Impact of farmer producer organizations on farm economy in Krishna district of Andhra Pradesh

Farmers’ organizations are inclusive of the poor and are charged to become a market outlet for smallholder farmers. This paper investigates the determinants and effects on farm income of group membership, using the sample of 120 smallholder producers in the Krishna District of Andhra Pradesh. A probit regression model was used as a selection equation to identify factors that influence group membership decisions by smallholder farmers. Since farmers are resource-poor and farmer organizations are constrained by various institutional, technical and investment constraints despite their potential, it is recommended that favourable policies should be geared toward smallholder agriculture to ensure the success of farmer producer organizations. Our results show that farmer groups can be an important institution for the transformation of smallholder farming, increasing productivity and incomes thereby reducing poverty.