International Journal of Environment, Agriculture and Biotechnology

Vol-9, Issue-3; May-Jun, 2024

Peer-Reviewed International Journal
Journal Home Page Available: https://ijeab.com/
Journal DOI: 10.22161/ijeab

Operations Management in Farmer Producer

Organizations: A Case Study of Bagma Agri-Producer
Company Ltd., Tripura
Biswajit Debnath1,*, Chandan Debnath2
1Subject Matter Specialist (Fisheries), ICAR- Krishi Vigyan Kendra, South Tripura
(ICAR Research Complex for NEH Region), P.O.: Manpathar, B.C. Manu, South Tripura – 799144
2Senior Scientist (Fisheries Resource Management), ICAR Research Complex for NEH Region, Umiam, Meghalaya – 793 103

*Corresponding Author: [email protected]

Received: 18 Apr 2024; Received in revised form: 23 May 2024; Accepted: 08 Jun 2024; Available online: 21 Jun 2024
©2024 The Author(s). Published by Infogain Publication. This is an open access article under the CC BY license
(https://creativecommons.org/licenses/by/4.0/).

Abstract— This study elucidated the efficacy and challenges of Farmer Producer Organizations (FPOs) in
India, focusing on the Bagma Agri-Producer's Company Ltd. (BAPC Ltd.) in Tripura. Through a rigorous
analysis of primary data collected from 32 randomly selected members out of 250 registered participants,
the research delineated the multifaceted operations and organizational dynamics of BAPC Ltd. The study
employed Ordinal Logistic Regression to elucidate the correlation between socio-economic variables and
member satisfaction, revealing a statistically significant positive relationship (p≤0.10) for most factors,
excluding gender and non-farm income. A comprehensive SWOT analysis underscored BAPC Ltd.'s
strategic advantages, including its multi-product approach and robust institutional linkages, while also
highlighting areas for amelioration such as limited value-addition infrastructure. The organization's
involvement in eight diverse projects, ranging from dairy to apiculture, exemplified its adaptability to the
region's mixed farming landscape. However, the research also uncovered potential threats to long-term
sustainability, including competition from nascent FPOs and persistent intermediary influence in supply
chains. This nuanced examination of BAPC Ltd. provided invaluable insights into the potential of FPOs as
catalysts for agricultural transformation, while simultaneously emphasizing the imperative for sustained
support and strategic interventions to optimize their impact on smallholder agriculture in India.
Keywords— Farmers Producer’s Organization (FPO), Ordinal Linear Regression, Smallholder
Agriculture, Rural Development, Agribusiness Management

I. INTRODUCTION Tripura, like other states in the Northeast, has an

Northeast India, a predominantly agrarian region, agriculture-based economy, with approximately 42% of its
is renowned for its diverse cultural heritage and rich population dependent on agriculture and allied activities
biodiversity. Endowed with abundant natural resources, (DoE & S, 2018). Rice is the major crop cultivated in the
including fertile land, water bodies, dense forests, high state, and the climate is suitable for a variety of
rainfall (ranging from 1500 mm to 12000 mm), and a horticultural and plantation crops, including pineapple,
mega-diverse flora and fauna, the region possesses unique jackfruit, tea, rubber, and bamboo. A section of the
and unparalleled features (Deka et al., 2020; Debnath, indigenous population practices the traditional slash-and-
2022). However, despite these ample natural and human burn (jhum) method of cultivation. One of the main
resources, the Northeast region of India lags behind many obstacles in the agriculture sector of the state is the
other states in terms of development. shortage of cultivable land, as two-thirds of the total

