Understanding of FPOs’ business ecosystem and strategies to tap potential

Bringing together farmers to form Farmer Producer Organisations (FPOs) is considered to be a promising approach to address the challenges facing the small holders by providing them the benefits of economies of scale. Presently, there are around 10,000 FPOs existing in the country, out of which NABARD has promoted 5060 (about 50%) while remaining FPOs are promoted by Small Farmers’ Agri-Business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and by other agencies. Since the formation of FPOs is a recent phenomenon, the literature on evaluating the impact of membership of FPOs on different aspects of a farmer's welfare remains limited. Some of the available studies have been incorporated in this paper to analyse the impact of FPO-membership on farmers’ wellbeing in terms of saving in cost of production and increase in income through better price realization. Findings of the studies present a mixed picture with reference to impact of FPO members on farmers. For instance, the study on Vegetable Initiative for Urban Clusters in States of Chhattisgarh, Delhi and Jammu & Kashmir (2013) conducted by SFAC has revealed favourable findings, such as increased productivity (13 per cent) of vegetables (per unit area) in Chhattisgarh, increased area (2 per cent) and production (8 per cent) in Jammu, enhanced use of scientific package of practices in four states of Delhi, Chhattisgarh, Jammu and Kashmir. Similarly, the study on Formation of FPOs and Its Impact on the Development of Sustainable Crop Production in Karnataka revealed increase in productivity (10 per cent) as well as income (20 per cent) of farmers having FPO membership. On the other hand, the study on Farmer Producer Organizations & Agri-Marketing: Experiences in Selected States, Relevance and their Performance in Punjab. finds that only a small fraction of produce of farmers having FPO membership is actually sold through FPO channel. An internal study conducted by NABARD in 3 states viz. Madhya Pradesh, Odisha and Kerala revealed an increase of 29 per cent in net annual income of the FPO members. The studies have recommended for initiating steps for refining the approach towards FPOs. Suggested strategy includes strengthening the existing FPOs through intensive capacity building, membership mobilization, scaling up FPO-Bank Linkage initiatives through SLBC/Banks, digitization of all the FPOs database, sharing the database with other stakeholders for facilitating online business transactions, facilitating business incubation and other ecosystem services to FPOs through partnerships and networking, convergence with the State Govt. schemes, networking with market players, agro industries, and integrating with electronic National Agriculture Market (e-NAM). It is only through continuous and concerted efforts of all stakeholders that a sustainable and effective FPO structure can be established for enhancing the income of small and marginal farmers.