially, the minimum number of members in FPO will be 300 in plain areas and 100 in the North East & Hilly areas. However, DAC&FW may revise the minimum number of members.
5. Priority will be given to the formation of FPOs in Aspirational Districts in the country with at least one FPO in each block of Aspirational Districts.
6. FPOs will be promoted under the "One District One Product" cluster to promote specialization and better Processing, Marketing, Branding & Exporting by FPOs.
7. There will be a provision of Equity Grants for strengthening the equity base of FPOs.
8. Credit Guarantee Funds in NABARD and NCDC to accelerate flow of Institutional Credit to FPOs by minimizing the risk of Financial Institutions for granting loans to FPOs.
9. Adequate training and handholding will be provided to FPOs.