The Indian agriculture sector has made significant strides in the past few decades by meeting the required production of basic staple like rice and wheat to feed the growing population. However, farmers * are unable to realize the right value for their produce and achieve full potential in terms of yield. The subdivision and fragmentation of landholdings, lack of awareness and less inclination towards adoption of newer technologies has led to lower levels of production against the optimal potential. The absence of adequate marketing infrastructure, long chain of intermediaries, lack of collectivization effort has led to fewer marketing opportunities and reduced profits to the farmers.
Collectivization of primary producers, especially small and marginal farmers, into producer organisations is emerging as one of the most effective pathways to address various challenges of agriculture and most importantly, improved access to investments, technologies, quality inputs and markets. Department of Agriculture and Cooperation, Ministry of Agriculture and Farmers Welfare, Government of India has identified Farmer Producer Organisation (FPO) as the most appropriate institutional form and mechanism to mobilize farmers and build their capacity to collectively leverage their production and marketing strengths.
The many challenges faced by individual small and marginal farmers especially in marketing of the produce are expected to be addressed by the formation of FPO. As a producer company, FPO should be able to unleash the economic and entrepreneurial potential of the local producer community through enhanced negotiation power and business partnerships. These organizations are created depending upon the needs of the producers considering the demand potential to adopt value chain approach to enhance producer’s economic and social benefits.