Union Cabinet Redesigns Agricultural Infrastructure Fund to Benefit Farmers’ Producers Organisations (FPOs)

Sub :Eco

Sec: Agriculture

Expansion of Agricultural Infrastructure Fund (AIF):
- The Union Cabinet has expanded the scope of the Agricultural Infrastructure Fund (AIF), a scheme worth ₹1 lakh crore, to include financial support for Farmers’ Producers Organisations (FPOs).
- This redesign aims to enhance the financial security and creditworthiness of FPOs, making the AIF more attractive and impactful.
Focus on Farm Infrastructure:
- The AIF will now cover a broader range of eligible projects, with additional supportive measures to foster a robust agricultural infrastructure ecosystem in the country.
- The Cabinet’s approval is part of an effort to strengthen farm-related infrastructure facilities.
Progress and Impact:
- ₹47,575 crore has been sanctioned for 74,508 projects under the AIF so far.
- These projects have mobilised a total investment of ₹78,596 crore in the agriculture sector, with ₹78,433 crore coming from private entities.
- The infrastructure projects sanctioned under the AIF have generated more than 8.19 lakh rural employment opportunities in the agriculture sector.
Government’s Statement:
- The Centre’s statement highlights that these initiatives aim to make the AIF more attractive, impactful, and inclusive, ultimately contributing to a stronger agricultural infrastructure across the nation.

Agriculture Infrastructure Fund (AIF)

About:

Launch: AIF is a financing facility that was launched in July 2020.
Objective: The fund aims to provide comprehensive financial support to farmers, agri-entrepreneurs, and farmer groups such as Farmer Producer Organisations (FPOs), Self Help Groups (SHGs), and Joint Liability Groups (JLGs). The focus is on creating post-harvest management infrastructure and building community farming assets across the country.

Key Features:

Interest Subvention: AIF provides a 3% interest subvention on loans.
Credit Guarantee: The fund offers credit guarantee support through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme for loans up to ₹2 crore.
Convergence Facility: AIF allows for convergence with other Central and State Government schemes to maximize the benefits and outreach of the fund.
Infrastructure Focus: The fund helps in reducing post-harvest losses by creating and modernizing agricultural infrastructure. This includes primary processing centers for vegetables and hi-tech hubs for renting agricultural machinery.

Management and Monitoring:

Online MIS Platform: The AIF will be managed and monitored through an online Management Information System (MIS) platform, which allows qualified entities to apply for loans under the fund.
Monitoring Committees: National, State, and District level monitoring committees will be established to ensure real-time monitoring and provide effective feedback on the progress and impact of the fund.

Farmer Producer Organizations (FPOs)

Overview:

An FPO (Farmer Producer Organization) is a legal entity owned and managed by farmers, including cultivators, dairy producers, fishers, plantation owners, and others involved in primary production within the agriculture sector.
Purpose: FPOs are formed to leverage the power of collectives through economies of scale in both the production and marketing of agricultural and allied sector products.
Registration: FPOs can be incorporated or registered under:
Part IXA of the Companies Act
Co-operative Societies Act of the respective states

Examples:

Sahyadri Farms: India’s largest farmer producer company with over 8,000 farmer shareholders.
Lokhit Bahuuddeshiya Krishi Producer Company: A women-led FPO that cultivates organic cotton and sells it to global brands.