As the world’s population increases and the demand for agricultural products rises, small farms have an opportunity to play a big role and reap many benefits, if they are able to join together to form farmer producer organizations (FPOs) to increase their aggregate size. TCI is studying the challenges facing FPO models and aggregating Indian FPO data onto an accessible web platform to strengthen FPO promotion in India.

Big challenges for small farms

Due to their size, small farms measuring less than 2 hectares (about 5 acres) have an inherent disadvantage in accessing product markets, credit, management inputs, and technology. These weaknesses have kept small farms from leveraging income-growth opportunities, which have arisen from changing demand for diversified, high-value agricultural products through globalization, population increase, and income growth. By forming FPOs, smallholders can benefit from scale economies, and in the process, aid agricultural development and poverty reduction.

The average farm size in India was 1.15 hectares in 2010-11, a decrease from 1.33 hectares in 2000-01. Considering this downward trend, aggregation models have become critical for the country’s smallholder farmers. In the past two decades, there has been renewed interest in the promotion of FPOs for agricultural development and poverty reduction by philanthropic actors, donors, corporations, and governments. The country continues to promote FPOs in a big way, and in 2017, the government assisted in the formation of over 3,000 such organizations.

Yet, despite increased focus and avenues of support, global FPO success stories are few. Low-financing opportunities and the extended gestation period required for FPOs to become self-sustaining are major factors that impede success. Other challenges include weak market linkages, high coordination costs, government interference, inadequate managerial expertise, low levels of trust among members, and the exclusion of women.

Strengthening FPO promotion

Utilizing a data-driven, analytical approach to the challenges facing FPOs, TCI is helping pave the way for smallholder farmers to grow their livelihoods while providing nutritious food to an expanding world.

With support from the Walmart Foundation, TCI’s project on FPO-Led Small Farm Market Access Models aims to create lessons, tools, and resource pathways to strengthen small farm aggregators, while simultaneously catalyzing a community of practice of funders, implementers, and policy stakeholders.

TCI researchers will gauge the results of farmer aggregation globally, highlighting case studies from India and Mexico for comparison, in order to:

• Identify successful and unsuccessful strategies for making FPOs economically sustainable and boosting agricultural growth.
• Assess how FPOs come together to form inclusive agribusiness entities that are integrated into the full production and supply cycle.
• Clarify how FPOs access essential infrastructure and inputs, leverage new marketing opportunities, and reach a wider customer base.
• Evaluate the effect FPOs have on smallholder market linkages, social/gender inclusion and empowerment, nutrition sensitivity in market development, and overall welfare.

FPO Hub

The cornerstone of this project is TCI’s FPO Hub. A part of TCI’s Center of Excellence in Delhi, India, the Hub serves as a repository of research, information, and knowledge for the advancement of FPOs in India.

Philanthropic actors, government, and private entities that promote FPOs can use the Hub as a resource to access information, technical help, and guidance.