Farmer Producer Organizations (FPOs) and Promotion Scheme 2020

Farmer Producer Organizations (FPOs) and Promotion Scheme 2020

Promotion of Farmer Producer Organizations (FPOs) Scheme 2020 | UPSC


Inauguration of Honey FPOs under the “Formation & Promotion of 10,000 FPOs” Scheme

      WHY IN NEWS:

Union Agriculture Minister inaugurates Honey Farmer Producer Organizations.

MINISTRY? :- Ministry of Agriculture & Farmers Welfare


For PRELIMS go through the aim , definition of FPO’s , eligibility criteria and the funding pattern of this scheme.

For MAINS keep an eye on beneficiaries and significance of this scheme . Let us dive in !


Honey FPOs will help in achieving the goal of increasing income of small farmers



In Budget 2019-20, the Government announced formation of 10,000 new Farmer Producer Organisation to scale income for farmers over the next five years.


  • To provide holistic supportive ecosystem to form new 10,000 FPOs to facilitate development of vibrant and sustainable income oriented farming.
  • To enhance productivity through efficient, cost-effective and sustainable resource utilisation.
  • Realize higher returns through better liquidity and market linkages for their produce and become sustainable through collective action.

To provide handholding and support to new FPOs up to 5 years from the year of creation. 

  • To enhance management of FPO, inputs, production, processing and value addition, credit linkages and use of technology etc.
  • To provide effective capacity building to FPOs to develop agriculture entrepreneurship skills to become economically viable.


  • It includes farmer- producers’ organization incorporated/ registered either under Part IXA of Companies Act .

These FPO’s are formed for the purpose of leveraging collectives through economies of scale in production and marketing of agricultural and allied sector.


(i) Supply quality production inputs like seed, fertilizer, pesticides and such other inputs at reasonably lower wholesale rates.

(ii) Make available need based production and post-production machinery and equipment like cultivator, tiller, sprinkler set etc.

(iii) Make available value addition like cleaning, assaying, sorting, grading, packing etc. at user charge basis on reasonably cheaper rate.

(iv) Undertake higher income generating activities like seed production, bee keeping, mushroom cultivation etc.

(v) Undertake aggregation of smaller lots of farmer-members’ produce; add value to make them more marketable.

(vi) Facilitate market information about the produce for judicious decision in production and marketing.

(vii) Facilitate logistics services such as storage, transportation, loading/un-loading etc. on shared cost basis.

(viii) Market the aggregated produce with better negotiation strength to the buyers and offering better and remunerative prices.


Farmer Producer Organizations (FPOs) and Promotion Scheme 2020



  • Small Farmers Agri-business Consortium (SFAC)
  • National Cooperative Development Corporation (NCDC)
  • National Bank for Agriculture and Rural Development (NABARD).


  • Farmers as members of the FPO will have better bargaining power to leveraged trading 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 which fetch a higher price for the farmers’ produce.
  • FPO formation facilitates utilization of pre and post harvest infrastructure like green houses, mechanized farming, etc.
  • FPO can expand its business activities by opening of input stores, custom centres etc.


  • FPOs are playing significant role in fulfilling the mission of implementing  agricultural reforms in the country.
  • Promotion & Formation of FPOs is the first step for converting Krishi into Atmanirbhar Krishi.
  • For this purpose new Central Sector Scheme for Formation & Promotion of new 10,000 FPOs was launched.

A National Level Project Management Advisory and Fund Sanctioning Committee (N-PMAFSC) had allocated 2200 FPO clusters for 2020-21 to all Implementing agencies. 

  • Implementing Agencies had also identified the block wise clusters.
  • FPOs will be developed by specialist Cluster Based Business Organizations (CBBOs)’ engaged by Implementing Agencies.

Farmer Producer Organizations (FPOs) and Promotion Scheme 2020



  • 86% of farmers are small and marginal with average land holdings in the country being less than 1.1 hectares.

Small, marginal and landless farmers face tremendous challenges during agriculture production phase.

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.


  • It is a Central Sector Scheme to form and promote 10,000 new FPOs.

It has been alloted a total budgetary provision of Rs 4,496 crore for five years (2019-20 to 2023-24).

  • A further committed liability of Rs 2,369 crore for the period from 2024-25 to 2027-28 towards handholding of each FPO for five years .
  • Recognizing the strength of POs, NABARD created a dedicated fund “Producers, Organization Development Fund (PODF)”.


  • A group of farmers, who are actually involved in agricultural production and pursuing agribusiness activities can form a group in a village .

Alternatively a cluster of villages and apply for registration of a Farmer Producer Company under the relevant Companies Act. 


  • The Honey FPO Programme of National Agricultural Cooperative Marketing Federation of India Limited.
  • (NAFED) was inaugurated by Minister of Agriculture and Farmers’ Welfare on 26th November 2020.

Beekeeping in India is highly predominant in the unorganized sector among  the rural and tribal population.

  • Despite having a huge potential of honey production in the country, the beekeeping industry is still underdeveloped.

      IASbhai WINDUP: 

  • NAFED will address these issues by acting as an intermediary between the elements of the beekeeping supply chain.

FPOs are promoted under various Central Sector Schemes operated in the States by the Departments of Agriculture, Cooperation & Farmers Welfare.

  • Farmers interested in forming an FPO may contact the Director of the concerned Department/Small Farmer Agri-business Consortium.
     SOURCES:  PIB | Farmer Producer Organizations (FPOs) and Promotion Scheme 2020



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