The Sustainability Saga of Farmers Producers Organizations- Do We Need A Fresh Start?

Mohit Sharma and Ritambhara Singh
Mohit Sharma and Ritambhara Singh
Rice Plantation
Rice Plantation

The saga of Farmers Producers Organization (FPO) dates back to around two decades when the Alagh committee suggested the need for FPOs as new generation co-operatives. In due course of time with a lot of pilot projects and promotion by SFAC and NABARD, the year 2013 witnessed the formation of a national policy on FPOs. The policy aimed at revolutionizing Indian agriculture.

The Union budget 2019-20 expressed clearly the intention of the Government of India when Rs. 6865 crores were allocated to form 10,000 FPOs pan India. The idea to form 10,000 FPOs focused on cluster-based approach with an idea to integrate the One District One Product scheme with FPO formation. The country since then is witnessing the FPO revolution. According to the NABARD portal (nabfpo.in), since the announcement in 2019-20, around 2061 FPOs have been registered covering 30 states, 494 districts and around 9.64 lakhs of stakeholders.  As per the data available on e-NAM portal at present 2177 FPOs have been onboarded. In order to address the questions of effectiveness of these FPOs towards farmers welfare many reports have strongly claimed in favour of these. A study conducted by Price Waterhouse Coopers in Maharashtra on the effect of FPOs on farmers found about 22 per cent increase in price realization, reduction in cost by 31 per cent and about a saving of about 1.3 k per acre by at least a third members on procuring agri-inputs from FPOs.

While such a positive impact was observed in Maharashtra, which is well developed on all grounds as compared to states like Bihar where agricultural marketing is still figuring its way to flourish, claiming the effectiveness of FPO may become little adjustable. As per the report of MANAGE, only 25 per cent of FPOs are reported to be running successfully in a sustainable manner. If we want to achieve the dream of the successful ecosystem for FPO then this riddle of marketing, and sustainability is required to be addressed in the light of institutional and policy support leading to their successful management.

Many of the FPOs are at the mercy of financial support from the institutions like NABARD and SFAC as reported in the policy document of the centrally sponsored scheme for promoting 10,000 FPOs. However, after the tenure-based funding, it is becoming difficult for the FPOs to run successfully and to draw out the operational expenses, let alone the profit realization and sustainability in the long run. Another thing that is coming into the picture is the rise of conflict among the group members for more profit sharing as only few members are devoting themselves to the major operations of the FPOs and it is claimed that the rest of the members are just sharing profit while not putting up the efforts to run the organization. Now, if some group members are generating marketing leads, and business linkages then they claim to get more share or at least some incentives for their efforts but if such things come into practice, then FPOs will lose the general essence and basic foundation of equal profit sharing among the members. All these are required to be addressed while going forward for the sustainability of the FPO system in India. 

Start-up wave is spreading across the country, many tech start-ups are coming into agriculture and providing need-based solutions and it is believed that the present start-up ecosystem will sustain for at least one more decade. There is a need to link FPOs with start-ups as well so that FPOs who are struggling on the market front will get suitable linkages and facilities for product promotion. Although such agreement and tie-up require to be formulated on those terms which should be acting as a win-win situation for both parties. The government also needs to step up and regulate such contracts for the betterment of stakeholders and building sustainable linkages.

It is also important to work on resilient business models for FPOs and it cannot be generalized to all FPOs working in a similar geographical region. Many of the CBBOs are only interested to just form the business plan for FPOs and then it is not realized how robust is that for actual implementation. FPOs should not only be attempted to link with e-NAM but other platforms like NCDEX etc., are also required to be connected for better developments. The aim should not be just to form the FPOs in order of number realization and completion of target but sustainability and effective management of the FPOs should be the prime concern. This is only possible with the unity of the stakeholders operating in different institutions. As the saying goes, unity is strength so it should not only be applicable for collectiveness of farmers but also for the stakeholders who are directly or indirectly involved in the formation, development and promotion of the FPOs. With this only the ecosystem can be strengthened and going forward we can claim the sustainability of the FPOs.  

Government should also seek out clarity from existing case studies of FPOs in terms of funding support, institutional support, and other developments and conclude in terms of policy intervention that what is required for the present phase to make the FPOs more sustainable. Is it fine to go with the existing support scheme or more efforts are required toward the sustainability front? Considering all these points would be bringing out the conclusion on the fate of FPOs and all the promises which they need to be delivered.


Mohit Sharma and Ritambhara Singh

Assistant Professor, School of Agribusiness and Rural Management, Dr. Rajendra Prasad Central Agricultural University, Pusa, Samastipur, Bihar

Email: mohit.sharma@rpcau.ac.in; +919549034035

Associate Professor, School of Agribusiness and Rural Management, Dr. Rajendra Prasad Central Agricultural University, Pusa, Samastipur, Bihar

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