detailed description of formation of FPO/FPC, registration process, information about CBBO and some success stories of FPCs. Thiws presentation will give basic idea abpout formation and working procedure of FPOs/FPCs

1. Facilitating Formation of FPC/FPO and
their working modalities
Jayanta Kumar Dutta
Dept. of Agril.Extension
AAU, Jorhat
Presented By:

2. INTRODUCTION
 Majority of the (86%) of the operational land holdings belong
to small and marginal farmers
 46.94 % of the total production is contributed from small and
marginal farmers
Source: Agriculture Census 2015-16

3. Farmer Producer Organizations?
FPOs are collective enterprises
formed by farmers to enable
better connect between market
and rural agricultural produce.
The collectivised farmers’
business organisation is called
FPO

5. Features of FPO
 It is formed by a group of producers
 It is a registered body and a legal entity
 Producers are shareholders in the organization
 It deals with activities related to the primary produce
 Common interest, It works for the benefit of the member producers
 Both long and short term objectives and plan of action
 Enrolment through membership fee
 Democracy through regular elections
 Linkages and network with other Farmer ProducerOrganizations
 Committed leadership
 Rest of the surplus is added to its owned funds for business
expansion

6. Objectives of Promotion of FPO
• Mobilising farmers into groups of between 15-20
members at the village level (called Farmer
Interest Groups or FIGs) and building up their
associations to an appropriate federating point
i.e. Farmer Producer Organisations (FPOs) so as to
plan and implement product-specific
cluster/commercial crop cycles.

7. Objectives of Promotion of FPO
• Strengthening farmer capacity through
agricultural best practices for enhanced
productivity.
• Ensuring access to and usage of quality inputs
and services for intensive agriculture production
and enhancing cluster competitiveness

8. Objectives of Promotion of FPO
• Facilitating access to fair and remunerative
markets including linking of producer groups to
marketing opportunities through market
aggregators

9. Basic Formation of FPO
Commodity Interest Group ( CIG)
15-20 Members/Group
Farmer Producer Organisation (FPO)
50 to 70 CIGs/1000 farmers ;20 villages ;30-40 ha

10. Members of FPO
• Initially, the minimum number of members in
FPO will be 300 in plain area and 100 in the
North East and hilly areas.
• However, the Department of Agriculture and
Farmers Welfare may revise the minimum
number of membership-based on experience.

11. Services Provided by FPOs
Input supply Credit Agro-advisory
Procurement Market support Warehousing Processing, value addition
Export
Certification Research linkage
Training and development

12. Key difference between producer company and cooperatives

13. Present status of FPOs in the
country

14. • Presently, around 5000 FPOs (including FPCs)
are in existence in the country.
• These were formed under various initiatives of
the Govt. of India (including SFAC), State
Governments, NABARD, as well as other
organisations over the last 8-10 years.

15. • The vast majority of these FPOs are at their
nascent stage and are still in the early growth
phase of their life cycle. (MANAGE Report,
2019).
• It is estimated that at best 30%of these FPCs
are currently operating viably and around 20%
are still struggling to survive

16. • Around 50% are still in the phase of
mobilisation, equity collection, business
planning other management related
developmental stages.
• This is quite comparable to the success rate of
new enterprise start-ups in the industrial and
processing sector in India.

18. • In addition to these, Deen Dayal Antyodaya
Yojana, National Rural Livelihood Mission (DAY
- NRLM) have promoted around 32.53 lakh
Self-Help Groups (SHGs) and 1.81 lakh Village
Organisations (VOs) in the country.
• Efforts are being made to federate these
groups into FPOs.

19. S.No Sate No of FPOs No of farmers mobilised
1 Assam 18 10,831
2 Madhya Pradesh 149 1,38,994
3 Maharashtra 105 1,05863
4 Rajasthan 50 59,962
5 Karnataka 125 1,27,369
6 West Bengal 89 92,322
Total in India 902 8,81,079
Promotion of FPOs by SFAC as on 31.03.2021
Source: SFAC (2021)

20. Promotion of FPOs by NABARD
State No. of FPOs No. of Share holders
Assam 95 14612
Tamil Nadu 170 137683
Madhya Pradesh 160 72380
Karnataka 159 85273
West Bengal 150 81024
Rajasthan 143 59140
Gujarat 117 43763
Uttar Pradesh 116 49850
Total in INDIA 2086 950936
Source: NABARD portal on FPO (2021)

