Govt mulls easy credit scheme for FPOs

The government may help Farmer Producer Organisations (FPOs) access to easy credit at subsidised interest rates which are currently available to farmers as indicated by the Union Agriculture Minister Narendra Singh Tomar.

“I was informed about several challenges, including credit availability faced by FPOs. The agriculture ministry will take these (concerns of the stakeholders) forward,” Tomar said Monday addressing an FPO summit, organized by CII and NCDEX. “There is a need to expand FPOs as the number of small and marginal farmers is high in our country,” he said adding, neither small farmer can afford nor anyone else is ready to invest because of very small land size.

Speaking at the event earlier, Arun Raste, managing director of commodity exchange NCDEX, had suggested the government to provide special credit card for FPOs, similar to the Kisan Credit Card, He also sought credit to FPOs at same interest rates as extended to farmers (on short-term crop loans) since they (FPOs) are currently charged at 12-18 per cent interest.

It has been the government’s endeavour to make funds available to the farmers, ensuring link between market and their produce, and removal of middlemen, Tomar said. He also highlighted the government’s plan for crops diversification so that farmers move towards cash-rich crops. The government has been trying to get farmers linked to latest technology to meet global standards

Stating that Nabard has created close to 16,000 FPOs since 2010-11, its Chairman G R Chintala said, the philosophy behind this concept of producers’ group is what to produce, how to produce, how much to produce and at what rates it should be sold. He also said that many of the FPOs are now either input or output aggregators and not doing enough for the welfare of the farmers.

Chintala further added, to overcome the challenge of lower productivity, FPOs need to leverage new technologies such as artificial intelligence (AI) and Blockchain towards optimising collectivisation benefits.

Addressing the event, PK Swain, additional secretary in Union Agriculture Ministry, said the concept from cooperatives to collectivization to FPOs though all in similar veins, there are difference in approach. He cited how importers started showing interest on FPOs. He said the FPO model has the potential to enhance global trade of Indian geographical indication (GI) products at competitive prices.

The government in 2020 had launched “Formation and Promotion of FPOs” under which by 2027-28, about 10,000 new FPOs are created. Under the scheme, the Centre grants upto ₹33 lakh handholding and financial support for five years to each new FPO. Also, a credit guarantee facility upto ₹2 crore of project loan per FPO.

First time since its launch, the Centre released equity grant of more than ₹14 crore to about 351 FPOs with a base of 1.24 lakh farmers, on January 1.

The minister also released a study — A review of Successful FPOs — published by CII and NABCONS in which benefits accrued to 25 successful FPOs across 15 states have been documented.

Published on


February 28, 2022