India’s farming industry makes up nearly 60% of the nation’s employment. Still, despite their essential role, farmers frequently have restricted access to financing and sector resources. To deal with these problems, the National Bank for Agriculture and Rural Development (NABARD) provides various schemes to help Farmer Producer companies (FPOs). These organisations help farmers pool their resources to promote their produce better.
What is a Farmer Producer Company?
A Farmer Producer Company (FPC) is a hybrid cooperative society / private limited Company. It enables its farmer members to benefit from both structures – greater bargaining power and enhanced use of credit and markets.
Members of an FPC are shareholders and producers and can grow, produce, procure, harvest, market and promote it. FPO registration helps make certain that farmers obtain a much better price for their plants by pooling their produce and selling it together instead of separately.
Role of NABARD in Agriculture
NABARD stands for National Bank for Agriculture and Rural Development. It offers the backbone for financial services and support to farmers and agricultural associations throughout the nation. With loans, grants and subsidies, NABARD helps medium-sized and small farmers acquire the information they need to grow a lot more food, purchase much better equipment and improve their farming methods.
Among the essential areas where NABARD impacts is in the formation and support of FPOs. These organisations enable farmers to gather and come together to obtain even more negotiating power on the marketplace and better prices for their crops. NABARD assists these FPOs in getting started and then offers ongoing financial assistance and training to keep them sustainable and successful.
Further, NABARD takes part in development projects involving rural infrastructure including highways and irrigation systems which are essential for agricultural communities. Additionally, it funds programs which teach farmers new farming methods and technologies which boost yields and productivity in farming.
Generally, NABARD works to give sufficient assistance to India’s farmers for economic growth and food security.
Key NABARD Schemes for FPOs
NABARD has introduced many schemes to assist FPOs with their financial stability and development. See some of these initiatives are:
1. Producers Organisation Development Fund (PODF)
Founded in April 2011 with a starting fund of 50 Crores, the PODF offers economic aid to FPOs in the form of loans and grants. This fund is essential for FPOs to develop their operational capability, marketing methods, and market linkages.
Eligibility for PODF
Entities that can obtain a contribution under this fund:
- Registered Producer Companies.
- Producers Cooperatives.
- Registered Farmer Federations.
- Other eligible farming cooperative societies.
2. Financial Assistance
FPOs may apply for several kinds of loans through this scheme, including:
- Term loans for fixed capital requirements.
- Working capital loans for day-to-day activities.
- Composite loans for fixed and working capital.
- FPOs may also get subordinated debt along with direct lending.
3. Capacity Building and Market Linkages
The fund supports direct financial needs in addition to addressing:
- Skills development in farming and related pursuits.
- Technological enhancements through tie-ups with agricultural universities.
- Creating marketing infrastructures such as storage facilities.
- Partnerships with buyers to guarantee steady market access.
Terms & Conditions of NABARD Schemes
FPOs need to be registered and operating for the members benefit. The monetary assistance from NABARD covers as much as 90% of project cost based on the nature of the project and associated risks. Repayment can take seven to 10 years with a moratorium of 1-2 years in which no payment is needed.
Procedure to Apply for NABARD Schemes
Interested FPOs submit a concept note describing their organisation and the proposed project to NABARD’s regional offices. A detailed project report is then assessed and in case possible, a field visit and due diligence are then performed to finalise the loan terms.
NABARD positively monitors the usage of the funds disbursed to make certain they are utilised as intended. FPOs must submit regular progress reports and show transparency in their financial operations.
Other Notable Initiatives by NABARD
Here are some additional notable initiatives by NABARD:
- PRODUCE fund: Established in the financial year 2014-15 with an initial capital of 200 crores, this fund assists the establishment of new FPOs with technical and financial assistance.
- OFPO Scheme: Just like FPOs, Off-Farm Producer Organizations (OFPOs) consist of groups that practise non-farming activities like handicrafts and handlooms. This particular scheme helps such groups to gain economies of scale.
- Central Sector Scheme for Forming & Promotion of 10,000 FPOs: This brand new initiative aims to form and promote 10,000 new FPOs nationwide to boost financial inclusion and employment in agriculture.
Conclusion
NABARD’s schemes for Farmer Producer Companies are key to structure a more organised and financially stable agricultural sector in India. These schemes help individual farmers get better prices for their produce by means of assistance, capacity building and industry linking assistance. As these initiatives develop and grow, we hope that even more farmers all over India will benefit from such structured assistance and build a more powerful agricultural economy.
FAQs
What is the subsidy offered to farmer producer organisations?
The subsidy for FPOs also includes a matching equity grant up to Rs. 10 lakhs to registered FPOs. It also offers a credit guarantee cover of as much as 85% on loans not exceeding Rs. Hundred lakh to lending institutions that finance such FPOs.
Who can apply for FPO scheme?
The general eligibility for the FPO scheme is registered farmer Producer Organizations (FPOs), agricultural cooperatives and even some kinds of Farmer federations. Such entities have to be interested in agricultural or related activities and be meant to serve their member farmers.
What is the new FPO policy?
The new FPO policy, a part of a bigger government effort, promotes more rapidly the formation and promotion of FPOs. It comprises financial support, capacity building and improved market linkages to boost profitability and sustainability of FPOs throughout India.
What is the central sector scheme for FPOs?
The government created the Central Sector Scheme for FPOs to form 10,000 additional FPOs. This scheme offers funding, credit and job creation in the agriculture industry to boost the economic viability of agricultural communities.
Who can apply for the NABARD scheme?
Farmers, entrepreneurs, members of Self Help Groups (SHGs) cooperatives and Farmer Producer Organizations are eligible for NABARD scheme. These participants can obtain subsidies through NABARD’s financial support to institutions which lend and other financial assistance.
