Farmer Producer Organisations (FPOs) have emerged as a strong support system for India’s small and marginal farmers. By coming together under one umbrella, farmers get access to collective bargaining power, better markets, and modern practices. According to the Ministry of Agriculture, India aims to create 10,000 new FPOs by 2027 to empower rural communities and improve farmers’ income security. This highlights the government’s focus on farmer-led institutions as a pathway to sustainable growth.
An FPO is essentially a collective of farmers registered under the Companies Act. It allows farmers to pool resources, share risks, and market their produce at better prices. Through this system, small-scale farmers, often left behind in the open market, gain a stronger voice. FPOs also play a key role in providing inputs, training, and access to financial support.
Many people often confuse FPOs with Farmer Producer Companies (FPCs). While both serve farmer interests, the difference lies in their legal structure. An FPC is a registered company formed under the Companies Act, whereas an FPO can be registered under different legal forms, including cooperatives or societies. In short, every FPC is an FPO, but not every FPO is an FPC.
Why FPOs Matter in Indian Agriculture?
Smallholders struggle with fragmented landholdings and buyer exploitation. FPOs unite them under a common banner – collectively negotiating prices, securing supplies, and accessing credit. Research notes that FPOs aim “to solve the problems encountered by small and marginal farmers, especially access to capital, technical improvements, and inputs and markets.” (Source: Nature ). States like Maharashtra and Bihar have seen surging FPO growth thanks to these advantages (Source: JSRR ).
What are the Common Challenges Faced by FPOs
The reality is not rosy. Common challenges include:
- Access to finance remains a hurdle: Banks hesitate to lend to FPOs as many are newly formed, lack collateral, and have limited credit history. This keeps them dependent on government schemes or donors, slowing their growth.
- Weak governance and management: Several FPOs are unable to build strong boards or management teams. Poor record-keeping, irregular meetings, and weak decision-making often affect farmer confidence in the organisation.
- Low farmer awareness: Most small-scale farmers joining FPOs have little exposure to modern markets, digital tools, or collective bargaining. Without capacity development, the FPO struggles to create impact.
- Inadequate market linkages: Despite their aim to bypass middlemen, many FPOs continue to sell through traditional channels. Lack of branding, logistics, and buyer networks weakens their bargaining power.
- Regulatory and compliance load: FPOs need to meet legal, financial, and auditing requirements like any company. For small farmer groups, these processes become complex and costly.
- Gender-based barriers: Though women-led FPOs are emerging, they face unique challenges – restricted mobility, limited leadership opportunities, and fewer training programmes – reducing their ability to scale.
- Digital divide: With agriculture rapidly moving towards e-markets, FPOs in remote areas without internet access or tech know-how risk being left behind.
Strengthening Governance
Strong governance breeds trust and efficiency. Clear member roles, regular audits, and annual strategy reviews help. Village-level farmers interest groups can feed into these structures, amplifying transparency. Training leadership teams in accounting, decision-making, and stakeholder communication is essential. This not only strengthens FPO operations but helps build the farmer producer company into a trusted entity.
Power of Federations
Individually, FPOs are small. Federations bring scale. Grouping multiple FPOs into federated structures improves access to capital, opens new markets, and enables bulk branding. Federations consolidate produce, reduce marketing costs, and attract larger buyers, amplifying FPO business and its viability.
Embracing Digitization
Digital tools can be a game-changer. Web platforms – like ONDC – allow FPOs to sell value-added goods directly. For instance, nearly 5,000 FPOs have listed their products via ONDC with promising sales from commodities like millet, honey, and GI-tagged turmeric. Digitization also helps in performance tracking, transparency, and capacity building. Boosting digital literacy among members is crucial to modernize FPO systems.
Women-Led FPOs: A Transformative Force
Women-led FPOs are gaining recognition. In Karnataka, for instance, 336 FPOs are functional, many fully run by women. That includes the Mahila FPOs with strong regional membership. Women leadership spurs inclusive growth, particularly in rural markets and decision-making (Source: The Times of India). Boosting women participation magnifies benefits to households, communities, and wider agrarian systems.
