Institutional efficiency and sustainability determinants of farmer producer organizations: A causal-comparative analysis across agro-ecological zones of Madhya Pradesh

Introduction 1.1 Background and Context

Farmer Producer Organizations (FPOs) have emerged as a critical institutional innovation to address the structural challenges confronting India's smallholder agriculture sector. With over 86% of Indian farmers operating www.extensionjournal.com landholdings below 2 hectares, individual producers face severe disadvantages including limited bargaining power, high transaction costs, inadequate access to institutional credit, and exploitation by intermediaries (Trebbin& Hassler, 2012) [15] . FPOs, structured as farmer-owned collectives registered entity, aim to overcome these constraints through aggregation, collective marketing, and economies of scale. The Government of India's ambitious FPO Promotion Scheme (2020) targeting formation of 10,000 FPOs with ₹6,865 crore allocation reflects policy recognition of collectivization as a pathway to doubling farmer incomes. However, empirical evidence on FPO performance remains fragmented, with studies documenting both remarkable successes (Neti, 2015; Singh et al., 2021) [8,14] and high failure rates (Dutta et al., 2019; Mondal et al., 2017) [2,6] . Madhya Pradesh, India's second-largest state by area with diverse agro-ecological zones and predominantly smallholder agriculture (average landholding: 1.9 ha), presents an ideal context for examining FPO effectiveness across varied agro-climatic conditions. The state's agricultural landscape encompasses the fertile Malwa Plateau, the rugged Vindhyan Plateau, the Narmada valley region, and the tribal-dominated Kymore-Satpura hills each characterized by distinct cropping patterns, infrastructure availability, and market integration levels.

Research Gap and Rationale

Previous FPO research has predominantly focused on single districts or homogeneous agro-climatic contexts, limiting understanding of how environmental, infrastructural, and market variations influence organizational performance. Moreover, systematic constraint prioritization using robust analytical frameworks remains sparse, as does quantitative modeling of sustainability determinants across diverse contexts. This study addresses these gaps through multi-zonal comparative analysis employing advanced statistical techniques to establish generalized principles while accounting for contextual variations.

Research Objectives

The specific objectives of this research are: 1. To analyze organizational characteristics, governance structures, and financial performance of FPOs across four agro-ecological zones of Madhya Pradesh using comprehensive financial ratio analysis [1] 2. To identify, quantify, and prioritize operational constraints faced by FPOs using Garrett's ranking technique and constraint severity indexing 3. To establish statistical relationships between FPO 1 In several cases, complete or verified financial records were not available; therefore, financial indicators and ratios have been derived from self-reported data and discussions with key stakeholders. While every effort has been made to ensure accuracy and consistency through cross-verification and logical checks, the findings should be interpreted as indicative rather than audited representations of FPO financial performance. characteristics and sustainability indicators through chisquare analysis, correlation analysis, and binary logistic regression modeling

Significance of the Study

This research contributes to FPO by

Data Collection

This study was conducted during the mid-decade period before 2024. Primary data were collected through personal interactions with FPO stakeholders, including board members, managers, and member farmers. Although structured questionnaires were initially prepared to capture organizational, governance, and financial details, many FPO members were hesitant to respond to formal survey instruments. To overcome this challenge and minimize response bias, we adopted an interactive and conversational approach. Information was extracted through informal discussions, storytelling, and participatory interactions during field visits, which encouraged more open and genuine responses. Secondary data included FPO financial statements, registration documents, board minutes, annual reports, district agricultural statistics, and NABARD scheme records. Data quality was ensured through pre-testing in two non-sampled FPOs.

Analytical Framework

We used R & Microsoft Excel programme for statistical computing and data visualizationsuch as ranking, index construction, chi-square tests (Pkg-stats, gmodels), correlation analysis, and logistic regression efficiently and reproducibly (Pkg-ResourceSelection, pROC, car, caret) etc. Respondents rank constraints by severity (1=most severe) 2.

