Introduction
Smallholder agriculture forms the backbone of India’s food system, with nearly 89% of farmers cultivating less than two hectares of land. Despite their central role in ensuring food production and rural livelihoods, smallholders continue to face persistent challenges such as fragmented landholdings, limited access to quality inputs, inadequate storage and market infrastructure, climate variability, and low bargaining power in agricultural markets. These constraints often trap farmers in cycles of low productivity and economic vulnerability, making it difficult for them to benefit from broader agricultural growth. In response to these structural challenges, Farmer Producer Organisations (FPOs) have emerged as a key institutional mechanism in India’s agricultural policy landscape. FPOs are collective enterprises formed by farmers to improve access to markets, inputs, credit, technology, and extension services.
As policy attention increasingly shifts towards building decentralised and climate-resilient agricultural systems, access to timely, affordable, and locally adapted seeds remains a critical gap for many smallholders, particularly in regions vulnerable to climatic and market uncertainties. In this context, FPOs could play an important role in seed aggregation, distribution, local production, and dissemination of climate-resilient varieties. However, an important question remains: are FPOs institutionally and operationally prepared to take on this expanded role? A recent telephonic survey conducted by the Bharti Institute of Public Policy (BIPP) at the Indian School of Business with FPOs in Bihar and Odisha revealed considerable variation in response rates across the two states. Such differences may reflect varying levels of operational maturity, communication capacity, and administrative preparedness among FPOs.
Rapid Growth, Uneven Readiness
Over the past few years, both Bihar and Odisha have seen a surge in the formation of FPOs, driven by support from agencies such as National Bank for Agriculture and Rural Development (NABARD) and Small Farmers Agri-Business Consortium (SFAC). In Bihar, nearly 700 FPOs were mapped, with a significant concentration established between 2021 and 2024. Odisha shows a similar trend, with sustained expansion over a short period. However, this rapid growth masks important challenges. Outreach response rates tell a revealing story: only about 43% of FPOs in Bihar and 25% in Odisha could be meaningfully engaged. In many cases, contact details were outdated, leadership had changed, or there was no dedicated administrative capacity to respond. These are not merely logistical issues; they reflect deeper gaps in institutional consolidation. The implication is clear the expansion of FPOs has outpaced their operational strengthening.
Cropping Systems: Stability with Signs of Change
Cropping systems refer to the pattern and sequence of crops cultivated across seasons and landscapes, reflecting how farmers manage land, resources, risks, and market opportunities within agricultural systems. Across both states, FPOs continue to operate within cereal-dominated production systems. Paddy, wheat, and maize remain the backbone of agriculture, particularly in Bihar, while rice dominates in Odisha. At the same time, there are emerging patterns of diversification. Farmers are increasingly cultivating pulses, vegetables, fruits, and region-specific crops such as makhana in Bihar or ragi and mango in Odisha. This shift reflects both ecological adaptation and growing market orientation. Yet diversification also brings new challenges. Unlike cereal systems, diversified agriculture requires more complex input systems, particularly access to quality seeds and crop-specific knowledge. Without strengthening these input systems, diversification may not translate into sustained productivity gains.
The Missing Link: Seed Systems
Perhaps the most critical gap emerging from the analysis is the limited role of FPOs in seed systems. In Bihar, only a small share of FPOs hold valid seed licences, and even fewer are actively engaged in seed production. In Odisha, while licensing compliance appears stronger, active seed production remains restricted to a small subset of organisations. This gap is particularly concerning given the scale of unmet demand. In Bihar alone, the difference between seed demand and production is substantial, pointing to a heavy reliance on external suppliers. This dependence limits local resilience and constrains the development of decentralised seed systems. In effect, while FPOs have been positioned as key actors in agricultural transformation, their integration into input supply chains especially seeds remain limited.