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Debnath and Debnath Operations Management in Farmer Producer Organizations: A Case Study of Bagma Agri-Producer
Company Ltd., Tripura

geographical area is hilly, and only about 27% of the land percent are less than 1-hectare holdings (GOI 2015)).
is cultivable, compared to the national average of 43%. Small farm size is associated with limited marketable
The better performance of the agriculture sector surplus and lower access to inputs like seeds, fertilizers,
has a direct and multiplier effect across the economy. credit, information, and extension services. Small and
Interestingly, about 96% of agriculturists in Tripura are marginal farmers also have poor access to public goods,
marginal and small farmers, with very few large such as public irrigation and government subsidies. Poor
landholders specializing in specific crops. A common transportation and communication networks restrict
pattern observed in the state is the same farmer dealing farmers from accessing remunerative markets and result in
with multiple crops, vegetables, livestock, fish, and other opportunities for rent-seeking by local traders. The lack of
agricultural activities. However, studies have shown that adequate local markets and the costlier transport for small
farmers face significant challenges in adopting modern quantities force farmers to sell to local traders at low prices
practices. For instance, Debnath et al. (2017) found that (Hegde 2010). Without large volumes, small farmers face
lack of financial support, low-cost feed, and quality fish low bargaining power in input procurement and output
seed were the main barriers to the adoption of sale (Kirsten and Sartorius 2002). With the formation of
recommended fish farming technologies in fishery sector FPOs, the role of middlemen is significantly reduced
in South Tripura. (Fafchamps and Hill 2005). Hence, farmer organizations
can create opportunities for small and marginal farmers to
Tripura's industrial backwardness can be
participate more effectively in markets (Stockbridge et al.,
attributed to its geographical isolation and poor road and
2003).
railway connectivity with the mainland of India. Low
availability of infrastructure has made the process of The Indian government, with economic
economic development and decentralization extremely liberalization, not only aims to initiate new organizational
difficult in the state. The adoption of best practices and forms in agricultural production and marketing to integrate
innovation in agriculture, animal husbandry, fisheries, large firms but also encourages groups of small-scale
horticulture, as well as small and micro-level primary producers to connect with corporate buyers. With
entrepreneurial units, including information technology, the amendment of the Companies Act 1956 in 2002, the
can boost employment opportunities and improve Indian government introduced the concept of 'producer
productivity, thereby reducing rural poverty to a large companies,' which constitute an attempt to establish basic
extent in the state. business principles within farming communities, bring
industry and agriculture closer together, and boost rural
Producer companies can play a crucial role in
development (Kumar, 2008). Farmer producer companies
helping smallholder farmers participate in emerging high-
can be seen as hybrids between private companies and
value markets, such as the export market and the unfolding
cooperative societies. The producer-company concept aims
modern retail sector in India. Theory and experience
to combine the efficiency of a company with the 'spirit' of
suggest that Producer Organizations (POs) offer a means
traditional cooperatives. These companies aim to integrate
by which the constraints faced by smallholder farmers can
smallholders into modern supply networks, minimizing
be reduced, thereby enhancing their participation in
transaction and coordination costs while benefiting from
agricultural markets (Stockbridge et al., 2003). POs have
economies of scale (Lanting, 2005). They are run and
played a significant role in agricultural and rural
owned by farmers, financially facilitated by the
development, and in recent years, their strengthening has
government or donor agencies, and managed by
gained increasing donor attention owing to their
professionals.
importance in promoting the commercialization of
smallholder agriculture in response to structural Against this backdrop, this research paper aims to
adjustment policies, economic liberalization, and explore the innovative ideas of value-chain governance
globalization. and collective-action organizational structure of a producer
company in Tripura. Through a case study of a specific
By setting the target of doubling farmers' income
producer company, Bagma Agri-Producer's Company Ltd.
by 2022, the Indian government signaled a significant
(BAPC Ltd.), which produces and markets multiple
policy shift, shifting focus from food production to
agricultural products, the paper discusses the potential
farmers' welfare. Toward this goal, several schemes are in
benefits for rural communities and the re-empowering
place, with the promotion of farmer producer organizations
effect of this form of farmer organization. The general
(FPOs) being a prominent one, particularly important due
intention is to analyze the potential of the producer-
to the small and fragmenting landholdings in the country
company model as a bottom-up approach for smallholder
(85 percent of farms are less than 2 hectares, and 67
participation in emerging markets of Tripura.

