National Policy on FPOs to emulate AMUL model farmer organisations

The Ministry of Agriculture is working on a national policy on farmer-producer organisations (FPOs) to emulate the AMUL model by consolidating the existing ones and facilitating the formation of new ones across the country. The objective is to help establish about 50,000 FPOs benefiting 2.5 crore farmers in the next five years.

The draft National Policy on FPOs, currently being circulated for stakeholder comments, notes that AMUL has been a successful model for the milk value chain not only in ensuring at the back end an assured, remunerative market to milk producers through establishing primary cooperative societies but also reducing transactional losses and developing strong supply in domestic and export markets at the front end through their federation at District (District Level Union) and State Level (State Level Federation). “This 3-tiered model has been successful in working on a business goal collectively, with capacity building focused on milk production and aggregation related, and managed by a strong professional organisation. This policy will guide the policymakers, governments and all those involved to make strides and endeavour to develop the FPOs on the 3 tier AMUL model through making all needed support and removing the hurdles,” the draft policy states.

The policy weaves around enhancing farmers’ net income through end-to-end Value Chain Concept.

The draft policy also points out that despite dissimilarities between milk and agricultural produce, cooperatives in the European Union (EU) have been equally successful in other categories such as fruits and vegetables, cereals, meat and so on. Hence, the AMUL model suitably tweaked can provide the necessary impetus for agricultural, horticultural, livestock, fisheries etc., it states.

The draft policy proposes tax incentives to corporations for providing financial assistance to FPOs. It also talks of government support through the “FPO equity grant fund” and “FPO formation fund”.

Small Farmers’ Agribusiness Consortium (SFAC), New Delhi, an autonomous body under the Department of Agriculture and Farmers’ Welfare (DA&FW) has been proposed as a “Central Nodal Agency (CNA)” to coordinate with State Nodal Agencies to facilitate the growth and development of FPOs. DA&FW, as the Central Nodal Department, will coordinate with the finance ministry if needed to make institutional loans available to FPOs at cheaper interest rates to meet their working capital, term loans for investments and composite loan requirements.