Intro: Is modern agriculture quietly setting farmers up for failure? Despite a massive state push, thousands of agricultural collectives collapse the moment government grants disappear. In this unfiltered exclusive interview with Indiastat, agri-economist analyst Ajit Chaloba Lad shares some uncomfortable truths, dismantling industry myths about modern farming, systemic flaws and more. Senior journalist Mahima Sharma digs deeper with him into what it actually takes to survive. Read this week’s Socio-economic Voices.
MS: India now has over 25,000 registered FPOs, but a large share still struggle to break even after their promotional support period ends. In your experience, what actually separates an FPO that becomes financially self-sustaining from one that stays dependent on government grants?
AL: See, achieving financial sustainability for a Farmer Producer Organisation (FPO) requires much more than registration or access to government grants. From the very beginning, an FPO should have a clear business model, capable leadership, adequate working capital, professional management and strong market linkages.
According to SOFPO (2025), more than 44,000 Farmer Producer Companies (FPCs) have been registered across India. However, there is a significant gap between the number of registered organisations and their operational efficiency and financial viability. Similarly, an ICAR-NIAP study covering around 1,069 FPOs identified factors such as membership size, organisational maturity, capital base, access to finance and market expansion as key determinants of financial sustainability.
During my field study of 95 FPCs in Maharashtra in 2025, I observed that several organisations had been established primarily in response to government schemes rather than genuine business needs of farmers. As a result, once the period of financial support ended, many of these organisations struggled to sustain their operations due to limited market access, inadequate working capital and weak managerial capacity.
From my perspective, farming is a business and an FPC should function as an enterprise ecosystem that enables farmers to participate collectively across the entire agricultural value chain. Therefore, creating market linkages alone is not sufficient. The organisation must develop an efficient end-to-end supply chain covering procurement, aggregation, processing, quality management, logistics and marketing.
Today, many FPCs receive infrastructure and capacity-building support. The next critical step is to provide them with business management and incubation support so that they can independently generate revenue, build working capital and establish sustainable market networks. Rather than focusing only on increasing the number of FPOs, greater emphasis should be placed on strengthening their business capabilities, creating measurable value for members and developing financially self-sustaining enterprise models over the long term.
MS: With the government pushing both the "2 lakh new PACS" cooperative expansion and the FPO model side by side, do you see these as complementary structures for farmer collectives or are they beginning to compete for the same farmers, capital and market access?
AL: In my opinion, it would not be appropriate to view PACS and FPOs as direct competitors at present. Instead, both institutions can play complementary roles within India's agricultural ecosystem. According to Michael Porter, competition enhances market efficiency. If, in the future, PACS and FPOs begin competing for commercial opportunities, such competition could be healthy and beneficial. However, the immediate priority is not competition, but greater coordination and convergence between the two institutions. Ultimately, the focus should remain on creating greater value for farmers.
The greatest strength of PACS lies in its well-established institutional network in rural areas and the long-standing trust it has built among farmers. Traditionally, however, the role of PACS has been largely limited to providing credit and agricultural input services. In contrast, FPOs were established to enable farmers to participate collectively in commodity-based businesses and agricultural value chains through aggregation, processing, value addition and market linkages. At the same time, practical experience with FPOs has highlighted several challenges, particularly limited working capital and the need for sustained farmer participation.
Recognising the evolving needs of the agricultural sector, the Government of India has introduced Model Bye-Laws to transform PACS into Multipurpose PACS (M-PACS), allowing them to diversify into activities such as dairy, fisheries, warehousing and other rural enterprises. The national initiative to establish two lakh new Multipurpose PACS reflects this broader vision of strengthening rural economic institutions.
In this evolving ecosystem, M-PACS can play a strategic role. PACS can continue to provide credit, agricultural inputs, storage facilities and other primary services, while FPOs can focus on commodity aggregation, processing, branding and market development. In other words, one institution can serve as the financial and institutional backbone, while the other functions as the market and enterprise forming.
At the same time, governance reforms within the cooperative sector are equally important. The amendments made to the Multi-State Cooperative Societies Act, 2002, in 2023 place greater emphasis on transparency, accountability, democratic elections and effective member grievance redressal. In my view, these reforms not only enhance the credibility of cooperative institutions but also create a stronger foundation for their professional and commercially sustainable management.