23. I: Voluntary and Open Membership
II: Democratic Farmer Member Control
III: Farmer-Member Economic Participation
IV: Autonomy and Independence
V: Education, Training and Information
VI: Co-operation among FPCs
VII: Concern for the Community
7 Principles for sustaining FPOs development

24. Structure of FPO
Farmers producer organization
General Body
Executive Body (2 representative
per FIG)
Board of Directors
General Manager
FPO Staff
Local resource
person
• Planning
• Implementation
• Management

25. 1 Managing
Director
1 CEO
10 Directors
5 FPO staff
1 B.Sc.,Agri.
Graduate
Farmer members
Organisational Setup

26. Support for Promotion of FPO
• Centrally sponsored Schemes
• State funded Projects
• Research System
• Civil Society Institutions
• Resource Institution(s)

27. Resource Institutions (RIs)
Nodal Agency of RIs : SFAC

28. Registration of FPO
 As per the revised guidelines, FPOs can be
registered either under the Companies Act,
2013, or under the Cooperative Societies Act
of the States and handholding is to be done
for five years by professionally managed
Cluster-Based Business Organization (CBBOs).

29. Cluster-Based Business Organizations
(CBBOs)
• The DoA & FW will allocate Cluster to
Implementing Agencies which in turn will form
the Cluster-Based Business Organization in the
States.
• FPOs will be formed and promoted through
these CBBOs and it will be a platform for an end
to end knowledge for all issues in FPO promotion

30. The CBBOs will have five categories of
specialists such as,
• The domain of Crop husbandry
• Agri marketing or Value addition and
processing
• Social mobilization
• Law & Accounts and
• IT/MIS.

31. Priority for Aspirational Districts FPO
• According to the new guidelines, priority will
provide for the formation of FPOs in
aspirational districts in India with at least one
FPO in each block of aspirational districts.
• FPOs will be promoted under the “One District
One Product” cluster to promote specialization
and better processing, marketing, branding and
export by FPOs.

32. Equity Grant for FPO
• To strengthen the financial base of and
working capital requirements for business
development, the Government is providing
Equity Grant to FPO.

33. Equity Grant Details
• Equity Grant will be in the form of a matching
grant up to Rs. 2000 per farmer member of
FPO subject to a maximum limit of Rs. 15 lakh
fixed per FPO.

34. Eligibility criteria of FPO for Equity Grant
• The FPO should be a legal entity as mentioned
• FPO has raised equity from its Members as laid
down in its Articles of Association/ Bye-laws
• Minimum 50% of the FPO’s shareholders are
small, marginal, and landless tenant farmers
and Women farmers

35. Eligibility criteria of FPO for Equity Grant
• The maximum shareholding of the members
should not be above 10% of the total equity of
the FPO.
• A farmer can be a member in more than one
FPO with different produce clusters but
he/she will be eligible only once for the
matching equity grant up to his/her share.

36. Documents Required for Equity Grant
• Shareholder List and Share Capital contribution
by each member and it should be verified and
certified by a Chartered Accountant (CA) or Co-
operative Auditors
• Resolution of the Board of Directors or
Governing Body
• Consent of shareholders

37. Documents Required for Equity Grant
• If the FPO is in operation for more than one
financial year then it shall provide a copy of
the Audited Financial Statements of FPO for
all years of existence of the FPO, verified and
certified by a Chartered Accountant (CA) or
Cooperative Auditors

38. • In case FPO is in operation for less than one
financial year, Photocopy of Bank Account
Statement for last six months authenticated
by the Branch Manager of the “Bank” is
required.
Documents Required for Equity Grant

39. • Business Plan of FPO and budget for the next
18 months
• Names, photographs, and identity proof
(ration card, Aadhaar card, election
identification card or passport) of
Representatives/ Directors authorized by the
Board
Documents Required for Equity Grant

40. • Eligible FPOs shall apply for the Equity Grant in
the prescribed Application Form to the
Implementing Agencies.
• After consideration by the Implementing
Agencies, the proposal may be approved for
the sanction of Equity Grant.
Application Procedure

41. • After accepting the terms of sanction, the FPO
shall enter into Agreement with Implementing
Agencies and implementing Agencies shall
transfer sanctioned funds to the FPO Account.
Application Procedure

42. Credit Guarantee Facility to FPO
• The Government is providing credit
guarantee cover to accelerate the flow of
institutional credit to FPOs by minimizing the
risk of financial institutions for granting loans
to FPOs and to improve their financial ability
to execute better business plans leading
increased profits.

