As per the new guidelines issued by the Agriculture Ministry, the Farmer Producer Organisations (FPOs), which were formed under a recently-announced scheme, will be given a maximum of ₹18 lakh in the formative years, apart from an equity grant of up to ₹15 lakh and a kitty for meeting administrative expenses, including salaries of key personnel.

Each FPO, barring those in hilly areas and North-Eastern States, should have a minimum of 300 farmer members and 50 per cent of them should be small, marginal and landless tenant farmers with maximum possible representation from women farmers. The FPOs founded in hilly areas and North-Eastern States, on the other hand, can have a minimum of 100 members, the guidelines said. Such minimum membership requirement was absent in earlier FPO schemes.

The government has also made provisions from financially supporting CEOs and accountants appointed by these FPOs for a maximum of three years. While the CEOs can be given up to ₹25,000 from the funds provided by the government, accountants can draw a maximum of ₹10,000. In earlier FPOs, this remuneration available to CEOs was a maximum of ₹10,000.

Reliable credit guarantee

The government said it would set aside ₹4,496 crore for the formation and promotion of these 10,000 FPOs — of which 1,500 of them are to be formed in the aspirataional districts — till 2023-24. They will also be financially supported for another five years till 2027-28 with an additional commitment of ₹2,369 crore. Each PFO will be given up to ₹18 lakh over the first three years of formation. Similarly, to ensure access to credit from mainstream Banks and Financial Institutions for FPOs, the government would create a dedicated Credit Guarantee Fund (CGF) which will provide suitable credit guarantee cover to accelerate flow of institutional credit to FPOs.

There are several conditions to accessing equity grant up to ₹15 lakh per FPO provided by the government. The government also bars any member in an FPO from having over 10 per cent of the total equity share.

The government plans to push its scheme ‘One District One Product” through this network of FPOs. In case the focussed agriculture produce has been declared for a district, FPOs in that particular district will be encouraged for promoting processing, branding, marketing and export of the product for better value realisation, the guidelines said.

Helping the formation of these FPOs would be Central organisations like Small Farmers Agribusiness Consortium, National Cooperative Development Corporation and National Bank for Agriculture and Rural Development, apart from State implementing agencies. The government also plans to establish a national project management agency and has made provisions for setting up cluster-based business organisations in different parts of the country, which apart from carrying out baseline feasibility study before the formation of FPOs, would handhold, advise and promote the FPOs.