The Farmer Producer Organization Ecosystem in India

24 May 2022

Farmer Producer Organization (FPO) is a model of aggregation for primary producers viz farmers, milk producers, poultry farmers, fishermen, etc. with the intention to strengthen the negotiation power of farmers through developing a judicious economy of scale at the farm-gate. The model is aimed towards mobilizing small holder farmers into member-owned producer companies, or Farmer Producer Companies (FPCs) for enhancing production, productivity and profitability, which in turn would help enhance their incomes.

Since farmers or the producers are the equity holders of the FPO, an FPO as an organization provides for sharing of profits/benefits among the members as well as an appropriate framework for owning the company by the farmers themselves. The FPO model has the ethos and basic tenets of cooperatives and infuses a greater professional approach and attitude into the management of organizations.

FPOs focus on the entire supply chain and this is what distinguishes them from other aggregation models. With around 86% of land holdings in India being small and marginal, the FPO model becomes an effective instrument to cater to the aggregation needs of farmers at the grass root level. It has also been recognised globally that achieving agricultural growth through small and marginal farmers is an effective pathway for povertyreduction.

India witnessed success of collectivization under cooperative model, however, the success was limited to Gujarat (milk) and Maharashtra (sugar). Following the recommendations of the Alagh Committee (1999), FPCs emerged as an alternative to state-sponsored or state-led cooperatives since 2003. The model, however, did not receive much uptake except for in a few states where it was driven by some proactive NGOs.

To scale the FPO model ‘Policy & Process Guidelines for Farmer Producer Organization’ were formulated in 2013. As a result of public policy thrust there has been substantial increase in the number of FPOs over the last six years.

Currently there are more than 7600 producer companies formed under various initiatives of the Government of India, including NABARD, SFAC, State Governments and other organisations. The distribution of FPCs indicates that the states of Maharashtra, West Bengal, Telangana, Madhya Pradesh, Karnataka, Odisha, Rajasthan and Uttar Pradesh account for around 65% of the total FPOs promoted under SFAC, NABARD, NRLM & MSAMB.

States such as West Bengal, and Maharashtra have added nearly 50 percent or more oftheir FPCs in the last three years. Telangana, West Bengal and Odisha are the top 3 states in terms of FPOs promoted by NABARD while Madhya Pradesh followed by Karnataka and Maharashtra have the most SFAC promoted FPOs.

Ownership of FPOs

A Producer Organization can be a producer company, a cooperative society or any other legal form which provides for sharing of profits/benefits among the members.Producer Organisation can be registered under any of the following legal provisions:

• Cooperative Societies Act/ Autonomous or Mutually Aided Cooperative Societies Act of the respective State

• Multi-State Cooperative Society Act, 2002

• Producer Company under Section 581(C) of Indian Companies Act, 1956, as amended in 2013

• Section 25 Company of Indian Companies Act, 1956, as amended as Section 8 in 2013

• Societies registered under Society Registration Act, 1860

• Public Trusts registered under Indian Trusts Act, 1882

Majority of the FPOs presently, are registered as producer companies and the remaining as Cooperatives/ Societies.

To know more, read the report ‘A Review of Successful Farmer Producer Organisations’ at

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