Budget 2019 | 10,000 new farmer producer organisations to be set up, says FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman in her Budget speech on July 5 said that cooperatives and farmer producer organisations (FPOs) will be the primary vehicles for ensuring better prices as part of the government's plan to raise income and make farming a more rewarding economic activity.

"We hope to form 10,000 new Farmer Producer Organisations, to ensure economies of scale for farmers over the next five years," Sitharaman said.

She also announced that the government would invest widely in agricultural infrastructure and support private entrepreneurships in driving value-addition to farmers' produce from the field. For allied activities, like bamboo and timber government would focus on value-addition from the hedges and for generating renewable energy.

“Annadata can also be Urjadata. Dairying through cooperatives shall also be encouraged by creating infrastructure for cattle feed manufacturing, milk procurement, processing & marketing. I place my appreciation for our farmers who have made India self-sufficient in pulses. I am sure they will repeat such a success even in the production of oilseeds. Our import bill shall be reduced by their Seva,” Sitharaman said.

The finance minister in her budget speech also said that the government would work with state governments to allow farmers to benefit from e-NAM. “The Agriculture Produce Marketing Cooperatives (APMC) Act should not hamper farmers from getting a fair price for their produce. Ease of doing business and ease of living both should apply to farmers too,” the minister said.

The government will also apply the zero budget farming model which is already benefitting farmers in a few states. “Steps such as this can help in doubling our farmers’ income in time for our 75th year of Independence,” Sitharaman said.

The finance minister also said that the government will set up a mechanism of direct marketing of vegetables, fruits, dairy and fishery products through farmers’ cooperative organisations to ensure that farmers earn better prices for their produce.

Farmers in the country can now practice cooperative farming by forming groups and the Centre has made a law that promotes such type of farming.

The law has been sent to states and farmers can now form cooperatives or sign MoUs to practise cooperative farming.

Farmers can now officially get together and form MoUs and Farmer Producer Organisation (FPOs) to do cooperative farming as per the new law. The Centre has said that state and central governments will also offer all kind of help to such farmers for doing cooperative farming as per the new law.

The main focus of the government's new agriculture policy is to bring the markets closer to the farmers.

Over the last two years, farmers have been protesting in several states, demanding better prices and debt write-offs. Low retail prices may be heartening to consumers, but persistently low food prices, have meant that farmers’ income have remained flat.

India’s long slowdown in food prices may well be symptomatic of a problem of abundance. Procurement is taking place at higher prices only for fourteen (14) cereals by government agencies such as the Food Corporation of India (FCI). Vegetables, potatoes and onions however, are not procured by government agencies. That's why vegetable prices have crashed in wake of a plentiful harvest.

The government has shifted the focus the policy to removing regulatory and logistics barriers and aggregating markets to enable economies of scale.