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Debnath and Debnath Operations Management in Farmer Producer Organizations: A Case Study of Bagma Agri-Producer
Company Ltd., Tripura

II. DATA AND METHODOLOGY 7. Number of training sessions attended

The study was based on primary data and The analysis aimed to explore the innovative
information collected from the Bagma Agri Producer ideas of value-chain governance and collective-action
Company Ltd. (BAPC Ltd.) of Tripura State. The author organizational structure of the BAPC Ltd., a producer
conducted personal discussions with members using a company in Tripura. Through this case study, the potential
semi-structured interview schedule to gather information benefits for rural communities and the re-empowering
about the Farmer Producer Organization (FPO). effect of this form of farmer organization were discussed.
Additionally, relevant findings from research articles were By examining the level of satisfaction of FPO
incorporated as secondary data to complement the members against various socioeconomic factors, the study
analysis. The study utilized cross-sectional information for sought to understand the factors influencing the success
this case study. and potential of the producer-company model as a bottom-
Tabulation and percentage analysis were carried up approach for smallholder participation in emerging
out to highlight the salient features of the data. Tabulation markets of Tripura.
is a systematic way of presenting numerical data in an
easily understandable format, providing clear expression
III. RESULTS AND DISCUSSION
and facilitating convenient comparison of related
numerical data. The percentage form was used while The analysis and discussion section of this paper
discussing the study parameters to make the document is organized into three distinct parts. The first section
more reader-friendly. provides a descriptive analysis regarding the background
and genesis of the selected Farmer Producer Organization
In the later section of the analysis, Ordinal
(FPO), Bagma Agri-Producer's Company Ltd. (BAPC
Logistic Regression (OLR) was employed to assess the
Ltd.). The second section offers a critical SWOT
level of satisfaction of being a member of the selected FPO
(Strengths, Weaknesses, Opportunities, and Threats)
against various socioeconomic parameters. Ordinal
analysis of the current state of affairs at BAPC Ltd. The
regression is a member of the regression analysis family,
third section attempts to explain the level of satisfaction of
used as a predictive analysis to describe data and explain
members in their participation in BAPC Ltd. against a few
the relationship between one dependent variable and two
selected socio-economic variables as explanatory factors.
or more independent variables. In ordinal regression
In the final section, we conclude that producer companies
analysis, the dependent variable is ordinal (statistically, it
are a promising new model of smallholder organization,
is 'polytomous' ordinal), and the independent variables are
but one that requires continued support and further critical
ordinal or continuous-level (ratio or interval).
analysis to formulate strategic options as per the
Linear regression estimates a line to express how requirements.
a change in the independent variables affects the
Background and present status of BAPC Ltd.
dependent variables. The independent variables are added
linearly as a weighted sum. In this study, the dependent The Farmer Producer Organization, BAPC Ltd.,
variable was measured on a 5-point Likert scale (1 = 'very was initially established under the registration of the
poor satisfaction', 2 = 'poor satisfaction', 3 = 'Average Cooperative's Act. However, due to administrative
satisfaction', 4 = 'high satisfaction', and 5 = 'very high difficulties, the organization shifted its registration to the
satisfaction'). Companies Act. The Board of Directors and the main
implementing body of BAPC Ltd. were involved in
The independent or explanatory variables
activities through a formal farmer's club, namely, Gram
considered in the study were:
Bikash Farmer's Club. Later, the same group of farmers
1. Gender (male or female) took the initiative to form an FPO under the Companies
2. Experience in farming (number of years of Act, considering the scope of benefits for a large number
involvement) of village farmers.
3. Family size Through years of existence, professionalism,
4. Education (number of classes passed) commitment towards the farming community, efficient
leadership, and robust networking with other reputed
5. Monthly income from farming activities (in
organizations, Bagma Agri-Producer Company has
Indian Rupees)
emerged as the leading producer organization in the entire
6. Monthly income from non-farming activities State of Tripura. It started as a vibrant farmer's club
(in Indian Rupees) supported by NABARD, KVK, and ICAR, later taking the

