Farmer Producer Organisations (FPOs) have the potential to empower smallholder farmers by harnessing their collective bargaining power and economies of scale. However, their success depends on overcoming numerous challenges, including the need for trained human resources, effective business modelling, sound finance, marketing, food safety, and brand building. FPOs’ partnerships with industries hold promise in addressing some of these key challenges. Strong FPO-industry linkages that support the 3Cs strategy of consolidation, capability and capital can ensure the proper functioning and viability of FPOs and are mutually beneficial for both FPOs and the industries involved.
While some of the initiatives have shown promising results, scaling up is necessary to benefit more FPOs. Potential areas for FPO-industry partnerships include:
Capital and finance: Capital is essential for organisational growth, and it typically takes three forms: grants, credit, and subsidies. While credit drives organisational expansion, grants and subsidies create a supportive environment. Often credit access is linked to a robust business plan, a good credit history, and collateral, making it inaccessible to FPOs. FPO-industry linkages can enable co-lending, and provide affordable financing for working capital, machinery, as well as investments. Industries can also assist in managing residual risks, such as storage, transportation issues, and unpaid farm loans, by offering meso-level insurance, ensuring financial stability for farmers.
Operation management: Industries can support FPOs in business planning and implementation by providing expertise in market analysis, financial forecasting, and strategic goal setting. They can also help FPOs identify business opportunities, develop realistic operational plans, and ensure that these plans align with market needs.
Technology: Through industry linkages, FPOs can access advanced technologies — AI, ICT and blockchain — to improve productivity, enhance precision farming, and increase supply chain transparency. This benefits industries with a reliable tech-driven supply chain, while FPOs achieve better resource management, expanded market access, and increased income.
Capacity building: Capacity building is crucial for farmers to adopt new technologies and boost productivity. Industry linkages can complement public institutions by providing business, process-related training, and Extension Advisory Services (EAS). This will help FPOs enhance their skills in management, marketing, and technology, leading to increased efficiency and market competitiveness.
Market linkages: These are the foundation for boosting farmers’ incomes, and industries can play a pivotal role in facilitating this by providing affordable and high-quality supplies; enhancing buyer relationships; enabling value addition; offering market intelligence; and establishing export connections for global reach. These linkages can also facilitate branding and sales promotion to enhance product value and marketability, benefiting both FPOs and industries.
Compliance: Industry linkages can guide FPOs on tax regulations, food safety standards such as HACCP (Hazard Analysis and Critical Control Points) and ISO certifications, and implement quality control practices. Industries can share best practices and knowledge to enhance the efficiency and productivity of FPOs. This support ensures that FPOs meet legal requirements, gain access to new markets, and build consumer trust.
However, a cautious approach is essential to ensure that FPO-industry linkages are mutually beneficial rather than exploitative to FPOs. This can be achieved by viewing FPOs as partners in development rather than input aggregators, suppliers, or buyers of products. At the same time, FPO-industry linkages should not be overly philanthropic but rather based on a genuine partnership. The orientation should not be transaction-based but rather centred around participation and interaction.
Nikam is Senior Scientist, ICAR-National Institute of Agricultural Economics and Policy Research, and Pasupuleti is Ph.D. Scholar, ICAR-Indian Agricultural Research Institute. Views are personal
