Economic impact of farmer producer organisation (FPO) membership: empirical evidence from India

Abstract

PurposeFarmer producer organisations (FPOs) are considered as a strategy to improve the livelihoods of small farmers through economies of scale by providing collective strength to farmers for improved access to production technology, value-addition services, high-quality inputs and marketing services for improving their incomes. This study investigates the impact of FPO membership on organic farming household's income in Northeast India.Design/methodology/approachThis study uses field survey data collected from all four districts of Sikkim. Primary data were obtained from a survey of 560 organic farming households, 280 of which are FPO members and the rest 280 are non-members. Propensity score matching (PSM) is used to estimate the impact of FPO membership on net returns, return on investment (ROI) and profit margin.FindingsResults show that the FPO members had, on average, Rs. 7,254–8,133 higher annual net returns, 4.6–4.8% higher ROI and 8–8.4% higher profit margin than the non-members. The findings confirm that FPO membership has a positive and significant impact on net returns, return on investment and profit margin. Also, heterogeneity analysis indicates that FPO membership has larger positive impact on relatively bigger farmers and female-headed households.Research limitations/implicationsAs the study was based on a cross-sectional survey, the findings may be subjected to some limitations.Originality/valueThis study is based on a novel data set, collected specifically to examine the economic impact of FPO membership on organic farming in India.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-06-2023-0451