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Debnath and Debnath Operations Management in Farmer Producer Organizations: A Case Study of Bagma Agri-Producer
Company Ltd., Tripura

form of a Trust before attaining its current status as a SWOT Analysis of BAPC Ltd.
recognized producer organization. I. Strengths:
BAPC Ltd. is deeply associated with a. The management or Director's Committee of
organizations like NABARD, ICAR, KVKs, and various the FPO is well-known among the farmers' group.
line Departments of the State Government, including
b. It is a multi-product-based FPO, highly
Agriculture, Horticulture, Fisheries, and Animal Resource
relevant for a state like Tripura, where mixed farming
Development Departments. BAPC Ltd. is rapidly
category farmers outnumber specialized farmers.
emerging as a credible name in the landscape of Farmer
Producer Organizations (FPOs) in Tripura, and much of c. Regular contact and support from NABARD.
the credit behind the current growth and development of d. Running a few important projects.
the organization goes to all the organizations actively
e. A good and efficient team of staff is involved
supporting its activities targeted towards the welfare of the
in management.
farming community.
f. The FPO has its own retail outlet at Matabari, a
BAPC Ltd. is presently working on eight projects
religiously important spot in Tripura.
and is in the process of initiating three more projects.
BAPC Ltd. has focused on dairy as their core or central g. Location advantage of being located near the
activity for supply value chain development, with credit district headquarters and connectivity through the national
linkage facilities supported by NABARD. Apiculture, the highway and railway.
development of Rural Marts, the formation of Joint h. Some members and Directors are already
Liability Groups for marginal farmers, and Seed involved in entrepreneurship in their personal capacities.
Production programs (especially for paddy) are among the
II. Weaknesses
multi-product-based activities undertaken by BAPC Ltd.
Recently, a credit-linked fish farming project was also a. Members are not highly experienced in FPO
initialized to diversify the activities of BAPC Ltd. for a management and do not have a focused sustainable plan of
large section of farmers. work to date.

There are 10 Board of Directors (BoDs) in the b. Less exposure to many technological advances
company. Two of the BoDs are graduates by qualification, in farming systems.
while all the Directors have years of practical experience c. The FPO is not single-product-based.
in agriculture and are considered progressive and d. Lack of entrepreneurship development attitude
innovative farmers in the farming community. Under the among farmers.
able leadership of these BoDs, the day-to-day operational
activities are spearheaded by a young and qualified CEO e. Lacking efficient resource personnel for project
who holds a Post Graduate degree in Rural Development preparation or planning.
from Tripura University. The CEO is supported by three f. They do not have infrastructure related to value
other permanent staff members. addition, food processing, or storage.
Currently, the key activities are focused on the g. Lacking good infrastructure facilities required
supply of inputs like feed, seed, fertilizers, etc., Seed to run an office.
production with the support of technical organizations, h. The location of participating Gram Panchayats
Apiculture, Dairy sector activities (supply value chain), is widespread.
assistance for KCC issuing, Rural Marts, Aggregation and
These challenges are not unique to BAPC Ltd. A study by
collectivization of farmers' produce and marketing,
Debnath et al. (2017) on fish farming in South Tripura
training and capacity building of members, exposure visits,
found that the main barriers to adopting recommended
and financial inclusion. Table 1 provides a generalized
practices were lack of financial support, unavailability of
view of the different types of services offered by BAPC
low-cost feed, and lack of quality fish seed. Their findings
Ltd. against the generalized profile of FPO services
align with the weaknesses identified in BAPC Ltd.,
available in the literature. It shows a potential scope for
particularly the lack of exposure to technological advances
development by BAPC Ltd. in different directions.
and the need for infrastructure development.
III. Opportunities
a. Importance towards FPOs as declared by the
government.

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Debnath and Debnath Operations Management in Farmer Producer Organizations: A Case Study of Bagma Agri-Producer
Company Ltd., Tripura

