Farmer Producer Organizations in India: Challenges and Prospects

Farmers’ collectives such as the FPOs that combine the spirit of cooperation and principles of business can significantly contribute to agricultural growth and rural development by improving the scale economies in the production and marketing of agricultural commodities, especially in agrarian economies dominated by smallholders. Farmers benefit from their association with FPOs in several ways — better and affordable access to technologies, inputs, information, services, finances and markets, higher price realization, less price risk, and reduction in transaction costs. Recognizing these benefits, the Government of India has increasingly focused on establishing and nurturing FPOs to strengthen backward and forward linkages of agriculture for the benefit of the smallholders who are a force to reckon with in Indian agriculture. Currently, there are more than 24000 FPOs registered under the Indian Companies Act, undertaking several agricultural activities, and 10,000 more FPOs are to be nurtured by 2027-28 under the central sector scheme. However, our understanding of the performance of FPOs in terms of their socio-economic impacts, inclusiveness, governance and financial viability is limited. This paper, based on an extensive review of literature, synthesizes empirical evidence on the impacts of FPOs at the farm, market and society levels, identifies their weaknesses and strengths in terms of financial viability and governance, and assesses the institutional and policy requirements for making FPOs as a preferred vehicle for inclusive agricultural development. I congratulate the authors of this paper for their painstaking efforts in compiling and synthesizing information on different dimensions of FPOs and putting these succinctly in this paper. I hope the findings may serve as evidence-based feedback to policymakers and institutions promoting FPOs, and for FPOs themselves to take corrective measures to improve their outreach and performance.