Therefore, I believe that combining the institutional strength of PACS with the entrepreneurial and market orientation of FPOs can create a more resilient, integrated and farmer-centric agribusiness ecosystem that delivers long-term economic value to rural communities.
MS: India is now the world's second-largest producer of fruits and vegetables, yet post-harvest losses in horticulture remain among the highest of any farm segment. Where exactly does the value chain break down — is it storage, transport, market linkage or something earlier in the process?
AL: The 'Missing Middle' in horticulture is not the result of a single gap, but a combination of weaknesses across the entire value chain. Studies by NABARD and the Ministry of Food Processing Industries (MoFPI) estimate post-harvest losses in perishable horticultural produce at around 30-40%. However, from my experience, these losses often begin at the farmgate, rather than in the market.
While studying the grape value chain, I observed that poor management of harvesting parameters such as Brix level, berry size, colour, temperature and thinning can result in nearly 7-8% losses during sorting, grading and packaging. This reduces both product quality and shelf life before the produce even leaves the farm. The problem is further aggravated by weak packhouse facilities, inadequate pre-cooling, limited refrigerated transport and gaps in the cold chain.
Therefore, building cold storage alone is not a complete solution. Greater attention must be given to quality management, farm-to-market connectivity and aligning production with market specifications. Many farmers produce good-quality crops but lack grading, packaging, traceability and reliable market access.
While schemes such as the Agriculture Infrastructure Fund (AIF) are strengthening infrastructure, the next priority should be developing an integrated post-harvest ecosystem that connects farmgate handling, processing, logistics and market linkages. This is the most effective way to bridge the "Missing Middle" and improve farmer incomes.
MS: You train farmers to think entrepreneurially rather than just producing more. What is the single hardest mindset shift you see farmers resist the most when moving from subsistence or commodity farming toward a value-added, market-facing business?
AL: In my experience, the biggest challenge in transforming a farmer into an agripreneur is not adopting a new technology-it is changing the way the farmer thinks about farming. Most farmers naturally focus on production, but an entrepreneur has to think about the entire business. This is the idea behind our training programme, "My Farm to My Industry." We encourage farmers to see their farm as an enterprise rather than just a place where crops are grown.
An entrepreneur must make decisions based on production cost, market demand, quality standards, price trends, cash flow and profitability, not just based on the yield. While working with grape, banana and pomegranate growers in Maharashtra, I found that many farmers were producing excellent crops. But they were not always producing what the market actually demanded. The gap was not in production; it was in understanding the customer and the market.
I also observed that farmers need to move beyond the role of raw material suppliers. Greater participation in grading, packaging, processing, branding and marketing allows them to capture more value from their produce instead of leaving those opportunities to other players in the supply chain.
Technical training alone cannot bring this change. Farmers also need exposure to business planning, financial management and market intelligence. In the long run, the objective should not simply be to produce more, but to build profitable and sustainable farm enterprises that can compete in modern markets.
MS: Women make up a large share of the agricultural workforce but a much smaller share of FPO leadership and cooperative boards. What structural changes, beyond quotas, would genuinely increase women's decision-making role in these organisations?
AL: Increasing women's participation in decision-making requires much more than reserving seats on the board. The real journey is from representation to participation and from participation to decision-making. This can happen only when women are trusted with core business responsibilities such as procurement, processing, marketing, finance and human resource management.
I had the opportunity to visit the Mulukanoor Women's Milk Cooperative in Telangana, where I observed this difference firsthand. Women were not only leading the board but were also actively involved in the day-to-day operations of the cooperative. Nearly 80% of the workforce was women and they were participating in business planning, financial decisions, procurement and enterprise management. I experienced this was possible because they had received continuous training and practical exposure, beyond leadership positions.
Another important aspect is financial inclusion. Women should have membership in their own names, access to banking and credit and the authority to make financial decisions within the enterprise. Institutions should also create a leadership pipeline by giving women operational responsibilities before expecting them to lead at the board level.
Laws that recognise women as independent farmers are an important step, but recognition alone is not enough. Real empowerment begins when women have the skills, confidence, resources and authority to make business decisions that shape the future of the enterprise.
