Farmer Producer Organisation

About Farmer Producer Organisation

  • Farmer Producers Organisation (FPO) incorporated/ registered under Part IXA of Companies Act or under Co-operative Societies Act of the concerned States and formed for the purpose of leveraging collectives through economies of scale in production and marketing of agricultural and allied sector. The main objective is to meet the credit requirements of the Farmer Producer Companies / Organisations in the form of term loans to create an asset and working capital loan to meet the recurring expenditure.
  • Purpose of Loan
  • Aggregation of Produce.
  • Bulk Procurement of Farm Inputs.
  • Collective Marketing
  • Farm Mechanisation and CHC
  • Storage and office Infrastructure setup.
  • Processing and Value Addition
  • Other purposes, such as administration and operational expenses
  • Specific contracts pertaining to procurements and marketing as a supply chain agent from governments/corporates and agencies
  • Loan Against Warehouse Receipts.

Key Benefits & Features of FPO

Promoters

  • FPOs operate under various legal frameworks outlined below and are supported by several Guarantee schemes administered by SFAC, NABARD, NCDC, or other government programs.
  • These frameworks and support systems enhance their credibility, facilitating access to credit and resources necessary for growth and sustainability.
Promoters

Types of FPOs

The following are the types of FPOs available based on the Constitution:

  • Producer Company established under Section 581(C) of the Indian Companies Act, 1956 (amended in 2013).
  • Multi-State Cooperative Society Act, 2002.
  • Public Trusts Registered Under Indian Trust Act, 1882.
  • Cooperative Societies Act/Autonomous or Mutually Aided Cooperative Societies Act of Respective states.
  • Societies Registered Under Societies Registration Act, 1860.
  • Section 25 Company of Indian Companies Act, 1956.
Types of FPOs

Loan Details

Nature of Loan:

  • FPO can obtain a Term or Working Capital Loan from HDFC Bank for business expenses.

Loan Amount:

  • The maximum loan amount available for each FPC/FPO is ₹200 lakh. 
  • Credit Guarantee Coverage from CGTMSE and NABSanrakshan is provided for loans up to ₹2 crore.
Loan Details

More about Farmer Producer Organisation

Nature of Loan

Term/Working Capital Loans may be obtained by FPOs for business expenses

Maximum Loan Amount and Coverage

  • HDFC Bank offers maximum loans up to ₹200 lakh to each applying FPO/FPC.
  • Loans up to ₹2 Crore come with Credit Guarantee Coverage from CGTMSE and NABSanrakshan
Read More

Promoters

  • FPOs operate under various legal frameworks outlined below and are supported by several Guarantee schemes administered by SFAC, NABARD, NCDC, or other government programmes.
Read More

FPOs take into account the various reasons and purposes for which farmers may require funding, such as aggregation of produce, collective marketing, setting up storage and infrastructure, processing and value addition, and to meet their administrative and operational expenses, among other things. It enables farmers to easily and effortlessly obtain high value, government-backed loans to manage their farming expenses.

Frequently Asked Questions

Farm Producer Organisations consist of groups of marginal and small farmers who pool their produce to trade in larger quantities. This collaborative approach facilitates value addition and helps them find buyers outside their local area, improving their access to investment, technology, inputs, and broader markets.

The FPO Farmer Producer Organisation Act outlines the legal basis for the formation of FPOs. These organisations can be registered either under the Companies Act of 2013 or the Co-operative Societies Act of the respective states, enabling farmers to harness collective power for greater efficiency in agricultural production and marketing.

The idea of Farmers Producer Organisations (FPOs) was introduced in India following the 2003 amendment to the Companies Act.