Calculate percent position for each rank 3.

Convert to Garrett score using standard table 4.

Calculate mean Garrett score for each constraint 5.

Rank constraints by mean score (higher score = more severe) 03 Constraint Severity Index (CSI)

• where, FPO Sustainability: Composite index based on four criteria: (1) Operational breakeven, (2) Positive net worth, (3) Continuity >3 years, (4) Member retention >70%. FPO classified as sustainable if meeting ≥3 criteria. Professional Management: Full-time qualified CEO/Manager with formal business/agricultural education managing dayto-day operations, distinct from board governance. Market Linkage Strength: Score (0-10) based on: number of institutional buyers, contract farming arrangements, value addition infrastructure, direct market channels. Board Education Index: Score (0-10) calculated as weighted average of board members' education levels (Illiterate=0, Primary=2, Middle=4, Secondary=6, Graduate+=10). Member Participation Rate: Percentage of registered members who transacted (bought inputs or sold produce) with FPO during last financial year. [14] , Kumar et al.

Results

Organizational Profile of FPOs Across Zones

Financial Performance Analysis

Constraint Analysis Using Garrett's Ranking

Correlation Analysis

(2018) [4] , and Dutta et al. (2019) [2] on management, capital, and credit challenges. This study adds zonal differentiation and quantitative severity analysis, confirming sustainability issues are widespread but context-driven.

Conclusion

This comprehensive multi-zonal study of 24 FPOs across four agro-ecological zones establishes that FPO www.extensionjournal.com sustainability in Madhya Pradesh is determined by a convergence of organizational, financial, and contextual factors, with significant inter-zonal variations driven by infrastructure and market access disparities.

Key Findings: 1. Performance Variation: Only 37.5% of FPOs were financially sustainable. High performers showed healthy profits, good returns, and strong liquidity, while low performers(29.2%) faced losses and weak cash flow. 2. Key Constraints: Garrett's ranking identified lack of working capital as the most critical issue, followed by poor market linkages and governance challenges, highlighting areas that need immediate attention.

Sustainability Drivers: Regression results showed that

FPOs with professional management, strong market connections, and educated boards are far more likely to be sustainable, offering a clear, evidence-based framework for improvement. 4. Zone-Specific Variations: Malwa Plateau and Narmada Valley zones achieve 50% sustainability rates compared to 16.7% in Vindhyan Plateau, validating infrastructure and market access advantages while emphasizing need for contextualized interventions.

Statistical Validation:

Chi-square analysis confirms significant associations between professional management and sustainability (χ²=19.87, p<0.001), board education and turnover (χ²=24.56, p<0.001), demonstrating quantifiable relationships between organizational characteristics and performance.

Limitations

The study acknowledges certain limitations that shape the interpretation of its findings. Being cross-sectional, it captures FPO performance at a single point in time, limiting insights into their growth and transition over the years. The relatively small sample of 24 FPOs restricts the scope for advanced modeling and detailed subgroup analysis. Since the study is confined to Madhya Pradesh, the results may not fully represent conditions in other states with different institutional settings. While significant statistical associations were identified, causal relationships cannot be firmly established without longitudinal or experimental research. Additionally, some data were self-reported, which may involve recall errors or social desirability bias, especially in governance-related responses.

Acknowledgement

AcknowledgmentsThe authors express sincere gratitude to the board members, managers, and member farmers of 24 FPOs across Madhya Pradesh who generously participated in this research. We acknowledge the support of NABARD Regional Offices (Jabalpur, Indore, Bhopal) for providing access to FPO databases and facilitating field visits. Special thanks to District Agriculture Officers of Jabalpur, Mandla, Hoshangabad, Narsinghpur, Rewa, Satna, Indore, and Ujjain districts for their cooperation during data collection. We appreciate the FPO Resource Institutions and promoting agencies for their technical insights and logistical support.

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