Sustainable Growth Pathways
To ensure long-term viability, FPOs must embrace sustainable practices: climate-resilient farming, organic produce, crop diversification, and value addition. Branding with GI tags, like turmeric and mango, adds value. For example, FPOs in Odisha exported mangoes directly to Europe, bypassing intermediarieshttps://timesofindia.indiatimes.com/city/bhubaneswar/50-quintals-of-balangir-mangoes-exported-to-europe/articleshow/121554301.cms?utm_source=chatgpt.com. UP’s public–private initiative supports FPOs with cold storage, grading infrastructure – all vital for sustainable growth (Source: The Times of India).
Policy & Institutional Support
India’s government has launched schemes like the Formation of 10,000 FPOs, led by SFAC, NABARD, and SFAC, assembling nearly 8.3 lakh small farmers into over 800 FPOs by 2019. Institutional bodies such as SFAC support capacity building and professionalization. UP recently created an FPO cell under a state-level unit to deliver tailored business training to FPOs (Source: The Times of India).
Sustainable Growth in Action (Summary Table)
| Strategy |
Action Steps |
| Governance |
Strengthen board roles, transparency, financial oversight |
| Federations |
Pool resources, market collectively, build joint branding |
| Digitization |
Use ONDC, e-NAM, mobile apps for operations, payments |
| Women Leadership |
Promote women-led FPOs and ensure women participation |
| Sustainable Practices |
Adopt climate-smart farming, GI tagging, value addition |
| Policy Support |
Harness government schemes and institutional training |
Case study: Vrishabhavati Agriculture Farmer Producer Company
The story of Vrishabhavati Agriculture Farmer Producer Company in Karnataka illustrates both the challenges and the transformation possible with the right support.
Initial Struggles
The FPO, formed with 300 members and a corpus of ₹3,00,000, struggled to mobilise farmers due to poor awareness of FPO operations and sustainable farming practices. Farmers associated membership only with the ₹1,000 share contribution, expecting seasonal inputs in return, while still depending on traditional cultivation methods.
Interventions and transformation
In 2021, the S M Sehgal Foundation, with CSR support from the Walmart Foundation, began working with the FPO under the Bolstering Farmer Producer Organizations project. Regular training, demonstrations, and exposure visits introduced farmers to scientific agricultural practices. For example:
- Adopting scientific Package of Practices (PoP) improved productivity and reduced nutrient costs through soil testing-based recommendations.
- Demonstrations on drip irrigation with mulching proved highly effective, motivating wider adoption.
- Membership grew from 300 to 1,000 shareholders, raising share capital to ₹10 lakhs.
Building Sustainable Business
The FPO overcame the challenge of lacking a business plan by setting up multiple income streams:
- Input business shop selling mulching paper, pesticides, and micronutrients.
- Ragi processing unit producing value-added flour, sold profitably at ₹50/kg.
- Custom hiring centre renting farm equipment to shareholders.
- Amruth stall for selling groceries and value-added products, generating monthly profits of ₹30,000-35,000.
- Cold storage unit allowing farmers to store produce and sell at higher prices.
With a turnover of ₹35 lakhs in the last financial year, the FPO’s operations now serve as a model of resilience.
Increasing Women’s Participation
Through apiculture, goatery, sheep rearing, agarbatti-making, and polyhouse farming of capsicum, women farmers were empowered with skills and income opportunities. For example, capsicum grown in a polyhouse worth ₹32 lakhs is expected to generate ₹25-30 lakhs in business.
Key Lessons from the Case
- Regular training and exposure can overcome traditional farming mindsets.
- Mobilisation and awareness-building are critical for scaling membership.
- Diversification of income sources – value addition, input shops, cold storage – helps FPOs reduce risk.
- Active inclusion of women strengthens FPO sustainability and social impact.
- Access to credit and market linkages unlocks growth potential.
Over to You
To truly strengthen farmer producer organisations, we must align governance, federations, digitization, women leadership, and sustainable practices. Backed by policy support and institutional ecosystems, FPOs can drive inclusive growth, empower small farmers, and ensure food security. Strengthening the FPO, for real.
Priya Chaudhary
Social Impact, CSR, and Gender & Development
Priya Chaudhary is an expert in Social Impact, CSR, and Gender & Development with a focus on gender equity, social inclusion, and evidence-based change. With extensive experience in project management, storytelling, and qualitative research, she has worked on various NGO marketing and development projects.
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