Performance of farmer producer organisations and its associated factors: A case study in Tripura

Introduction

Agriculture is indispensable to India's economic growth and development. Agriculture and related sector activities employ 54.6 percent of the labour force and account for 18.6% of India's GVA at current prices in 2021-2022. As per the Annual Report, Ministry of Agriculture & Farmers Welfare, 2022-23 [3] , the nation's total land area is 328.7 million hectares, of which 197.3 million hectares are grossly cropped with a cropping intensity of 141.6% and 139.3 million hectares are the reported net planted area. In percentage terms, the net area sown represents 42.4% of the entire geographical area. There are around 86% of small and marginal farmers with an average land holding size of 1.08 ha (Agriculture Statistics at a Glance, Ministry of Agriculture, GoI, 2022) [1] . Farmers with small and marginal land holdings confront a number of difficulties, including limited access to inputs, poor price realisation, transportation issues, market links and problems with marketing infrastructure etc. One of the most effective approaches to handle the numerous issues faced by small and marginal farmers may be collectivization of small and marginal farmers through Farmer Producer Organisations (FPOs).

There are 33,711 registered FPOs in India, with over 28.20 lakh farmers affiliated across 28 states and 7 Union Territories (Anand et al., 2023; FPO Platform of India, Tata Cornell Institute, 2023) [2,5] . Many FPOs in India face challenges in creating sustainable business model that yield substantial profits for their members. Research into the factors that enhance or impede FPO performance could provide valuable insights for policymakers seeking to improve their effectiveness. Research into different ways to enhance FPO members' income, yield, and living standards, the government can create policies that will maximize the benefits of the new FPOs. Several studies had shown the performance of FPOs. According to Mukherjee (2018) [10] , MP Women Poultry Producer Company Ltd., Sahyadri Farms and Vasundhara Agro Producer Company Ltd. members were highly satisfied with the performance of company and effective in enhancing farmer's income. Gorai et al. (2022) [7] reported that attitude of the group members assumed great importance as a positive attitude of members would provide for more success and a negative attitude of some members would pull down the success of the group. Anand et al. (2023) [2] stated that the FPC diversifying their products and www.extensionjournal.com performing processing, manufacturing, and marketing functions showed the highest effectiveness as compared to the FPCs dealing with single products. Talukdar (2023) [12] in her studies stated that performance of any company is not static, it changes from time to time based on many internal and external factors. Some research offers contradictory evidence findings. According to Garg (2012) [6] , the company's poor financial performance in terms of liquidity, solvency, and efficiency highlights the inefficiencies in financial management. Kakati and Roy (2017) [8] in his study revealed that the Farmer Producer Companies have experienced financial difficulties, including a lack of profitability, efficiency, and solvency, over the past three years. The corporations faced severe liquidity constraints. According to Mathuabirami and S. Kalaivani (2022) [9] cultural differences, lack of cooperation, participation and involvement were found to be the reasons for low level of group performance.

Materials and Methods

The study was conducted in Tripura, a north eastern state of India during the year 2023-24. Agriculture and allied sectors play a crucial role in driving the State's economic growth which accounts for 24% of its net shown area, or 2.56 lakh hectare as of March 31, 2022. The average land holding size decreased from 1.25 ha in 1976-1977 to 0.49 hectare against all India average of 1.08 ha. Approximately 96% of all farmers in Tripura are small and marginal farmers. (Economic Review of Tripura, 2022-23) [4] . A total number of five (5) FPOs were purposively selected based on the criteria that the FPOs have been working for 3 years and that they have a sizeable membership of 500 members. The profiles of the five selected FPOs are presented in Table. 1. A total of 120 respondents which comprises of 100 nos. of member farmers of FPOs (20 farmers from each FPOs) and 20 officials (4 officials from each FPOs) were selected by simple random sampling method. [11] and Mukherjee et al.

The performance index prepared based on the above mentioned parameters is calculated by the following equation: [10] . The concept 'performance' conceptually has been defined as the accomplishment of objective set forth by the FPOs. The performance index comprised of the seven following components.

Results & Discussion

The mean score of the seven indicators for performance measurement of the selected Farmer Producer Organisations, is shown in According to the results, approximately 98.9 percent of the variance can be explained by the variables included in the regression equation. This is evident from the R 2 value of 0.989, which is significant at 0.01 level of probability. Among all the independent variables, four variable was found to be significant i.e., attitude of farmers towards FPOs, share capital, functional effectiveness and managerial competency which was significant at 0.01 level of probability. The findings suggest that attitude of farmers towards FPOs, share capital, functional effectiveness and managerial competency can increase performance of FPOs.

Conclusion

FPOs can provide a significant advantage in accessing and benefiting from emerging market opportunities. However, the situation is different for FPOs in Tripura. Bagma Agri. Producer Company Ltd. is the only FPO which had been successful, profitable and was the highest performing FPO among the selected FPOs in Tripura. Apart from these, other FPOs were in the early stage of operations and do not have a comprehensive business plan in place. The findings suggest that attitude of farmers towards FPOs, share capital, functional effectiveness and managerial competency can increase performance of FPOs. A significant number of office bearers were not efficient in running FPOs. This necessitates effective FPO leadership, capacity building and more awareness which government and extension organisations can focus their efforts. The success of FPOs is largely determined by the quality of their management. Therefore, experts managing FPOs need to enhance their skills and competencies to improve their performance. Joining in FPOs had resulted to get exposure to trainings and capacity building programmes and getting inputs at comparatively low cost. The success of FPOs depends on a collaborative approach involving farmers, FPOs, and all stakeholders, supported by continuous learning and innovation. Therefore, an efficient and unique business model for the FPOs need to be design and implemented.

References

1. Anand S, Ghosh S, Mukherjee A. Effectiveness of Farmer Producer Organisations (FPOs) at Different Growth Stages in Transitioning to Secondary www.extensionjournal.com Agriculture. Indian Journal of Extension Education. 2023;59(3):90-96.
2. Economic Review of Tripura. Directorate of Economics & Statistics, Government of Tripura; c2023 [cited 2025 Apr 21]. Available from: https://ecostat.tripura.gov.in.
3. Gorai SK, Wason M, Padaria RN, Rao DUM, Paul RK. Factors contributing to the stability of the farmer producer organisations: A study in West Bengal. Indian Research Journal of Extension Education. 2022;58(2):91-96.
4. Kakati S, Roy A. A study on the financial performance of farmer producer companies with special reference to Northeast India. Amity Journal of Agribusiness. 2017;2(1):37-56.
5. Mathuabirami V, Kalaivani S. Group performance of Tribal FIGs in Erode District of Tamil Nadu. 2022;23(1):221-227.
6. Saaty TL. Decision making with the analytical hierarchy process. International Journal Services Sciences. 2008;1(1):83-98.