ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Determinants of Performance and Viability

Farmer Producer Companies in India

For farmer producer companies, the determinants of performance and viability are governance structure; network with external agencies; access to capital and technology; member–producers’ contribution to business; and financial performance. These companies can become viable if they follow the stakeholder strategy for cooperation and orientation to marketing of members’ produce and business expansion. Farmer producer companies can benefit if robust performance metrics based on these determinants of performance and viability are developed; these metrics influence policymakers and apex agencies; and there is a bottom-up approach in implementation and convergence between promoting agencies and financial institutions.

Farmer producer organisations are non-political entities that provide smallholder farmer members business services (Onumah et al 2007). These organisations can take any of various legal forms—cooperatives, societies, or farmer companies. The design and governance of producer organisations has long received considerable attention from academic and policy circles, especially in developing and least developed countries (Ton 2008; Meinzen-Dick 2009). India is no exception—the cooperative, a prototype of producer organisations, came into existence several decades ago. But, largely, cooperatives are fragile or appear to be dormant—due to the free-rider or agency problem, horizon problem, equity or efficiency issue, elite capture, and social exclusion (except, to some extent, in the case of milk, sugar, and plantation cooperatives).

More than a decade ago, policymakers were in search of a “competing institutional logic” that would make producer organisations viable social enterprises (Sharma 2013; Singh and Singh 2013). After a concerted effort and much deliberation, and following amendments to the India’s Companies Act, 1956, farmer producer companies (FPCs) emerged in 2002 as the fourth category of corporate entity (Trebbin and Hassler 2012). This hybrid form possesses the altruistic characteristics of a cooperative and the attributes of a private limited company (for more details, see Murray 2008).

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Updated On : 31st Aug, 2018

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