MS: Individual farmers often struggle to get formal credit, but do FPOs and cooperatives actually get easier access to institutional finance in practice or do banks still treat them with the same caution as individual smallholders?
AL: See, the credit situation for FPOs and cooperatives cannot be seen in the same way because their institutional structures and relationship with the banking system are fundamentally different.
For cooperatives, especially PACS, access to institutional finance is relatively stronger. PACS are part of India's cooperative credit structure, linked with district and state cooperative banks. Because of this established network, they already have institutional support and established banking relationships, making access to credit comparatively easier.
The situation is different for FPOs. Since an FPO is a business enterprise, banks evaluate it like any other commercial organisation. They look at its business model, cash flow, profitability, audited financial statements, governance, repayment capacity and promoter contribution before making lending decisions. According to a TCI study, only about 23% of FPOs have access to institutional credit, making working capital one of their biggest constraints.
However, my field experience suggests that the issue is not that banks are unwilling to finance FPOs. Well-managed FPOs with consistent turnover, transparent governance, reliable financial records and strong market linkages are generally able to access institutional finance.
Therefore, the real challenge is not banking alone. Many FPOs were established with grant support but have not yet evolved into bankable business enterprises. Strengthening professional management, financial discipline and working capital planning is essential for moving from a grant-dependent organisation to a financially sustainable enterprise.
MS: Erratic rainfall and heat stress are increasingly disrupting horticulture crops specifically, since they are more perishable and climate-sensitive than staple grains. How should farmer collectives be reorganising their value chains (storage, processing, insurance) in order to absorb this risk rather than just recovering from it after the fact?
AL: Climate change has shifted the focus from compensating farmers after losses to building climate-resilient value chains. In horticulture, climate events affect much more than production-they influence fruit quality, shelf life, marketability and ultimately the price that farmers receive.
The 2025-26 grape season is a good example. Across several parts of Maharashtra, unseasonal rainfall, low sunshine and high humidity affected berry development and fruit quality. Many growers experienced 40-50% yield losses, along with a decline in export-quality produce. Situations like these show that an individual farmer has limited capacity to manage climate-related risks alone.
This is why I believe FPOs and cooperatives should evolve from production collectives into risk management collectives. They can jointly invest in climate-resilient varieties, weather advisory services, packhouses, pre-cooling facilities, cold-chain infrastructure, crop insurance, digital traceability and market intelligence. These investments are often too expensive for individual farmers but become viable when made collectively.
During my work in the grape value chain, I observed that organisations adopting disease-resistant varieties and strengthening post-harvest infrastructure were better able to maintain quality despite adverse weather. This clearly demonstrates the value of collective investment.
In the future, the success of an FPO should not be measured only by the quantity it markets. It should be calculated by how effectively it helps farmers maintain stable incomes despite climate uncertainty. Today, climate adaptation is not just an environmental priority-it is a business strategy for improving competitiveness and ensuring long-term income sustainability.
MS: There is a lot of policy talk about digital agriculture, e-NAM and traceability platforms. From your direct training experience, how many farmers or FPOs are actually using these tools meaningfully today, versus how many remain digitally excluded?
AL: The success of digital agriculture depends not on the availability of technology, but on whether farmers actually use it to make day-to-day decisions. From my field experience, I have observed that digital tools are adopted more readily in high-value horticultural crops such as grapes and pomegranates, where both investment and production risks are high. Technologies such as weather stations, soil sensors, irrigation automation and farm advisory apps help farmers improve crop quality, optimise input use and make timely decisions.
However, the adoption of platforms such as e-NAM, traceability systems and digital market platforms is still limited. During my research on Maharashtra's APMC market reforms and FPO performance, I visited several markets and FPOs where e-NAM infrastructure and registration were available, but actual trading through the platform remained minimal. The major constraints were inconsistent quality standards, limited assaying facilities, weak buyer participation and poor integration with existing market practices.
A similar trend is visible in traceability. For instance, it is well established in export-oriented grape and pomegranate supply chains. But most domestic farmers and small FPOs are still outside these systems.
