The current discourse around Farmer-Producer Organizations rests on a convenient assumption that collectivization naturally yields bargaining power. But here’s the question nobody is asking: what is the actual threshold beyond which a market starts taking an FPO seriously? At least I dont! (Any calculations are welcome!)

Most FPOs operating under major public schemes carry a working capital base of only INR 15–20 lakhs with which they can at most aggregate 50 MTs i.e. 2 truck loads. In rural agricultural trade, these numbers simply don’t create the kind of ripple that attracts serious FMCG buyers or commands better prices for farmers (This is what an FPO is supposed to do).Even the relatively stronger FPOs — those managing up to INR 3-4 crores in capital — frequently struggle to aggregate beyond 600 MT – 1,000 MT depend on the food grain. When approaching large-scale buyers, even these volumes often fall below the threshold for strategic interest. To truly disrupt the market, I think the number should be 15,000–20,000 MT (annually) which requires working capital of atleast 10 – 15 crore depending on food grain and number of times the capital is rotated .

Layer on top of that the fact that value addition remains nascent despite a decade of policy push, due to which FPOs barely earn 50 paise to one rupee per kilo of trade. On a trade of 50 MT at one rupee margin deduct the operational costs and you are smart enough to calculate what is left for survival!

The governance picture is equally sobering. Across major progressive states, several FPOs had no office, some even had no CEO. Due to the lack of any incentives associated with the job , leadership rarely think about expanding either through value addition, technology integration or market expansion beyond local trades.

The focus must shift from the quantity of FPOs created to the quality of support extended to each. Three things need to happen, and urgently. First, high-intensity working capital must be unlocked at a scale that enables real market participation for FPOs and hence farmers. This along with number of times capital rotated will lead to higher revenue growth and larger overall margins. Second, entrepreneurial leadership must be actively cultivated within CEOs and Boards. Third, there needs to be an aggressive push toward primary and secondary processing. Aggregation is only the starting line. Collectivization creates the platform. But without capital, leadership, and technology, that platform stays empty .