In February 2020 the Government of India launched a scheme to form and support 10,000 new Farmer Producer Organisations (FPOs). The target was reached in February 2025, and support for these FPOs continues to 2027-28. This handbook explains the scheme from the first step: what an FPO is, who helps form it, what money it receives, and what it must achieve in five years. Every rule is taken from the official Operational Guidelines and their Addendum.
The short version
- An FPO is a company or cooperative owned by farmers, formed so that they buy, process and sell together.
- Each new FPO is supported for five years by a Cluster Based Business Organisation (CBBO).
- Money per FPO: up to ₹18 lakh management cost, an equity grant of up to ₹15 lakh, and a credit guarantee on loans of up to ₹2 crore.
- Minimum size: 300 farmers in the plains, 100 in the North-East and hilly areas.
- This handbook has 19 parts in 4 chapters, in the order the work happens.
The Scheme in Numbers
A Central Sector Scheme launched on 29 February 2020, with ₹6,865 crore up to 2027-28; the 10,000-FPO target was reached in February 2025.
Did you know?The guidelines define a hilly area as land at 1,000 metres or more above mean sea level.
What the Scheme Gives an FPO
Five years of professional support, money for running costs and share capital, cheaper access to bank credit, and training.
A CBBO for five years
Mobilises farmers, registers the FPO, prepares the business plan and supports it to year five.
Management cost
Up to ₹18 lakh over three years for the CEO, accountant, office and registration.
Equity grant
The government matches members' share capital, up to ₹2,000 per farmer and ₹15 lakh per FPO.
Credit guarantee
Banks can lend without collateral; the fund covers 75% to 85% of the loan.
Training
Directors and CEOs are trained twice a year through national institutes.
Advice and data
A national agency guides CBBOs and keeps every FPO's records on one portal.
Four Common Mistakes
Each of these is widely believed, and each is wrong. Tap a card to see the rule.
"The government gives the FPO money to share among farmers."
No cash is handed out. The management cost pays the FPO's own running costs for three years, and the equity grant becomes extra shares for members (clauses 10.1 and 11.1).
"Any group of farmers can get this support."
A new FPO must be formed in an approved cluster, with at least 300 members (100 in the North-East and hills), through a CBBO. Older FPOs can use the credit guarantee and advisory services (clause 4.9).
"Support continues as long as the FPO exists."
Management cost stops after three years and CBBO support after five. From the fourth year, the FPO pays its own running costs from its business (clause 10.1).
"The equity grant never has to be returned."
It is recovered if the FPO does not issue shares within 45 days, closes within five years, or misuses it (clause 11.4).
How to Read This Handbook
Read it in order if you are new; otherwise pick your role and the map highlights the parts you need most.
Which of these describes you?
Chapter 1 Start Here
Chapter 2 Forming an FPO
Chapter 3 Money and Support
Chapter 4 Running and Growing
Check yourself
Tap an answer to see whether you are right, and why.
What is the minimum number of farmer-members for an FPO in the plains?
- 100
- 300
- 500
300 in the plains and 100 in the North-East and hilly areas. 500 is the target average, not the minimum.
For how many years is the management cost paid?
- Three years
- Five years
- Ten years
Management cost is paid for three years from the year of formation; CBBO support lasts five.
Which statement about the equity grant is true?
- It is paid in cash to each farmer
- It matches members' share capital and becomes shares in the FPO
- It is a loan repaid with interest
The grant matches what members put in, and the FPO issues extra shares of the same value to them.
Remember these things
- The scheme forms and supports 10,000 new FPOs, with ₹6,865 crore up to 2027-28.
- Each FPO gets a CBBO for five years, management cost for three, an equity grant and a credit guarantee.
- Minimum size: 300 members in the plains, 100 in the North-East and hills.
- Read the parts in order, or follow the map for your role.
Part 2 explains what an FPO is and the two legal forms it can take. For FPOs whose members are also certified under PGS-India, KrushiFlow submits farmer records to the PGS-India portal in bulk.