The Government of India recently designated the National Dairy Development Board (NDDB) as the implementing agency for the establishment of 100 fodder-centric Farmer Producer Organizations (FPOs) in 2022-23.
GS Paper 3: transport and marketing of agricultural produce and issues and related constraints; e-technology in the aid of farmers
What exactly are Farmer Producer Organizations (FPOs)? In the food processing industry, how do they ensure forward and backward linkages? (150 words)
FPOs (Farmer Producer Organizations)- Background:
- There is a need to provide improved technology, credit, better input, and more markets to Indian farmers in order to incentivize them to produce higher-quality commodities.
- Because more than 86% of farmers in India are small, marginal, and landless, grouping them into FPOs will help them improve their economic strength and market linkages, thereby increasing their income.
Information on FPOs:
- A farmer-member-controlled FPO is a type of voluntary Producer Organisation (PO) registered under the Companies Act of 2013 and controlled by farmer-members who actively participate in making decisions and setting policies.
- The PO is a producer-led organisation that collects all types of produce, including non-farm products, agricultural products, artisan products, and so on.
- The primary operations of the FPOs, which are supported by the Small Farmers’ Agribusiness Consortium (SFAC), include the supply of seed, market linkages and fertiliser, machinery, training, financial, networking, and technical advice.
- The primary goal of FPOs is to increase producer income because a small producer lacks the volume to benefit from economies of scale. As a result, FPOs increase farmers’ competitiveness.
- FPOs can work with farmers to address productivity issues caused by small farm sizes.
- It may also result in additional job creation due to increased farming intensity.
- It enables farmer members to bargain with corporations as a group, assisting small farmers in both output and input markets.
- FPOs can provide quality and low-cost inputs to members, allowing them to save time, avoid distress sales, reduce transaction costs, and isolate themselves from price fluctuations, among other benefits.
- FPOs will develop social capital, which will improve women farmers’ decision-making and gender relations. It will ensure food and nutritional security while also reducing social conflicts.
- Government initiatives to promote FPOs include the following:
- Since 2011, the government has vigorously promoted FPOs through NABARD, SFAC, NGOs, and state governments.
- According to the Ministry of Agriculture and Farmers Welfare, FPOs are created under the ‘One District One Product’ scheme, in which agricultural/horticultural produce is grown to improve market access for members and leverage economies of scale.
- Ongoing assistance to FPOs is primarily in the form of cash infusions (up to Rs.10 lakh to registered FPOs) and credit guarantee cover for lending institutions.
- The Union Budget 2019-20 proposed the establishment of 10,000 additional FPOs over the next five years.
- As a result, in 2021, the Central Sector Scheme for “Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs)” was launched until 2027-28.
- According to the National Statistical Office report titled Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019: Situation Assessment,
- During July-December 2018, 48.5% (8.37 crore) of the total 17.24 crore rural households reported owning cattle ‘in milk,’ young cattle, and cattle in the ‘others’ category.
- Furthermore, during the period, 43.8% of the total 9.3 crore agricultural households used green fodder and 52.4% used dry fodder.
- The Union Ministry of Fisheries, Animal Husbandry, and Dairying first proposed the establishment of fodder-centric FPOs in 2020, with the goal of addressing the country’s fodder deficit.
- The Department of Agriculture and Farmers Welfare recently approved designating NDDB as the implementing agency for the scheme of formation and promotion of 10,000 FPOs.
- Under this, the NDDB has been tasked with forming 100 FPOs between 2022 and 2023, with a primary focus on fodder and animal husbandry as a secondary activity.
- This comes just a month after a report revealed that wholesale price index-based fodder inflation hit a 9-year high of 25.5% in August 2022, highlighting the challenges faced by rural families whose livelihoods rely on livestock.