Role of FPOs in Agricultural Development.pptx

role of FPOs

1. Role of FPOs in Agricultural Development

2. INTRODUCTION In India, more than 60 percent of people depend on agriculture as their main occupation and it acts as a major income-generating source for the Indian government. India had more stable and diversified GDP growth. In 2018, 43.86 percent of the nation’s workforce was employed in agriculture, however, their contribution to the total Gross Domestic Product (GDP) was only 14 percent (Statista, 2018), reflecting unemployment. Shrinkage size of land holding was the major constraint for the farmers in accessing the advanced technologies and administrations prompting low generation and profitability. In India, small and marginal farmers (less than 2 ha) constituted (86.21 percent) of operational holding and (47.34 percent) of operated area.

3. Another major problem faced by Indian farmers was that market inefficiency reduced the producer’s share in consumer’s rupees, giving them less remunerative prices for their produce ( Venkattakumar and Sontakki , 2016). There is a scope in many areas for an achievable increase in productivity, when the appropriate institutions can help farmers access information, inputs, and services to make themselves strengthened, and the promotion of natural resources management, marketing, and processing gives better results with efficient utilization and less wastage of farm inputs and farm products respectively. Farmers of India are good producers but fail in marketing their products due to a lack of access to markets in rural areas, less awareness of other markets, and poor marketing skills in meeting demand according to price fluctuations.

4. In recent decades among the agricultural marketing development interventions, group approach in farming society was found to be a more successful model. It paved the way for rural development and initiated institutional innovation at the grassroots primarily to deliver services more effectively and efficiently. Various types of farmer’s collectivization models have been tried and tested in India. Among them, one of the emerging, innovative, and participative models created Farmers Producers Organization (FPO). FPO can be created through Indian Companies act, 1956. Producer organizations (POs) are widely named as leading contributors to poverty reduction and the achievement of food security with efficient marketing practices.

5. Farmers' Producer Company (FPC), also known as Farmers' Producer Organization (FPO), is a privately owned business that farmers manage. It is a central government project effort that is made to assist farmers in effectively overcoming several difficulties that small producers are now experiencing. The government of India (GOI) started is supporting the promotion of FPOs during the 12th five-year plan (2012-2017) (GOI, 2013). GOI has approved and also launched a new flagship scheme for the establishment of FPOs called “Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs)” with a total budget of Rs.6865 Cr by the end of 2027-28. The formation and promotion of FPO can be done based on two approaches they are the produce-cluster area approach and the specialized-commodity-based approach. FPO is a way to unite small and marginal farmers with other small producers to create their commercial ventures under the supervision of experts.

6. FPO may assist farmers with the production of a variety of agricultural products as well as with crop marketing. Farmers’ organizations help small farmers participate in the market more successfully and collectively. This enables them to compete with larger farmers and agribusinesses by lowering the transaction costs of accessing inputs and outputs, obtaining the necessary market information, securing access to new technologies, and tapping into high-value markets (Kumar. et.al., 2024).