Farmer producer organisations in Telangana: A performance evaluation

Introduction

Smallholder farmers form the backbone of agricultural production in developing countries, and India is no exception. In the Indian context, small and marginal farmers constitute nearly 85 per cent of the total operated holdings, with about 66 per cent of them cultivating less than one hectare of land (Singh, S. 2012) [4] . Despite their significant contribution to national agricultural output, these farmers remain highly vulnerable to production, market, and climatic risks. Over the past two decades, rapid economic, political, and environmental changes have intensified their challenges, leading to high levels of indebtedness, unemployment, and migration from rural areas. Improving the socio-economic conditions of small and marginal farmers, including rural women and youth, has therefore become a key priority for sustainable agricultural and rural development. Strengthening farmers' access to inputs, credit, technology, and markets requires the creation of an enabling ecosystem supported by robust and innovative institutional mechanisms. Experiences from India and other developing regions demonstrate that financially sound, membership-based farmer institutions that adopt a business-oriented approach and integrate effectively with technology, research, markets, and financial institutions can generate substantial economic benefits for their members. Such collective action goes beyond mere aggregation and enables farmers to achieve economies of scale, improve market access, and enhance their bargaining power. In this regard, Farmer Producer Organisations (FPOs) have emerged as a strategic model for empowering smallholder farmers. FPOs are designed to aggregate farmers, strengthen their collective identity, and facilitate access to production, processing, and marketing services.

Supported by agencies such as the Small Farmers' Agribusiness Consortium (SFAC) and the National Bank for Agriculture and Rural Development (NABARD), FPOs play a crucial role in providing institutional, financial, and technical support to small and marginal farmers (Bachke, 2010) [2] . NABARD, in particular, has been promoting producer companies as a means to foster equitable and sustainable rural prosperity, while SFAC encourages the formation of region-and commodity-specific producer groups to improve both input and output market linkages. These farmer-led institutions are expected to increase farm incomes, reduce input and transaction costs, promote value addition and marketing, and improve farmers' access to formal credit and extension services (Agarwal, B. 2010) [1] . However, the effectiveness and sustainability of FPOs largely depend on their governance structures, managerial efficiency, and financial performance. Chauhan (2015) [3] conducted a study on effectiveness of Producer Companies in Madhya Pradesh. Number of shareholders, annual turnover and net profit were considered as measures for analysis of efficiency of producer companies. The study concluded that producer companies with more shareholders performed better by offering benefits to more members. Subhangi (2016) [5] studied the effective linkage of small producers with market and concluded that Farmer Producer Organisations are important means to bring the small and marginal farmers together in local communities to build their own enterprise, managed by professionals. FPO offers a proven pathway to successfully deal with a range of challenges that confront farmers today, especially small producers. FPO is the best way of linking producers to market for getting fair prices for their produce as it helps in giving market information on different market prices in different markets. In this context, the present study focuses on evaluating the performance of FPOs functioning in Telangana State. By examining their governance, management, and economic and financial aspects, the study aims to generate insights that can guide future strengthening and expansion of FPO initiatives for the benefit of smallholder farmers.

Materials and Methods

A descriptive research design was adopted for the study. Out of the 33 districts of Telangana state, two districts namely Nagar Kurnool and Wanaparthy were selected through simple random sampling using the chit method. With regard to the selection of Producer Organisation Promoting Institutions (POPIs), Child Care Organization (CCO) NGO from Nagar Kurnool district and Society for Integration and Rural Development (SIRD) NGO from Wanaparthy district were purposively selected, as they have been actively promoting FPOs for the past five years. A list of FPOs promoted by the two NGOs was prepared, and four FPOs, two from each promoting institution, which had been actively functioning for more than three years, were purposively selected for the study. From each of the selected FPOs, ten officials who are involved in FPO operations were purposively selected. Thus, the sample constituted a total of 40 FPO officials for the present investigation. The present study aimed to examine the performance of the selected FPOs. Performance Grading Tool for Farmer Producer Organisations developed by NABARD was used for measuring the performance of each FPO. The parameters included in the tool were Age profile of FPO, Governance, Management, Infrastructure, Membership of FPO, Percentage of total members contributing to share capital, Total share capital collected, Training of board members, Business plan, Financial aspects, Annual turnover, Market linkage, Percentage of members availing services, Convergence with government schemes, Compliance/ record keeping. Depending upon the total scores obtained by each FPO on the basis of these parameters were categorized into four grades. These were Grade-A (>75), Grade-B (60-75), Grade-C (50-60) and Grade-D (<50). Data were collected from the respondents using a structured interview schedule and focus group discussions. The collected data were analyzed using statistical tools such as arithmetic mean.

