Determinants of Smallholders’ Participation in Farmer Producer Companies–Insights from West Bengal, India

Abstract

Farmer Producer Companies (FPCs) are the recent institutional innovations to provide singlewindow solution for multiple problems of farmers and ensuring better price realisation through establishing direct market linkages. A study was conducted through primary survey during 2018–19 from six villages covering 120 households (60 FPC and 60 nonFPC farmers) associated with two FPCs in West Bengal. Average family income of FPC farmer was 242,765 per year, significantly higher than the average family income of non-FPC farmer ( 159,732). FPC farmers were better linked with the financial institutions (66 percent) as compared to non-FPC farmers (43 percent). The functioning of FPCs was quite successful in terms of achieving better income, easy input buying, and establishing linkages with the banking/financial institutions. Being member of a FPC, accrued multiple benefits to the farmers, but the functioning of such small institutions was depending on some extraneous factors like activeness and desire to take responsibility by the CEO and others Board of Director members in FPCs; establishment of market linkages with Govt. owned marketing initiative, Sufal Bangla and other organised retailers; prospects of value addition of the commodities produced by the farmers, availability of funds, technical and financial viability; and managing the overhead and maintenance cost like salary payment of CEO, accountant, field supervisor, particularly during initial years. Key determinant socioeconomic factors have been identified that are influencing participation of smallholder farmer in FPCs in the state. The study concluded that formation of FPCs should be promoted in different parts of the state to enhance farmers’ income and to bring grassroots level changing in the society.