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 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. 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 poverty reduction.

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), Farmer Producer Companies (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 of their 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.