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Understanding the FPO System in India

What is an FPO?

A Farmer Producer Organization (FPO) or Farmer Producer Company (FPC) is an organization that refers to a collective of farmers who come together to leverage higher economies of scale in the production and marketing of agricultural products. While Cooperatives in the business of specific commodities (such as milk) and Primary Agricultural Credit Societies have existed in India for a long time, the history of FPOs is rather short. Although FPOs have not existed for as long, they hold tremendous potential to benefit thousands of small and medium farmers across India.

Need for FPOs in India

Before venturing into the potential impact of these FPOs, it is important to understand why the need for them has arisen in the first place. In India, the farmer's land holding is small and highly fragmented. It is estimated that over 86% of the landholdings in India are less than 1.1 hectares. This results in significantly low individual farm yields. To put this in perspective, average land holding sizes in geographies such as Europe and the United States of America are 30 to 150 times larger. Additionally, many of the farmers are located in areas that are far from the markets where their products can be sold, this creates a lack of access to marketplaces which hinders their selling prospects. FPOs are a solution to these problems and help farmers by providing them with better economies of scale and improved access to marketplaces. Furthermore, since an FPO is a collective of farmers, they get better bargaining power when dealing with bulk buyers of products and bulk sellers of inputs.

Government's focus on FPOs in India

The Government of India has also been focussing on FPOs and has implemented policies that will help in the formation and promotion of FPOs in India. Recently, the Government has launched a central sector scheme titled “Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs)”. With a budgetary provision of Rs. 6865 crores, this scheme will focus on the formation and promotion of 10,000 FPOs in the country.

Our relationship with FPOs

At go4fresh, we ardently believe in our philosophy of “Kissan se Dukaan tak”. We strive to simplify the process of fresh fruit and vegetable trade between enterprises and farmers and hope to support 1 million farmers and small businesses transition to sustainable livelihoods in the coming years. As an organization, we are trying to improve the agricultural value chain by supporting small farmers, local vendors and communities by providing them with direct access to buyers.

Farmer Producer Organizations have always been an integral part of our process. Since our inception in 2013, we have worked with multiple FPOs and have helped them increase their reach and access to buyers. As we roll out our new digital marketplace, we intend on having a key focus on FPOs and their members. FPOs have always been major sellers on our platform, now, we aim to digitize their operations and provide them with digital infrastructure that will transform their experience as sellers. FPOs that onboard on our platform as sellers will be able to benefit from the key feature of easy market access, i.e, they will be able to show their products to prospective buyers and will be able to reap the benefits of buyer-seller matchmaking. Additionally, they will be able to fulfil all their functions on a single platform, right from maintaining a product catalogue, to generating orders and collecting payments. They will also be able to maximise their market and will no longer be restricted to any particular geographies.

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