Performance evaluation of farmer producer organisations in Uttarakhand
Abstract
Farmer Producer Organisations (FPOs) have emerged as a key institutional mechanism for aggregating smallholder production, strengthening market access, and improving farm incomes in India. Despite rapid numerical growth in FPO registrations over the last decade, systematic evidence on their functional performance remains geographically skewed, with the hill states of the Himalayan region receiving limited research attention. This study evaluated the performance of FPOs operating in four purposively selected districts of Uttarakhand, Tehri Garhwal and Dehradun (Garhwal division) and Almora and Pithoragarh (Kumaon division), using the National Bank for Agriculture and Rural Development (NABARD) Performance Grading Tool. A descriptive research design combining primary and secondary data was adopted, and thirteen FPOs (20 per cent of the 65 FPOs functioning in the selected districts) were assessed across fifteen weighted parameters covering structural, managerial, financial, and operational dimensions. Total grading scores ranged from 66 to 90 out of 100, and a Composite Performance Index, computed by normalising each FPO's score against the maximum attainable score, ranged from 0.66 to 0.90. Eleven of the thirteen FPOs were graded 'A' (ready for credit linkage) and two were graded 'B' (requiring limited capacity building before credit linkage). Governance, share capital mobilisation, member participation in services, and MIS/compliance were uniformly strong across FPOs, whereas financial assistance uptake, annual turnover, and convergence with government schemes showed marked variation and emerged as the principal constraints on overall performance. The findings suggest that while FPOs in the sampled hill districts have achieved a sound institutional and governance base, targeted interventions in financial inclusion, market linkage diversification, and inter-agency convergence are necessary to move moderately performing FPOs toward higher grades. The study offers empirical evidence to guide region-specific policy support for FPO strengthening in hill and mountain agro-ecosystems.
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Introduction
Smallholder and marginal farmers, who together constitute the overwhelming majority of India's agricultural workforce, continue to face persistent constraints in accessing quality inputs, credit, technology, and remunerative output markets. The fragmented nature of landholdings, weak individual bargaining power, and high transaction costs of small-scale market participation have historically limited the ability of such farmers to capture value along the agricultural supply chain. Farmer Producer Organisations (FPOs), introduced through the insertion of Part IXA in the Companies Act, 1956 (subsequently carried forward under the Companies Act, 2013), were conceived as a hybrid institutional form that combines the member-centric, democratic character of cooperatives with the operational flexibility, professional management, and legal standing of private companies (Chauhan, 2015). By enabling farmers to pool resources for input procurement, aggregation, value addition, and collective marketing, FPOs are expected to enhance economies of scale, strengthen bargaining power, and improve farm-level income and livelihood security (Mukherjee et al., 2018) [8] . Government of India has, since the mid-2000s, actively promoted the formation of FPOs through agencies such as the Small Farmers' Agribusiness Consortium (SFAC) and NABARD, and more recently through the Central Sector Scheme for the formation and promotion of 10,000 FPOs (Mukherjee et al., 2018) [8] .
This policy push has resulted in a rapid numerical expansion of registered FPOs across the country (Navaneetham et al., 2017; Nathan & Palanichamy, 2021). However, a growing body of evidence indicates that mere registration does not translate automatically into functional effectiveness; many FPOs remain dormant, undercapitalised, or unable to achieve the scale of operations required for sustainability (Rashtrapal et al., 2022; Padmaja & Ojha, 2023; Bharti & Kumari, 2024) [4,2] . Consequently, an evaluation of on-theground functional performance rather than registration counts alone is essential to understand the true institutional health of the FPO ecosystem. Performance assessment assumes particular significance in hill and mountain states such as Uttarakhand, where fragmented terrain, dispersed settlements, small operational landholdings, and constrained market access pose distinct challenges to collective agrienterprise relative to the plains. This study evaluates the performance of FPOs functioning in four purposively selected districts of Uttarakhand using the standardised NABARD Performance Grading Tool.
