Functional efficiency of farmer producer companies (FPCs): Insights from the perspectives of smallholder farmers in Bihar

In agrarian economies dominated by smallholder farmers, Farmer Producer Companies (FPCs), as subset of Farmer Producer Organizations (FPOs) are recognized as one of the most effective mechanisms for driving growth in agriculture and commercialisation. FPOs aim to help smallholders to access resources, increase productivity, reduce transaction costs, and participate more effectively in markets, providing them with better prices. This study investigates six randomly selected FPCs in Bihar, categorized by their operational stages: two each functioning for 1–3 years, >3–6 years and > 6 years. A total of 240 farmer members, with 40 randomly sampled from each FPC, were studied. The findings reveal that longer-established FPCs with functional diversity and FPCs focused on high-value crops that require specialized knowledge and strong market linkages tend to be more functionally efficient. Conversely, those concentrating on single, food grain crops face challenges such as market saturation and limited profit margins. FPCs dealing with high-value crops have more robust operational systems in place. To enhance functional efficiency, FPCs should prioritize collaboration, trust, decision-making, cohesiveness, and leadership effectiveness, as these factors are crucial for the sustainability and success of FPCs in a longer run.