Govt to extend Farmer Producer Organisations scheme for five more years

Stating that working capital remains a critical issue, the Agriculture Secretary said while the current equity grant provides matching grants, the ₹30 lakh limit is inadequate for larger operations

The government will extend its central scheme for Farmer Producer Organisations (FPOs) for another five years from 2026-31, addressing gaps that have limited the scaling up of operations, Agriculture Secretary Devesh Chaturvedi said on Friday.

Addressing the CII FPO Summit here, Chaturvedi said the scheme, launched in February 2020 with a target of forming 10,000 FPOs, needs to be extended for the next finance commission cycle.

"About 10,000 FPOs have been formed but they have to be handheld. Many of the FPOs have been formed in the last two years, so we have to handhold them with community-based organisations and implementing agencies," he explained to PTI on the sidelines of the event.

The ministry has identified practical difficulties in making FPOs successful, including capacity building and access to capital loans.

"We will try to incorporate these in the new scheme so that they become very efficient, energetic and dynamic in terms of giving returns to the farmers," he said in his address.

A major challenge facing FPOs is compliance with norms under the Companies Act.

The Secretary said the department has approached the Ministry of Corporate Affairs requesting relaxed penalties during the formative years of 3-5 years.

"Compliance is necessary but the penalty can be reduced for them. When they become strong, they can comply with them," he said.

At the summit, Chaturvedi noted that the 10,000 FPOs launched in Chitrakoot in 2020 have achieved a cumulative annual turnover of ₹9,000 crore in 2024-25 fiscal year, with some reports still pending.

He estimates the total business could reach ₹10,000 crore. These FPOs have reached 52 lakh farmers out of India's 12-13 crore farming community.

Including the 40,000-50,000 FPOs registered separately with government or private entities, the total number of FPOs significantly exceeds individual farmer registrations.

Stating that working capital remains a critical issue, the Secretary said while the current equity grant provides matching grants, the ₹30 lakh limit is inadequate for large-scale operations.

"It should be at least ₹50 lakh to ₹1 crore, especially when we want to send FPOs into crop procurement or give advance payments to farmers for processing and value addition," Chaturvedi said.

The government is exploring systems to extend credit guarantees or working capital facilities to FPOs.

On compliance, he suggested that state governments could maintain panels of reasonably priced chartered accountants and company secretaries to help FPOs meet regulatory requirements.

"Year by year, we have to ensure that FPOs have the capacity to do those compliances," he added.

The Secretary emphasised FPOs' role in processing local productsfrom banana fibre and jaggery to millets and pulsesfor local markets or online trading, aligning with the 'Make in India, local for local' vision.

However, he acknowledged that some FPOs exist only on paper for extracting benefits, involving just 3-4 people without genuine farmer engagement.

"We have to differentiate between these two types of FPOs and identify those genuinely working with farmers to strengthen them further," he said.

Chaturvedi outlined a key economic challenge: farmers buy inputs at retail prices but sell output at wholesale rates, the reverse of industry practice.

FPOs can help reverse this by enabling bulk input purchases at wholesale rates and selling value-added output at retail prices, though this requires collective action that individual small farmers cannot achieve alone.

Speaking on the occasion, APEDA Secretary Sudhanshu said the agricultural export promotion body is strengthening the FPO movement to ensure standardized, quality products reach domestic and export markets.

APEDA, responsible for over 50 per cent of India's total exports, supports FPOs through a three-pronged strategy: infrastructure support, quality sensitization, and market connectivity.

He cited success stories including vegetable exports from Varanasi, which grew from zero to 1,200 hectares over four years with FPO support, and Purandar Heights in Pune, whose fig products won awards at the Sial India fair and secured orders from the European Union.

APEDA is working closely with NABARD, SFAC, and NAFED to handhold registered FPOs and connect them to global export supply chains, Sudhanshu added.

Sahyadri Farms Chairman and MD Vilas Vishnu Shinde, PI Industries Chairman Emeritus Salil Singhal, Prowess Group Chairman Rajesh Srivastava and Olam Agro Country Head Sanjay Sacheti and NABARD General Manager K R Ramlingam were present at the event.