Sustainability of Farmer Producer Organisations under Agricultural Value Networks in India: A Case of Punjab and Gujarat

Small and marginal farmers constitute a majority in Indian agriculture but are integrated through traditional value networks which lack supportive environment with institutional and infrastructural system, inadequate resources and effective coordination within the value networks. Farmer Producer Organisations (henceforth, FPOs) are formed to integrate the small farmers with agricultural marketing system and offer remunerative prices with low transaction cost. With this understanding, this study explores the existing agricultural value networks and categorically makes a comparison between the FPO-led marketing system and the conventional models. It tries to investigate the efficacy and sustainability of FPO models and analyse the operational dynamics in two states of India, namely, Gujarat and Punjab. To examine the objectives of the paper, available data and literature along with information from field survey have been utilised. The study finds that the new initiative of linking farmers with the formal value networks through FPOs, which assumed as hybrids of co-operative model, seems ineffective for new entrants in the business. The formally active structures in agricultural marketing have taken the new shape under the FPO system which project the success of this model. One of the crucial determinants for the sustainability of FPO is institutional support that is not limited to the formation of FPO but provides new market linkages, adoption of agricultural best practices, and providing the managerial skills to the farmers.