Analyze the importance of farmer producer organizations (FPOs) for betterment of agricultural sector and farmers in India.

Central sector scheme of formalisation of farmer producer organisations (FPOs) aims to set up 10,000 FPOs by the end of year 2022.

Farmer Producer Organisations:

  • They are organised groupings of primary producers, farmers in this case.
  • United by common interest, i.e. promoting group welfare through better access to market, finance and technology.
  • Setting up of FPOs could be organized as cooperatives (under cooperative act) or as society (Under society registration act).

Significance:

  • Key to doubling farmer’s income (Ashok Dalwai Committee).
  • FPOs enable better access to credit mechanism (ability to provide collateral, formal documentation).
  • Improved access to market – FPOs entering into contract farming get access to assured quality raw material, market intelligence.
  • Reduce information asymmetry. E.g. E-SUVIDHA portal.
  • Greater bargaining power.
  • Enable hedging against market risk. E.g. trading on forward commodity market, contract farming agreements.

FPOs therefore are significant to promote income security of farmers while promoting right flow of funds, information and support to the producers.

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