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From Formation to Transformation of FPOs
The key drivers of farmer producer organisations are analysed in terms of their outreach, operations and financials and derived common performance indicators that make them model institutions. The findings show that the strong institution building with well-placed internal committees will go a long way in transforming them. Continuous capacity building of all the stakeholders involved is the only option for realising this goal.
Rural communities across the country are experiencing a deep agrarian crisis, leaving the agriculture-dependent households in distress and some of them are even dying by suicides. While plenty of reasons have been cited by many, the fundamental root cause identified is the vulnerability associated with the small size of the holdings and thereby the bargaining power of small farmers (Trebbin 2014; Shah 2016; Trebbin and Hassler 2012). International experience in this regard shows that some farmers’ collectives are not that successful due to the top-down approach in decision-making, often coercive methods of implementation and domination of very large-sized farmers in decision-making (Lin 1990; Brass 2007; Harris 1980). Shifts away from these features increased the chances of success. For example, even in Maoist China, Li (2018) demonstrates that collectives failed primarily when the state forcibly formed large farms where members lacked solidarity and a sense of belonging. Group farms formed voluntarily by families and neighbours (such as in Romania, East Germany, and Kyrgyzstan), to deal with land and machine scarcities, and also collective marketing was more successful, both in cooperation and productivity (Mathijs and Swinnen 2001; Sabates-Wheeler 2002).
In India, measures to aggregate the farmers have dated back to more than 100 years where the first recorded activity began in 1904 under state initiative and patronage with the enactment of the Cooperative Credit Societies Act, 1904. Since then, several approaches have been tried for collectivisation of the farmers to improve their bargaining power. As the cooperative system has registered some successes and many failures, producer companies in the form of farmer producer organisations (FPOs) have been emerging as an alternative to cooperatives, by combining the culture of cooperatives with corporate muscle to strengthen the value and supply chains of the agriculture produce (Murray 2008; Bikkina et al 2018; Singh 2008; Venkattakumar and Sontakki 2012). After more than a decade of explicit policy support to FPOs, some insights for further sharpening their design are slowly emerging.
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