Farmer Producer Organisations

Small holders face three major challenges – climate, markets and lack of suitable extension system to deal with their needs. While climate challenges are addressed through resilient alternatives, extension support to a limited extent is being provided by well intentioned. Civil societies and few mission specific programmes handled by diverse development agencies. To address market challenges, through significant efforts, Government of India created an alternative institutional framework – Farmer Producer Organisations. FPOs were conceived to enable small holders gain economies of scale through principles of aggregation and self governance. Through amendment of Companies Act in 2003, Farmer Producer Organizations (FPOs) emerged as a new form of aggregation model in India. and are viewed as an advantageous alternative to cooperatives.

FPO movement has been further pushed ahead through policy announcements and identifying nodal agencies like Small Farmer Agribusiness Consortium (SFAC) and NABARD. Thanks to a strong push from the central government, thousands of FPOs have been registered in the last decade. The thrust by Central and few State policies further strengthened the efforts of FPO movement. States like Maharashtra, Bihar, Odisha, Tamil Nadu, West Bengal, and Uttar Pradesh have reported the highest increase in the number of FPOs registered in the last three years. Though the growth is tremendous, ‘they continue to be born weak’. There have been different set of recommendations owing to which spearheading agency they are coming from. Ninety percent of the FPOs, operate in sub 10 lakh turnover level.

Studies based on database of FPOs maintained by different agencies reveal their performance too. The model is designed to be farmer centric with enough self governance structures. However, the financial and managerial requirements to run these new enterprises seem to be undermined which this excellent model offers. How they cope with their diverse needs with limited capital and investments is challenging. There should be more efforts in diagnosing and applying remedial measures through examining diverse cases of success, inertia and failure.

Role of Civil Societies

FPOs need to be incubated for a while before they can take off. The role of civil society organizations and national and international funding organizations cannot be underestimated, especially in incubating them and guiding them through formative years. Many first generation FPOs like Aharam, Chetna organic, and those supported by Civil Society Organisations like Timbaktu, Pradhan, Vritti, WOTR (Utkarsh Ghate, p. 19) are good examples. NGOs have built tremendous rapport with the communities over several decades of co-working as well as building their community’s capacities in handling shared ownership. What is grossly underestimated is the business acumen and strategic planning skills required for running such profitable enterprises, on a day to day basis. It is necessary to invest in building managerial talent to prepare and manage businesses, deal with financial capital, investments and returns, as well as create new market models and lastly to handle smoothly the shareholder expectations. Dependence on a promoting institution without ability to hire high quality managerial talent can be a limiting factor. This requires high quality support as well as investments.

Success factors

We can see that the factors driving the success are varied. For instance, it could be an organisation closely working with communities playing a critical role in availing the window of opportunity provided by policy; it could be aspirational similarities of the type of communities working with; the type of produce, its easy aggregation and marketability; may be, the produce is conducive for easy processing and value addition with members themselves being entrepreneurial. Ultimately, it depends on the producer’s own efforts to create a positive shift in willing to succeed. If and when these factors are there, the institutional framework aids, becoming an enabler. Let us look at some examples covered in this issue.

Spectacularly functioning FPO like Sahayadri (one with a turnover of 100 crore), boasting of 18000 members has started in 2010 dealing with 9 crops. It has been successful because of product choices, upmarket target (export), and professional management. It has attracted a record Rs. 310 crores European investment in 2022. (Utkarsh Ghate, p.19).

Indigenous communities in the Nilgiri Biosphere Reserve area have organised themselves into a Farmer Producer Company to secure their livelihoods. The company’s significant growth in terms of membership and the business turnover reflects the success of the model in providing sustainable and fair livelihood options for the indigenous communities. Systematic documentation for PGS and quality perseverance helped them to grow and be recognised with a Equator Prize in 2021 from UNDP. (Jestin Pauls, p.10).

Clear commodity focus of enhanced milk production along with value addition has helped Vidarbha farmers succeed as Shri Kamdhenu Dairy Farmer Limited. For farming communities, seeing and experiencing is believing. Promoting agronomic practices which ensure higher returns for farmers through alternative practices in Redgram and improved incomes from intercropping helped them to move towards successfully managing an FPO supported by Vritti (p.14).

It need not always be farm produce alone. Dealing creatively, momentum was created in processing farm wastes into a product has given rise to a successful FPO. This FPO deals with eco-friendly way of dealing with crop residues by converting them as Biochar to improve soil fertility. It has created an enterprise for the benefit of all. (Ganesh Bidare, p.6). Yet another inspiring example is of women in Sri Lanka. Vikalpini, a women’s network through continuous engagement with communities expanding organically to include more and more producers and buyers. Together, they took control of every aspect of production, marketing and value chain to maximize benefits. (Chathu Sewwandi, p.23).

Strengthening FPO movement

Not just formation, but FPOs sustainability is a critical factor in strengthening this precious movement. Besides successfully pushing their formation, it is also important to support these FPOs financially and in empowering them, so that they sustain over a longer period. New opportunities are being constantly created – like launching of Bharat Organic Brand, bringing together several institutions to work together for a common goal of marketing certified organic produce building integrating direct benefit transfers to producers. Also, the intent for promoting Natural Farming and FPOs is much more stronger than ever before. (Utkarsh Ghate, p. 19). The scale at which some of the State Governments (AP Natural Farming programme and Odisha Millets Mission) have succeeded in popularising alternatives is worth examining in terms of enabling conditions being fulfilled and innovative strategies adopted like offering subsidies, a missionary zeal, a visionary behind the programme etc.

Studies reveal that much more can be done. For example, need for multistakeholder dialogues for a new FPO ecosystem; Recognising Diversity and complexity; creating different models for rain fed farmers like State mission programs (Odisha, AP); Rethinking investments with linking to banks and NBFCs, CSR funding etc. Also, considered important is the need for capacity building and regional training manuals as attempted by some development agencies and civil society organisations. Ultimately, the objective of FPO is to enable small holders to negotiate collectively for getting fair price for their produce, be able to handle processing and value addition so as to gain better profits.


Ekta Joshi, Assessing India’s FPO Eco System, https://tci.cornell.edu/?blog=assessing-indias-fpo-ecosystem, May10,2022

  1. Shambhu Prasad, Farming as an Enterprise – Ten years of FPO movement in India, State of India’s Livelihoods Report, Chapter 4, 2019.

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