From Aggregators to Enterprises
Most FPOs today function primarily as aggregation and marketing platforms. While this role is important, it represents only the first step in value chain development. The next stage involves moving towards vertical integration engaging in input provision, processing, and value addition. The evidence suggests that this transition is still nascent. Only a small number of FPOs have established formal linkages with institutions such as the National Seeds Corporation or private seed companies. Similarly, seed production activities are concentrated among a limited group of FPOs, often at early stages such as foundation seed production. Scaling this transition will require not just policy intent, but sustained investment in capacity, infrastructure, and institutional linkages.
Data and Governance as Hidden Constraints
A less visible but equally important challenge is the weakness of data and governance systems within FPOs. Many organisations lack reliable records on cropping patterns, cultivated area, and input use. In Odisha, several respondents were unable to provide basic production data, indicating gaps in internal monitoring systems. These limitations have broader implications. Weak data systems can restrict access to finance, reduce the effectiveness of extension services, and hinder participation in government programmes. They also make it difficult to design targeted, evidence-based interventions.
Strengthening governance structures, ensuring regular updating of institutional data, and building administrative capacity must therefore be seen as core components of FPO development not peripheral concerns.
Policy Pathways: Building the Next Phase of FPOs
The findings from Bihar and Odisha suggest that India’s FPO policy is at a critical juncture. The first phase focused on institutional expansion has largely succeeded. The next phase must focus on deepening functionality and integration. One key opportunity lies in strengthening decentralised seed systems through FPO-led seed production. Targeted capacity-building programmes, access to breeder and foundation seeds, investment in storage and processing infrastructure, and simplified certification processes can enable this shift. Identifying high-performing FPOs and supporting them as regional seed hubs could also accelerate scaling.
At the same time, improving communication and data systems is essential. Regular database updates, stronger engagement through CBBO (Cluster-Based Business Organisation), and the use of digital tools for monitoring and coordination can help address current gaps.
Conclusion
The evidence from Bihar and Odisha suggests that India’s FPO ecosystem is entering a second and more critical phase of development. While policy efforts have successfully accelerated the numerical expansion of FPOs, institutional functionality has not progressed at the same pace. Most FPOs continue to operate as aggregation platforms with limited participation in decentralised seed systems, input supply chains, or value-added enterprises.
This has important implications for India’s broader agricultural transition. As climate variability, market uncertainty, and input dependence increase, strengthening local seed systems and improving institutional resilience will become central to smallholder sustainability. FPOs can potentially serve as decentralised rural institutions that support seed security, crop diversification, and climate adaptation, but only if policy support moves beyond formation targets towards long-term capacity building.
The findings point towards three immediate policy priorities. First, selected high-performing FPOs should be supported as regional seed hubs through targeted investments in licensing, storage, processing, and breeder seed access. Second, CBBO-led institutional strengthening should focus more on governance systems, record management, and administrative continuity rather than only mobilisation. Third, integration of FPOs into digital agriculture platforms must be accompanied by investments in local data management and technical training.
Without such structural support, the rapid expansion of FPOs may remain institutionally shallow. However, with sustained investment in governance, seed systems, and enterprise development, FPOs could evolve from market intermediaries into foundational institutions for resilient and decentralised smallholder agriculture in India.
Author’s Bio: Rashmita Sharma is a Research Fellow at the Bharti Institute of Public Policy, Indian School of Business (ISB). She recently completed her PhD in Environmental Sciences from Jawaharlal Nehru University (JNU) under the prestigious Prime Minister’s Research Fellowship (PMRF). Her research focuses on agroecology, socio-ecological systems, ecosystem services, food security, climate adaptation, and sustainable farming systems. She has expertise in mixed-methods research, GIS and remote sensing, biodiversity assessment, and ecosystem service evaluation. Rashmita has presented her work at international forums, including the Natural Capital Symposium at Stanford University and the FLARE Conference at World Agroforestry, Nairobi. She is also a recipient of the Marie Skłodowska-Curie Postdoctoral Fellowship Seal of Excellence under Horizon Europe.