43. The objective of the Credit Guarantee
Facility
• The primary objective of CGF is to provide a
Credit Guarantee Cover to Eligible Lending
Institution (ELI) to enable them to provide
collateral-free credit to FPOs by minimizing
the lending risks in respect of loans.

44. Eligible project loan amount for Credit
Guarantee Cover
Sl.N
o
Project Loan Credit Guarantee Cover
1 Up to Rs. 1 crore 85% of bankable project loans with
a ceiling of Rs. 85 lakh
2 Above Rs.1 crore and up to Rs.
2 Crores
75% of bankable project loan with a
maximum ceiling of Rs. 150 lakh
3 Over Rs. 2 Crores of bankable
project loan
Maximum up to Rs.2.0 crore only

45. Other Condition
• ELI shall be eligible to seek Credit Guarantee
Cover for a single FPO borrower for a
maximum of 2 times over 5 years.
• In case of default, claims will be settled up to
85% or 75 % of the amount in default subject
to maximum cover

46. Formation of FPOs –Some Important considerations
1. Mobilise farmers: into groups and plan, establish product specific cluster/
commercial crop cycles.
2. Strengthen farmer capacity : Package of practices,
trainings, exposure visits, collectivized activities, awareness on
institutional framework and governance
3. Institution building: FPO level – Forming Board of Directors & their
training on statutory processes, credit and working capital
management, banking, business planning, equity management etc.
4. Creating market linkages : Facilitate access to fair & remunerative markets,
institutional buyers, value addition & processing, market linkages
5. Risk mitigation strategies: Climate change coping, insurance , credit linkages
and farm-based subsidies for FPOs

47. Steps to form an FPO
10

48. Steps in formation of FPO
1.Orientation of farmers/producers about the concept of FIG.
2.Facilitate farmers to form FIGs based on geographic and product homogeneity
3.The FIGs may consist of 10-20 producers from the same geographical area.
4.Group members may identify name of FIG suitable/ appropriate to them.
5.Selection of two representatives/cheque signing authorised signatories by FIG.
6.Frame rules and regulations through participatory manner.
7.Opening of Bank Account
8.Introduce all the required Books of Accounts
9.RI/NGO should train FIG members on how to conduct regular meetings and
savings,if they are interested.
11

49. Other important aspects
• How to identify and select FPO BoDs
• Roles and responsibilities of FPO Management/ BoDs
• Recruitment of other staff to support FPO functioning
• How to plan to do business
• How to conduct business
12

50. Obstructions with FPOs:
1. Liability of Newness:
• A young venture has a higher chance to fail
because it is new to the ecosystem.
• Many collectives begin without looking at
issues such as the modalities of the conduct of
board meetings, technical expertise required
for better procurement process, and
identifying the potential buyers and their
requirements.
• As a result, efficiency is compromised

51. Obstructions with FPOs:
2. Lack of Uniqueness:
• Novelty is a central aspect of entrepreneurship
and with no novelty to offer, it is often
challenging for FPOs to compete in the market.
• Issues like why any buyer should be attracted to
FPOs and why a financial institution should come
forward to help FPOs make the external
stakeholders aware of their discreteness.

52. Obstructions with FPOs:
3. Audience Diversity:
• The expectation of a government certifying
agency for organic produce would be different
from a that of a corporate buyer.
• The certifying agency would focus
on intensity while the buyer would be driven
by reliability and quality.
Contd…

53. Obstructions with FPOs:
• Most FPOs identify the farmer as their customer.
This is good as well as bad.
• Good, because as a member-driven
collective enterprise, centrality of the farmer
member is vital for its existence.
• Bad, because single-minded focus on farmer as
producer blinds an FPO from the reality of the
market and makes it insensitive towards external
demand.
• Focusing solely on attainment from farmers while
ignoring the buyers and regulators harms an FPO.

54. Obstructions with FPOs:
4. Cryptic Market Category:
• Ventures become risky when they have few or
no precedent for their operations.
• For FPOs getting into a new crop or a new
process without any precedence is
always riskier than doing something more
routine.
• The lack of clarity on the market
category creates hurdles for the FPO at two
levels.

55. Obstructions with FPOs:
• At the level of inter-organisational
relationship, the buyers would find it
challenging to engage with FPO since there is
little precedence for the same.
• As a result, buyers would often start viewing
FPOs as inefficient.

