SFAC Begins Grading as Many Farmer Producer Companies Turn Defunct
A large share of FPOs registered under the Companies Act are known as Farmer Producer Companies (FPCs). These FPCs are formed through the Small Farmers’ Agribusiness Consortium (SFAC) under the Ministry of Agriculture. According to sources, many of these FPCs have become defunct.
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To help farmers increase their income through agri-business and reduce input costs, the government had set a target of forming 10,000 Farmer Producer Organisations (FPOs) across the country. The government is now close to achieving this goal. However, a significant number of these collectives, formed under the concept of farmers' collectives, are facing challenges. A large share of these are FPOs registered under the Companies Act, known as Farmer Producer Companies (FPCs). These FPCs are formed through the Small Farmers’ Agribusiness Consortium (SFAC) under the Ministry of Agriculture. According to sources, many of these FPCs have become defunct.
As per SFAC sources, around 3,700 FPCs under its umbrella are being graded based on fixed parameters. They are being classified into grades A, B, C, D, and E based on a scoring system. Reports so far suggest that around 500 FPCs fall under Grade A, about 450 under Grade B, and 550 under Grade C. SFAC has submitted the complete list of graded FPCs and related data to the Ministry of Agriculture, and the final decision now rests with the Agriculture Secretary.
The source also revealed that a large number of FPCs have not even filed returns on the Ministry of Corporate Affairs’ website. The grading system is based on criteria such as financial performance, ground-level operations, possession of input licenses, processing capabilities, and expansion plans. For instance, input licenses carry 5 points, and processing capacity is allotted 10 points. FPCs scoring 60 or more points are placed in Grade A, while those scoring between 50 and 60 are placed in Grade B. FPCs with lower scores are accordingly placed in Grades C, D, and E.
According to sources, some states are considering offering financial assistance of up to ₹10 lakh to FPCs, for which they require this grading report. The Chief Minister of a Northeastern state is reportedly particularly keen on this initiative. The source added that only FPCs in Grades A and B are likely to be eligible for such support.
