Farmer Producer Organizations (FPOs) are a collective of farmers who produce agricultural goods. The Department of Agriculture and Cooperation, Ministry of Agriculture, Government of India, has authorised the Small Farmers' Agribusiness Consortium (SFAC) to assist state governments in the development of Farmer Producer Organizations (FPOs). Financial assistance to Farmer Producer Organizations (FPOs) up to a maximum of Rs. 18 lakh / FPO or actual, whichever is less, is granted under the initiative for a period of three years from the year of establishment.
As a result, starting in the fourth year of existence, the FPO shall handle its financial support from its own commercial operations. The fee of establishing FPOs under the Companies Act or registering under the Co-operative Societies Act would be reimbursed up to a maximum of Rs. 40,000/- or actual, whichever is less, under the programme, with the remainder, if any, paid by each FPO. Equity Grant would be in the form of a matching grant up to Rs. 2,000 per farmer member of the FPO, subject to a maximum ceiling of Rs. 15.00 lakh per FPO under the plan.
The Cabinet Committee on Economic Affairs approved the formation of 10,000 FPOs during a five-year period from 2019 to 2024 in 2020. In the plains, FPOs with a minimum farmer-members' size of 300 will be eligible for the scheme, while in the north-eastern and hilly areas (including such other parts of UTs), FPOs with a minimum farmer-members' size of 100 would be eligible. Farmer-members with almost the same objectives should be organised to create a group of 15-20 people known as a Farmer Interest Group (FIG) or Self-Help Group (SHG), Farmers Club (FC), Joint Liability Group (JLG), or Rythu Mitra Group. In plains, 20 or more groups from a harvest cluster area or a village/ cluster of neighbouring villages based on certain resemblances must be combined to form an FPO with a minimum farmer-members size of 300, while in hilly and northeastern parts, 7-8 groups must be combined to establish an FPO with a minimum farmer-members size of 100 to be eligible under this scheme.
The estimated financial support of Rs 18 lakhs generally includes salary assistance for its CEO/Manager up to Rs. 25000 per month and Accountant up to Rs. 10000 per month. And a one-time registration fee of up to Rs. 40000 or actual cost whichever is lower, office rent of up to Rs. 48,000/year, FPO office utility charges of up to Rs. 12000 per year, one-time cost for minor equipment, including furniture items, of up to Rs. 1,00,000 subject to the condition that the FPO saves from other heads such as office rent, travel, cleaning, etc. by the FPO subject to overall ceiling of support of Rs. 18 lakhs per FPOs in 3 years.
A farmer can be a member of many FPOs with various crop clusters, but he or she will only be eligible for the equivalent equity payment once for each FPO in which he or she is a participant. In September 2021, the Central Government approved the formation of 10,000 new FPOs between 2019-2022 and 2023-24. A total budget of Rs.6,865 crore has been made for the formation and promotion of new FPOs under One District, One Product. incentive will be given.