b. The FPO is comparatively new, with plenty of appears in Table 3, we can conclude that all the variables
opportunities for expanding its activities. except monthly income from non-farming activities had a
c. Farmers are interested and show a positive positive sign, indicating a positive predictive increase in
response towards FPO activities. log odds of higher levels of satisfaction for membership in
the FPO. This indicated that higher values of socio-
d. Vertical integration of the marketing channel.
economic variables, except non-farm income, were more
e. Scope for diversification of crops and related likely to indicate higher levels of satisfaction in becoming
supply-value chain activities. a member of the FPO. However, for non-farm income, it
f. Scope for improving family members' income was the opposite, which might be due to the fact that
through economies of scale. farmers with higher non-farming income were more likely
to have a lower level of satisfaction in being a member of
g. Farm mechanization is yet to be adopted.
the FPO. But it was not significant.
h. Packaging and value addition for different
While observing other independent variables,
produce are yet to be explored.
except gender and income from non-farming income, none
i. Institutional support. showed a significant influence on the level of satisfaction
IV: Threats of being a member of BAPC Ltd. The coefficients of other
variables were positive and significant at a 10%
a. Long-term sustainability.
significance level, indicating a positive influence on the
b. Competition from other recently initiated level of satisfaction of being a member.
FPOs.
In summary, the analysis provided insights into
c. Administrative control. the background, present status, strengths, weaknesses,
d. Short-term monetary greed by avoiding the opportunities, and threats of the Bagma Agri-Producer's
FPO channel by a few members. Company Ltd. (BAPC Ltd.), a prominent Farmer Producer
e. The involvement of middlemen in the supply Organization in Tripura. It also examined the level of
value chain is still very active at the village level. satisfaction among members of the FPO, considering
various socio-economic factors. The findings suggest that
Satisfaction of being a registered member producer companies like BAPC Ltd. are a promising new
Altogether, there are 250 registered members model for smallholder organization in agriculture,
under the selected FPO, and as the FPO deals with particularly in regions like Tripura where mixed farming is
multiple agricultural commodities, the registered members prevalent.
also have their involvement in farming various agricultural The study reveals that BAPC Ltd. has made
commodities. Table 2 presents the percentage of FPO significant strides since its inception, evolving from a
members who expressed their primary interest in farmer's club to a well-established producer company. Its
agricultural activities as received through a primary survey strong associations with organizations like NABARD,
of 32 randomly selected members of BAPC Ltd. ICAR, KVKs, and various state government departments
The level of satisfaction of being a member of have contributed to its growth and credibility. The
BAPC Ltd. was analyzed using a 5-point Likert scale company's focus on multiple agricultural activities,
through Ordinal Linear Regression (OLR), and the results including dairy, apiculture, seed production, and fisheries,
are presented in Table 3. demonstrates its adaptability to the diverse needs of
The model fitting information with a -2 log- farmers in the region.
likelihood chi-square value of 54.97 was observed at less The SWOT analysis provides valuable insights
than a 1% level of significance, and the Goodness of fit into the current state of BAPC Ltd. The company's
using the Pearson chi-squared test also explained a better strengths lie in its multi-product approach, strong
fit of the model to the data. It was 86.75 (sig. = 0.984), management team, and strategic location. These factors
suggesting a good model fit. position it well to serve the needs of mixed farming
Table 3 shows the regression coefficients and communities in Tripura. However, the analysis also
significance tests for each of the independent variables in highlights several weaknesses, such as limited experience
the model. The regression coefficients can be literally in FPO management, lack of value-addition infrastructure,
interpreted as the predicted change in the log odds of being and the need for more focused long-term planning. These
at a higher level of satisfaction in the form of the areas require attention for the company's continued growth
dependent variable. Looking at the mathematical sign as it and success.

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Debnath and Debnath Operations Management in Farmer Producer Organizations: A Case Study of Bagma Agri-Producer
Company Ltd., Tripura