Results and Discussion

Governance and Management Aspects Age profile of FPO:

The data in the Table 1, indicates that Kollapur Farmer Producer company Ltd. was actively functioning from the last five years followed by Panugal Farmer Producer Company Limited, Wanaparthy Girijana Fruit Producer Company Limited and Timmaipally Farmer Producer Company Limited which were actively functioning from the last three years.

Governance: It is evident from Table 1, that all the four FPOs were having five board members. Out of five board members four were male and one was female in Kollapur Farmer Producer Company Limited (KFPCL), three were male and two were female in Panugal Farmer Producer Company Limited (PFPCL), four were male and one was female in Wanaparthy Girijana Fruit Producer Company Limited (WGFPCL) and all of them were male in Timmaipally Thanda Farmer Producer Company Limited (TTFPCL). Representation of women was observed in KFPCL, PFPCL, WGFPCL. It was observed that there is no representation of women in TTFPCL. Board meetings were conducted once in every month in KFPCL, PFPCL. In WGFPCL and TTFPCL board meetings were conducted once in every 45 days. It was observed that board members were following the instructions of POPI regarding board meetings and it was seen that POPI was also involved in discussions and decision making of the FPOs. indicates that lending institutions can provide them credits for enhancing their business performance. PFPCL and TTFPCL requires a little capacity building, as lending to small and marginal farmers without empowering them to repay was poor planning, so farmers need capital assets to progressively improve their income over the initial 3-4 years. WGFPCL need further capacity building as it has inadequate infrastructure facilities and inefficient board members and CEO who has no market awareness and knowledge about market linkages.

Management: The data in the

It can be concluded through observations that all the selected FPOs were performing almost similar with respect to governance and management aspects but the major differences lie with in economic and financial aspects. In governance and management aspects the major differences observed were infrastructure facilities of FPOs, governing capabilities of CEO, availability of paid staff, training of board members and decision-making capability of board members. FPOs which were providing only input services but not doing procurement of produce were not performing up to the mark and the FPOs which were procuring the produce performed well. The FPOs which have market awareness and market linkages with corporate buyers / processors or any other agencies were fetching better returns. It is evident that FPOs having POPI handheld support and convergence with government schemes were performing better. It could be seen that FPOs which were promoted by CCO were better performing than FPOs promoted by SIRD as CCO was providing information related to market awareness to its FPOs and provided market linkages with NCDEX and corporate buyers or processors.

Conclusion

The study evaluated the performance of four Farmer Producer Organisations (FPOs) in Telangana, focusing on their governance, management, and economic and financial aspects using the NABARD Performance Measurement Tool. The results revealed that while the selected FPOs exhibited relatively similar structures and functioning in terms of governance and management, significant variations were observed in their economic and financial performance. Among the four FPOs studied, Kollapur Farmer Producer Company Limited (KFPCL) demonstrated the highest level of performance and was categorized under Grade-A, indicating its readiness for credit linkage and advanced business operations. Panugal Farmer Producer Company Limited (PFPCL) and Timmaipally Thanda Farmer Producer Company Limited (TTFPCL) were placed in Grade-B, suggesting moderate performance and the need for additional capacity building and institutional strengthening. Wanaparthy Girijana Fruit Producer Company Limited (WGFPCL) fell under Grade-C, highlighting the necessity for further support, particularly in infrastructure development, managerial efficiency, and market linkages.

The findings indicate that FPOs that actively engage in both input supply and procurement services, maintain strong market awareness, and establish linkages with corporate buyers or commodity exchanges achieve better financial outcomes. Additionally, the role of the Producer Organisation Promoting Institutions (POPIs) was found to be crucial in shaping the performance of FPOs. The FPOs promoted by Child Care Organisation (CCO) performed better than those promoted by SIRD, largely due to stronger handholding support, better infrastructure facilities, and more effective market linkages.

Overall, the study underscores that strengthening the economic and financial dimensions of FPOs is essential for their sustainability and scalability. Targeted interventions in leadership capacity building, infrastructure enhancement, market integration, and convergence with government schemes can significantly improve the effectiveness and long-term viability of Farmer Producer Organisations in Telangana.