56. Obstructions with FPOs:
• At the level of members there is a mismatch of
expectations. FPOs, often in a hurry, would make
unrealistic promises to members to increase
their membership.
• Such strategy soon backfires as members
stopped their transactions once they see the
mismatch.

57. Obstructions with FPOs:
5. Lack of Multiple thresholds:
• The single-minded focus on one stakeholder
can be harmful. FPOs are required to
internalise that different stakeholder have
different yardsticks to measure the success of
their venture.
• Giving a better price to farmers for their
produce or offering input services at
reasonable cost should not be only mistaken
as the success measure of FPOs.

58. Success of Farmer Producer Organizations…
Policies of Government
Focus on income generating activities
Abilities of members
Visible benefits to its members
Extension officials' attitude and support
Linkages with people and organizations
Tie up with other development programmes
Inter group linkages
Capacity building of farmers

59. Role of Extension in promoting FPOs
and FPCs
• Providing training support to promote
FPOs/FPCs
• Monitoring and evaluation of activities and
performances of FPOs and FPCs.
• Leadership Development.
• Guiding the CEOs of FPOs and FPCs

60. Success stories of
FPO/FPCs in North-
Eastern Region

61. TETELIA AGRO ORGANIC
PRODUCER COMPANY
LIMITED
 Tetelia Agro Organic Producer Company
Limited was initiated on 26 July 2017. It is
registered at Registrar of Companies,
Shillong. Its authorized share capital is Rs.
2,500,000 and its paid up capital is Rs.
908,000. It is involved in Growing of
horticulture crops
 TETELIA, GANDHI NAGAR,
TETELIA Kamrup

62. SATBHANI POTATO
PRODUCER COMPANY
LIMITED
 Satbhani Potato Producer Company Limited was incorporated
on 21 November 2016. It is classified as Non-govt company
and is registered at Registrar of Companies, Shillong. Its
authorized share capital is Rs. 1,000,000 and its paid up
capital is Rs. 548,000. It is inolved in Growing of Potato.
 Jingia, Sonitpur, Assam

63. GOLAGHAT TOMATO FARMER
PRODUCER COMPANY
LIMITED - GOLAGHAT - ASSAM
 GOLAGHAT TOMATO FARMER PRODUCER COMPANY LIMITED
is in GOLAGHAT and registered address is VILL- RUPKOLIA,
P.O- BARPATHARUA,,NEAR BARPATHAR-JAMUGURI-
GOLAGHAT ROAD,,FURKATING,Golaghat,Assam-785702.
Registered on 02-08-2018
 1000 registered farmers
 Annual turnover is Rs. 10 Lakh.

64.  Reitlang Organic Producers’ Company Limited
(ROPCO Ltd.), an organic farming company
established by turmeric growers of Reiek and
ajoining villages of Mizoram.
 The company's is wholly managed by
turmeric growers of Reiek and adjoining
three other villages and has about 400
shareholders. The company launched two
products - organic turmeric powder in
polypacks and organic turmeric capsules etc.
Reitlang Organic Producers’ Company
Limited (ROPCO Ltd.)

65. Kangleipak Spices
 Located in Machal, Imphal-795001,
Manipur, India
 ISO certified company in spice and FSSAI
accredited company
 Annual turn over is 40-50 Crores.

66. • Vasundhara Agri-Horti Producer Company Ltd
(VAPCOL), Maharashtra(41,000 members in 6
states)
• Ram Rahim Pragati Producer Company Ltd,
M.P (4200 members)

67. Suggestion to overcome the constraints as perceived by the
respondents in seeking the information about the FPC (n=120)
Int.J.Curr.Microbiol.App.Sci (2019) 8(8): 2358-2361. Chopade et al. (2019)

68. • India’s first FPC was the Vanilla India Producer
Co. in Kerala (est. 2004). Now here are some
problems of these companies, which explain why
the progress has been so low in India.
• If some one is non-producer and wants to invest
in the equity of these companes, it is not
possible. The fall out of this is that it is not easy to
mobilize sizeable funds as primary producers
cannot contribute large amounts to the share
capital.

69. CONCLUSION:
• The expectations and subsequent indicators for
success become increasingly complex for FPOs.
• The recipe for failure is to devise a strategy
addressing the expectation of single set of
stakeholders and continuing the measurement of
success by accounting for only one stakeholder.

70. THANK YOU
STRENGHTS LIES IN UNITY