Financial health of farmer producer companies in Tamil Nadu: challenges and prospects

Abstract

In India, where nearly 80% of farmers are small and marginal, farmer collectives have become essential for strengthening their livelihoods. Among these, Farmer Producer Organizations (FPOs) play a critical role in advancing agricultural development and act as key conduits for implementing major government schemes. This study evaluates the financial performance of Farmer Producer Companies (FPCs) in Tamil Nadu, aiming to identify key challenges and opportunities for growth. Using purposive sampling, 100 FPCs that had filed balance sheets for the financial years 2018–19, 2019–20, and 2020–21 was selected for analysis. Financial performance was assessed through Factor Analysis, complemented by a primary survey of 10 randomly selected FPCs (10% of the sample). The analysis reveals that most FPCs demonstrate average to poor financial performance, with only a few exceptions showing strong results. The primary survey highlights several barriers to growth, including limited access to credit, inadequate marketing infrastructure, and a lack of business management skills. To enhance scalability and sustainability, FPCs need targeted interventions such as capacity-building programs, improved access to financial services, and stronger market linkages. Revisiting credit eligibility criteria could also improve financial viability. Strengthening FPCs is essential not only for uplifting smallholder farmers but also for building a more inclusive and resilient agricultural economy in Tamil Nadu. © The Author(s) 2025.