In my observation and experience, India's biggest challenge is no longer developing digital technologies, rather it is ensuring their adoption. The next phase should focus on digital literacy, field-level handholding, quality infrastructure and stronger market integration so that digital tools become a practical part of farmers' everyday business decisions, rather than remaining only policy initiatives.
MS: When you train rural entrepreneurs, how many eventually build businesses that go beyond primary agriculture (into processing, packaging or agri-services) and what usually determines whether that leap succeeds?
AL: Our training programme is designed to help farmers move beyond crop production and become active participants in value addition and agripreneurship. This may involve food processing, efficient trading, agri-services or other value-added businesses. However, our focus is not on creating individual entrepreneurs alone-it is on building collective entrepreneurship. Most agricultural challenges are too large for individual farmers to solve. But they can be addressed effectively when farmers work together through FPOs, cooperatives or producer groups.
From our experience, farmers who collectively manage input procurement, production planning, sorting, grading, packaging and market linkages gradually gain greater control over the value chain. This improves efficiency, reduces dependence on intermediaries and creates better income opportunities.
A good example comes from grape growers in Sangli. Earlier, many farmers sold their produce individually to traders. Today, some producer groups are working together on branding, grading, packaging and supplying directly to retailers and consumers. As a result, the farmer's share of the final consumer price, which was often around 40%, has increased to nearly 60-70% in some cases.
For us researchers, this is the real transformation. Farmers are no longer limiting themselves to production; they are becoming partners in the entire value chain. That shift-from producing a crop to building a business together-is the core philosophy of our training programme and the foundation of long-term, sustainable agripreneurship.
MS: Cooperative and FPO success stories are often concentrated in a handful of states with stronger institutional history. What would it take to replicate that success in regions with weaker cooperative traditions, without simply copying a model that may not fit local realities?
AL: No cooperative or FPO model can simply be replicated from one state to another. Every region has its own social context, natural resources, market opportunities, leadership capacity and institutional history. Therefore, the goal should not be to copy a successful model, but to adapt it to the local context.
I experienced this while working on the jackfruit value chain project in Dumka district, Jharkhand. Unlike Maharashtra, the region does not have a strong cooperative tradition. Instead of importing an existing model, we first assessed the local resource base, cropping pattern, existing institutions such as LAMPS, market opportunities and farmers' capabilities. Based on the feasibility study, we designed a collective enterprise around the jackfruit value chain, covering production, aggregation, processing and market development.
To support this, we developed the BISWA (Business Incubation, Strategy and Workforce Alliance) Model.
From my experience, the biggest constraint in underserved regions is not the lack of funding; it is the lack of institutional incubation and professional management. Once strong local institutions are built, they are far better positioned to attract investment, adopt technology and create sustainable agribusiness enterprises.
About Ajit Chaloba Lad
He is an Agri-Economist with expertise in agribusiness economics, supply chain management and commodity market analysis. He holds a Master's degree in Agribusiness Economics and a Post Graduate Diploma in Cooperative Business Management (PGDCBM). He has extensive experience leading research projects on agricultural markets, Farmer Producer Organizations (FPOs), cooperatives, supply chains and rural development. He has conducted field studies across India, contributing to feasibility studies, impact assessments, policy research and commodity outlooks. Ajit combines strong analytical skills with practical field experience to deliver evidence-based solutions that strengthen agricultural value chains, enhance farmer livelihoods and promote sustainable agribusiness development.
About the Interviewer
Mahima Sharma is an Independent Senior Journalist based in Delhi NCR with a career spanning TV, Print, and Online Journalism since 2005. She has played key roles at several media houses including roles at CNN-News18, ANI, Voice of India, and Hindustan Times.
Founder & Editor of The Think Pot, she is also a recipient of the REX Karmaveer Chakra (Gold & Silver) by iCONGO in association with the United Nations. Since March 2022, she has served as an Entrepreneurship Education Mentor at Women Will, a Google-backed program in collaboration with SHEROES. Mahima can be reached at media@indiastat.com
Disclaimer : The facts & statistics, the work profile details of the protagonist and the opinions appearing in the answers do not reflect the views of Indiastat or the Journalist. Indiastat or the Journalist do not hold any responsibility or liability for the same.
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