Farmers Producer Organizations (FPO) – Explained

What is a Farmers Producer Organization (FPO)?

It is a type of Producer Organization (PO) where the members are farmers. PO is a generic name for an organization of producers of any produce, e.g., agricultural, non-farm products, artisan products, etc.

• The ownership of the producer organization is with its members. It is an organization of the producers, by the producers and for the producers.
• One or more institutions and/or individuals may have promoted the PO by way of assisting in mobilization, registration, business planning and operations. However, ownership control is always with members and management is through the representatives of the members.
• FPOs in Gujarat, Maharashtra and Madhya Pradesh, Rajasthan and some other states have shown encouraging results and have been able to realise higher returns for their produce.
  • For example, tribal women in the Pali district of Rajasthan formed a producer company and they are getting higher prices for custard apples.

What is a producer organization (PO)?

A Producer Organization (PO) is a legal entity formed by primary producers, viz. farmers, milk producers, fishermen, weavers, rural artisans, craftsmen.

A PO can be a producer company, a cooperative society or any other legal form which provides for sharing of profits/benefits among the members. In some forms like producer companies, institutions of primary producers can also become member of PO.

Need for PO

The main aim of PO is to ensure better income for the producers through an organization of their own.

• Small producers do not have the volume individually (both inputs and produce) to get the benefit of economies of scale (When production becomes efficient due to a large spread out operation). Besides, in agricultural marketing, there is a long chain of intermediaries who very often work non-transparently leading to the situation where the producer receives only a small part of the value that the ultimate consumer pays. Through aggregation, the primary producers can avail the benefit of economies of scale.
• They will also have better bargaining power vis-à-vis the bulk buyers of produce and bulk suppliers of inputs.