The fragmented stakeholder approach, limited technical support, inadequate market access, governance issues, limited scale of operations, lack of member participation, and infrastructure gaps are some of the major constraints and challenges faced by farmer-producer organisations (FPOs), identified by the agriculture scientists’ body NAAS. It has suggested that institutional buyers, including the Railways, Defence forces and FCI, should prioritise FPOs in the procurement of both food and non-food commodities.

Releasing a policy paper titled -- “Enhancing Efficiency and Sustainability of FPOs in India: Challenges and Strategies”, the National Academy of Agricultural Sciences (NAAS) suggested several measures including easing compliance burden and greater FPO-industry linkages.

“Institutional buyers, including the Railways, the Military, and Food Corporation of India (FCI), must prioritise FPOs in the procurement of both food and non-food commodities. This will ensure the consistent delivery of high-quality goods and significantly reduce transaction costs associated with market searches,” it said.

Structural, operational challenges

“Over the years, despite the impressive increase in FPOs, concerns regarding their long-term viability and sustainability have persisted. Only a small proportion of them is economically viable, while others continue to face structural and operational challenges, including a low equity base, limited access to credit, small operational scale and low membership base, and insufficient infrastructure for value addition,” said M L Jat, president of NAAS and also Director General of Indian Council of Agricultural Research (ICAR).

Stressing that ICAR and NAAS have the potential to accelerate research and initiatives focused on FPOs, thereby enhancing their promotion and operations, the study said that in certain instances, such as in the Farmer FIRST project, FPOs can be integrated as research collaborators.

“The ICAR can use FPOs to extend effective advisory and extension services. It can identify collaborative opportunities that benefit both ICAR and FPOs. Simultaneously, they can collaborate with regional- and state-level entities that work with FPOs,” it said.

Other suggestions

As FPOs are required to periodically submit various compliance documents, it has suggested that the Agriculture Ministry needs to collaborate with the Corporate Affairs Ministry to review and simplify these requirements. “A single window system for all relevant FPO issues should be created to ease FPO operations,” it said.

Other suggestions include training for bank staff on FPO schemes, dedicated desk within banks for FPOs, digitizsation of data at national level, setting up a national-level business development agency to facilitate connections between FPOs and industries, guidance for diversification to grab opportunities in emerging sectors -- climate finance, climate-smart agriculture, futures markets, artificial intelligence (AI), the Internet of Things (IoT), and drone technology.

It also said: “To facilitate the infusion of private equity, new entities similar to Farmer Producer Companies (FPCs) under the Companies Act may be established.”

The paper said that there were as many as 44,258 registered FPOs under the Companies Act by 2024. Most FPOs (85per cent) focus on field crops and horticulture -- cereals, pulses, millets, oilseeds, cash crops, vegetables, fruits, flowers, and spices. Only 15 per cent of FPOs focus on dairy, livestock, and fisheries.

Published on April 23, 2026