Farmer Producer Organizations


A group of farmers who are actually involved in agricultural production and have a common interest in pursuing agribusiness activities can form a group in a village or a cluster of villages and apply for a registration of a Farmer Producer Company under the relevant Companies Act.

What are FPOs?

It is a Producer Organisation (PO) where the members are farmers. Small Farmers’ Agribusiness Consortium (SFAC) is providing support for the promotion of FPOs.

  • FPOs help in the collectivization of such small, marginal and landless farmers in order to give them the collective strength to deal with such issues.
  • Members of the FPO will manage their activities together in the organization to get better access to technology, input, finance and market for faster enhancement of their income.

Support by the Government:

The government has launched a new dedicated Central Sector Scheme titled “Formation and Promotion of Farmer Producer Organizations (FPOs)” with a clear strategy and committed resources to form and promote 10,000 new FPOs.

Need for and significance of FPOs:

  • Nearly 75% of farmers are small and marginal with average land holdings in the country being less than 1 hectares.
  • These small, marginal and landless farmers face tremendous challenges during agriculture production phase such as for access to technology, quality seed, fertilizers and pesticides including requisite finances.
  • They also face tremendous challenges in marketing their produce due to lack of economic strength.
  • FPOs help in the collectivization of such small, marginal and landless farmers in order to give them the collective strength to deal with such issues.

What are the essential features of a  FPO?

  1. It is formed by a group of producers for either farm or non-farm activities.
  2. It is a registered body and a legal entity.
  3. Producers are shareholders in the organization.
  4. It deals with business activities related to the primary produce/product.
  5. It works for the benefit of the member producers.
  6. A part of the profit is shared amongst the producers.
  7. Rest of the surplus is added to its owned funds for business expansion.

What Benefits farmers will get by forming FPO

  • As a cohesive group, farmers as members of the FPO will have better bargaining power which can be leveraged to buy or sell commodities at competitive prices.
  • Aggregation of agricultural produce for better marketing opportunities. Trading in bulk saves farmers on associated expenditures like processing, storage, transportation etc.
  • FPOs may take up activities for value addition like sorting/grading, packaging, basic processing etc. which fetch a higher price for the farmers’ produce.
  • FPO formation facilitates utilization of pre and post harvest infrastructure like green houses, mechanized farming, cold storage, agri-processing etc.
  • FPO can expand its business activities by opening input stores, custom centres etc. through which its member farmers can get subsidised inputs and services.

Development of Marketing Societies and Regulated Markets:

Moreover, the Co-operative Credit Societies are also revitalized for providing more credit to the farmers. Again about 2633 general purpose primary co-operative marketing and processing societies have also been formed for assuring reasonable prices to the farmers and also to remove all existing intermediaries from the market.