The opportunities identified for BAPC Ltd. are government agencies and other institutional partners. This
significant. With the government's increasing focus on support should not only be financial but also include
FPOs, there is potential for expansion, diversification, and capacity building, technology transfer, and market linkage
vertical integration of marketing channels. The scope for assistance.
introducing farm mechanization and exploring value Second, the multi-product approach of BAPC
addition processes presents avenues for enhancing farmer Ltd. appears to be well-suited to the agricultural landscape
incomes and overall productivity. However, the company of Tripura. This model could be considered for replication
must also be mindful of the threats it faces, including long- in other regions with similar mixed farming systems.
term sustainability challenges, competition from other However, care should be taken to address the challenges
FPOs, and the persistent influence of middlemen in the associated with managing diverse product lines, such as
supply chain. the need for specialized knowledge and infrastructure for
The analysis of member satisfaction provides each product category.
interesting insights into the factors influencing farmers' Third, the identified weaknesses and threats
perceptions of the FPO. The positive correlation between suggest areas for targeted interventions. For instance, there
most socio-economic variables and satisfaction levels is a clear need for enhancing the entrepreneurial skills of
suggests that BAPC Ltd. is generally meeting the needs of FPO members, improving infrastructure for value addition
its diverse membership. However, the negative (though not and storage, and developing more robust long-term
significant) relationship between non-farm income and strategic plans. Additionally, measures to counter the
satisfaction levels indicates a potential area for further influence of middlemen and to ensure the long-term
investigation. It may be worthwhile for the company to sustainability of the FPO should be prioritized.
explore strategies to better engage and serve members with
Fourth, the satisfaction analysis highlights the
higher non-farm incomes, ensuring that the FPO remains
importance of considering socio-economic factors in FPO
relevant and beneficial to all its members regardless of
management. Strategies should be developed to enhance
their income sources.
the benefits of FPO membership for all farmers, regardless
The study's findings have several implications for of their farm size, education level, or non-farm income.
policy and practice. First, they underscore the importance This might involve tailoring services and interventions to
of continued support for FPOs like BAPC Ltd., both from meet the specific needs of different member segments.
Table 1. Services provided by farmers' organizations
Services details (source: Hellin et al, 2009; Markelova et al, 2009; Narrod et al, 2009; Pilot survey summary
Rondot and Collion, 2007)
Services Activities Level of adoption by BPAC Ltd.
Organizational services Organizing farmers, catalyzing collective action, Fully adopted
building (strategic) capacities, establishing internal
monitoring systems
Production services Input supply, facilitation of (collective) production Partially adopted
activities
Marketing services Transport and storage, output marketing, processing, Not adopted (partially adopted for
market information and analysis, branding, dairy sector)
certification
Financial services Savings, loans, and other forms of credit, financial Ongoing
management
Technology services Education, extension, research Not adopted
Education services Business skills Not adopted
Welfare services Health, production health, safety nets Not adopted
Management of resources Water, pasture, fisheries, forests, soil conservation etc. Partially adopted

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Debnath and Debnath Operations Management in Farmer Producer Organizations: A Case Study of Bagma Agri-Producer
Company Ltd., Tripura

Table 2: Interest towards different agricultural activities as primary activity of interest among the members of FPO (n=32)
Agricultural Activities Percentage of farmers showed primary interest
Crop production 25
Vegetables 9.4
Seed production 15.6
Animal rearing 18.8
Apiculture 6.3
Fisheries 18.8
Other agricultural activities 6.3

Table 3: Ordinal Linear regression estimates for level of satisfaction of being member of BAPC Ltd., Tripura, in 2020
(n=32)
Dependent Variables Independent variables
Level of satisfaction of Marginal Variable Measurement Estimates +/- Sig.
being member percentage
Very poor satisfaction 12.5 % Gender Male or Female .026 + 0.981
Poor satisfaction 21.9 % experience in farming Number of .278 + 0.020
years of
involvement
Average satisfaction 18.8 % family size in nos. .500 + 0.052
High satisfaction 21.9 % Education Number of .336 + 0.077
class passed
Very high satisfaction 25 % Income from farming Rs. per month .001 + 0.009
activities
Test of parallel lines income from non- Rs. per month .000 + 0.122
farming activities
Chi-square = 14.130 Sig. = 0.864 number of training in nos. .557 + 0.068
attended
Pseudo R-Square (Nagelkerke) = 0.857

IV. CONCLUSION this potential requires a concerted effort from all

In conclusion, while BAPC Ltd. and similar stakeholders - the FPO management, member farmers,
producer companies show promise as a model for government agencies, and supporting institutions. By
smallholder organization, they require continued support addressing the challenges identified in this study and
and critical analysis to reach their full potential. Future building on the strengths and opportunities, BAPC Ltd.
research could delve deeper into the factors influencing and similar FPOs can contribute significantly to the
member satisfaction, explore the long-term economic transformation of smallholder agriculture in India.
impacts of FPO membership on farmer incomes, and
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Campus, Kent, England: Imperial College, London.

ISSN: 2456-1878 (Int. J. Environ. Agric. Biotech.)

https://dx.doi.org/10.22161/ijeab.93.20 172