A leading narrative facing agriculturists in India is the need for market participation or expanding the value chain of their produce. This point, however, ignores the fact that in a country where over 85 percent of farmers are small and marginal, individual market participation is often inefficient and economically unviable. Farmer Producer Organisations (FPOs) provide a sustainable alternative in such a context. FPOs aim to address this imbalance by facilitating collective procurement, aggregation, and marketing, which in turn enhances scale and bargaining power.

The Government of India recognised the importance of FPOs in transforming the agri value chain and launched the Formation and Promotion of 10,000 FPOs Scheme in 2020. The Government of Punjab has also introduced complementary measures to promote FPOs within the state. While the expansion in numbers is notable, the critical issue is whether these institutions have translated into viable and self-sustaining enterprises, particularly in a structurally distinct state like Punjab. Over the years, the number of FPOs registered in Punjab has increased to 136 in 2024. Punjab, despite traditionally being an agricultural state, still lags behind other states like Andhra Pradesh (445), Tamil Nadu (414), and Rajasthan (533). Another linked issue is whether the expansion of FPOs has translated into viable and self-sustaining enterprises, particularly in a structurally distinct state like Punjab.

A crucial lever in the performance of these institutions are the existing policy framework. In this context, the National Policy Framework roots itself in the understanding of the structural realities of Indian agriculture. The applicability of the national framework, however, depends critically on local conditions. Punjab presents a unique agricultural structure that diverges from the assumptions underlying the policy. The state’s agrarian economy is deeply embedded in the Minimum Support Price (MSP) procurement, where public agencies provide assured markets and stable prices. Importantly, the national framework misses on identifying pathways of establishing market linkages under this path-dependence.

In a MSP-secure system, Punjab’s farmers operate in a relatively secure market. Against this background, the advantage of the collective bargaining abilities of FPOs becomes inherently limited. The growth of FPOs in Punjab has not produced many viable enterprises. Most FPOs remain small, underfunded, and reliant on outside support. Research assessing the performance of FPOs in Gurdaspur, Punjab highlighted the lack of market awareness of members of FPOs, absence of business skills and exposure to formal and complex contract- based business transactions amongst farmers (Singh et.al, 2022). Further, surveys of FPO members across Amritsar, Gurdaspur, and Patiala reported nearly 16% increase in incomes of marginal farmers. However, gaps continue to persist. Lack of storage facilities and external market linkages were major pain-points despite FPO membership (Kaur and Singh, 2021).

A deeper concern lies in the policy emphasis on numerical targets ‘the number of FPOs formed’, rather than on enterprise viability. This has resulted in a proliferation of organisations without corresponding economic strength. In Punjab, where farmers already benefit from relatively better incomes through MSP procurement, the incentive to engage with weak or non-performing FPOs is further diminished.

Thus, the issue is not one of policy inadequacy but of policy misalignment. Without adaptation, the framework risks underperformance in states where its core assumptions do not fully apply.

The future trajectory of FPOs in Punjab depends on a strategic shift from institutional formation to enterprise development. This requires prioritising sectors where aggregation generates real economic value, particularly horticulture, pulses, oilseeds, dairy, and high-value crops. Integration with value chains through partnerships with processors, exporters, and organised retailers is essential to ensure sustained market access.

Financial support systems must evolve from grant-based assistance to sustainable credit frameworks, supported by risk mitigation instruments. Institutional coordination at the state level must be strengthened to align central schemes with Punjab-specific priorities. Equally important is the need to build professional management capacity within FPOs, enabling them to function as competitive business entities rather than grant-dependent collectives.

The experience of FPOs in Punjab highlights a fundamental principle of public policy: uniform frameworks must be adapted to local contexts to achieve intended outcomes. Too varied sectors like agriculture must be viewed with the lens of place-based policies. Such policies can respond to the needs and potentials of diverse places, while also contributing to national competitiveness and social cohesion (OECD, 2025).

In Punjab, this alignment requires recognising both the strengths of the MSP system and the urgent need for diversification. FPOs can play a pivotal role in facilitating this transition, but only if repositioned as viable enterprises operating within appropriate value chains.  / Daily World /

( Mr Suresh Kumar, IAS, served as Chief Principal Secretary to the Chief Minister of Punjab from 2017 to 2021 and Sirjan Kaur is Senior Development Associate at PANJ Foundation. The views expressed are personal. )