Target pressure weakens farmer producer organisations, survey finds

Farmer producer organisations established after 2021 under the central government's promotion scheme are substantially weaker than their predecessors, according to findings that point to implementation driven by numerical targets rather than sustainable institution-building.

The survey data shows a stark gap in financial health between earlier and newer FPOs. Organisations formed before 2021 maintained a median paid-up capital of ₹5 lakh, while those established after 2021 reported a median capital of just ₹1 lakh—an 80 per cent reduction that signals deteriorating capacity at the formation stage.

The credit landscape presents an even grimmer picture for the farmer organisations. Seven in every ten FPOs surveyed lacked access to institutional credit, a critical constraint for scaling operations and providing members with meaningful services. The inability to secure formal credit hampers their ability to aggregate farmer produce, negotiate better prices, and invest in value-added activities.

The findings suggest that rapid expansion of FPOs to meet centrally-mandated targets has come at the cost of organisational viability. Without adequate initial capitalisation and credit access, newer FPOs face structural challenges in delivering the developmental outcomes the scheme envisages.

Experts have flagged the need to shift focus from quantitative expansion to qualitative institution-building, emphasizing adequate capitalisation, proper governance training, and assured credit linkages as prerequisites for sustainable FPO operations across rural India.