An empirical study of financial sustainability and market linkages of FPOs: Insights from five maize-producing districts in Bihar

Abstract

This study evaluates the financial sustainability and market linkage effectiveness of Farmer Producer Organisations (FPOs) in Bihar's maize sector, a region characterised by high production potential but dominated by smallholder farmers with limited bargaining power. Using primary data from five major maize-producing districts—Katihar, Samastipur, Kishanganj, Araria, and Begusarai—the study examines the impact of collective action on farmer livelihoods and institutional performance. The findings reveal a significant improvement in farmers’ economic status, with a marked increase in the number of members earning above ?5,00,000 annually after joining FPOs. This growth is primarily driven by efficient input procurement and collective marketing practices. However, key challenges persist, including dependence on relatively high-cost institutional credit (11–12%), limited managerial capacity, and inadequate value-addition infrastructure. While FPOs have reduced the role of traditional intermediaries, they continue to face constraints in establishing stable linkages with large-scale buyers and processors. The study concludes that achieving long-term financial sustainability requires targeted policy support, including access to low-cost working capital, enhanced digital market integration, and the development of professional agribusiness management skills. These interventions are essential for building a resilient and competitive maize value chain in Bihar.