Materials and Methods
Research Design and Study Area
The study followed a descriptive research design combining primary field-level data with secondary institutional records. The study area was purposively confined to four districts of Uttarakhand selected based on the highest concentration of registered FPOs, namely Tehri Garhwal and Dehradun from the Garhwal division and Almora and Pithoragarh from the Kumaon division. A combination of purposive and random sampling was employed. Twenty per cent of the FPOs functioning in each selected district were purposively selected for detailed assessment of the 65 FPOs operating across the four districts, out of which 13 FPOs were selected to carry out the study.
Performance Grading Tool
FPO performance was assessed using the standardised Performance Grading Tool developed by NABARD, which evaluates FPOs across fifteen weighted parameters to a maximum attainable score of 100 as shown in Table 1. FPOs scoring within defined score bands are classified into grades that indicate readiness for credit linkage.
Composite Performance Index
To enable comparative ranking, a Composite Performance Index (CPI) was computed for each sampled FPO by normalising its total grading score against the maximum possible score of 100 (i.e., CPI = Total score obtained ÷ 100). FPOs were subsequently ranked in descending order of CPI, with ties assigned equal rank.
Results and Discussion
Composite Grading and Ranking
Discussion
The results indicate that FPOs in the sampled districts of Uttarakhand have achieved a comparatively sound institutional base, characterised by unbiased and active governance, professional management, high member ownership of share capital, and strong statutory compliance, notwithstanding the relatively young age of most organisations. This finding is consistent with Gorai and Wason (2022) [6] , who identified sound interpersonal relations and collective governance as key predictors of FPO success, and with Padmaja et al. (2019) and Prabhavathi et al. (2023) [11] , who linked competent managerial support and market-oriented leadership to stronger business performance. The uniformly high share capital contribution recorded in this study (exceeding 90 per cent of members in every FPO) corroborates Kumar et al. (2023), who established paid-up capital as a strong predictor of turnover and business growth. At the same time, the variation observed in financial assistance uptake, annual turnover, and government convergence points to capital access and inter-agency linkage rather than governance or compliance as the binding constraints on higher performance within the sample. This pattern parallels the findings of Kumar et al. (2023) and Balasubramanian et al. (2024) [1] , who identified capital constraints and limited institutional support as principal hurdles to FPO success elsewhere in India, and is broadly consistent with Ravikishore et al. (2025) [12] , who reported comparable inter-FPO grade variation using the same NABARD tool in Andhra Pradesh, driven primarily by market-price and market-linkage constraints. Taken together, the evidence suggests that the two lower-graded FPOs in the sample, both characterised by limited share capital, no financial assistance, weaker market linkage, and only partial government convergence, represent the segment most likely to benefit from targeted capacity-building and credit-facilitation support, while the majority of sampled FPOs are institutionally prepared for expanded credit linkage and business scaling.
Conclusion
This study applied the NABARD Performance Grading Tool to assess the functional performance of thirteen FPOs across four hill districts of Uttarakhand. The findings show that sampled FPOs, have established strong governance, management, and compliance foundations, with eleven of thirteen FPOs graded 'A' and ready for credit linkage. Performance differentiation among FPOs was driven primarily by financial depth, share capital mobilisation and access to financial assistance together with the strength of market linkage and convergence with government schemes, rather than by governance quality, which was uniformly strong across the sample. These results suggest that policy and promotional support for FPOs in Uttarakhand's hill districts should prioritise facilitating access to formal credit and financial assistance, strengthening linkages with corporate and organised buyers, and improving convergence with government departments and schemes, particularly for the moderately performing FPOs identified in this study. Given the limited existing evidence base on FPO performance in Himalayan hill agro-ecosystems, the study contributes region-specific empirical insights that can inform more targeted, terrain-sensitive FPO promotion strategies going forward. Future research employing a larger sample across a wider set of hill districts, and tracking performance longitudinally, would further strengthen the evidence base for policy design.
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