Agriculture is a foundational pillar of India’s economy (Singh, 2012), sustaining the livelihoods of over half the population (Chadha, 2021), with a substantial share of the population comprising smallholders (Singh, 2012). However, smallholder farmers face persistent challenges in accessing markets, credit, infrastructure, technology, information and training, with intermediaries capturing much of the consumer price (Islam et al., 2022; Kumar, 2020; Sidhu et al., 2024). Further, the absence of robust policy frameworks further hinders productivity and income generation, making it difficult for these farmers to sustain their livelihoods (Islam et al., 2022; Singh, 2012; Kumar, 2020). These inefficiencies across the supply chain result in the annual wastage of nearly 45% of total production (Shannon, 2021). In response, FPOs with blended properties of cooperative and corporate (NABARD, 2022) have been promoted to aggregate resources, enhance bargaining power and improve market access.
       
In recent years, FPOs have emerged as a promising solution to the challenges faced by smallholders, gaining recognition as farmer-owned economic entities (NABARD, 2022; Salokhe, 2025a). These organisations blend features of traditional cooperatives with modern corporate structures (Department of Agriculture, n.d.; NABARD, 2022; Ramappa and Yashashwini, 2018). Collective action through FPOs can improve bargaining power, technology, infrastructure, market access and access to financial services that smallholders would not be able to afford individually (Hellin et al., 2009; NABARD, 2022; PIB India, 2021b; Bikkina et al., 2018; Desk, 2023; Gurung and Choubey, 2023). While FPOs have been studied in plainland states (Gujarat, Maharashtra, Karnataka), limited empirical research exists for the northeastern hill states. Tripura offers a unique case due to its favourable agroclimatic conditions, recent FPO promotion and persistent smallholder livelihood challenges. No published study has systematically examined FPO impacts on fruit and vegetable smallholders in Tripura.
       
In response, the formation of FPOs has been prioritised in Tripura. Over the last few years, the state has seen a remarkable expansion in FPOs to pool resources and aid access to services, inputs and markets that would otherwise be beyond the reach of individual farmers. This study addresses the following research questions:

1. What are the perceived impacts of FPO membership on  smallholders’ market access, input availability and bargaining power in Tripura’s fruit and vegetable supply chains?
2. What infrastructural, financial and social constraints limit FPO effectiveness in this context?
3. How does Porter’s Cluster Theory explain the current limitations and potential pathways for FPO development in Tripura?
       
The remainder of this paper is organised as follows: Section 2 presents the literature review and theoretical framework, Section 3 describes the methodology, Section 4 reports the results, Section 5 discusses the findings and Section 6 concludes.
 
Literature review and theoretical framework
 
FPOs as an intervention
 
FPOs are collective entities that enable smallholders to access inputs, credit, markets and training that would be unaffordable individually (Hellin et al., 2009; NABARD, 2015; Bikkina et al., 2018). Evidence from plainland India reports increased bargaining power and reduced intermediary dependence (Gummagolmath et al., 2022; Singh and Vatta, 2019). Agencies such as IRMA, NABARD, NAFPO and SFAC support FPOs in accessing institutional finance for storage, processing and marketing (IRMA-NABARD, 2022; NABARD, 2015; NAFPO, 2022; SFAC, 2019). Collective purchasing of inputs and sale of produce can lower transaction costs, though challenges in identifying reliable suppliers and buyers persist, especially in rural areas (Kasrija and Singh, 2023). Training programmes cover integrated pest management, irrigation, organic farming and bio fertilisers, often facilitated by government agencies (Krishnan et al., 2021).
       
The combined resources and expertise of an FPO can enable smallholders to realise higher economies of scale, lower transaction costs and obtain better prices for their agricultural products (Gummagolmath et al., 2022; Adhikari et al., 2021; Bunte, 2019; Singh and Vatta, 2019). These enhancements are expected to make supply chain processes more efficient, support sustainable livelihoods, enable smarter decision making and foster innovation in the sector (Fig 5).
       
Smallholders typically cannot benefit from economies of scale due to limited production volumes, but collective efforts through FPOs can help overcome this constraint. However, without transparency and value addition in the pricing chain, intermediaries may capture a larger portion of the consumer price, thereby diminishing the share received by producers (Acharya, 2022).
       
The presence of FPOs broadens the scope of research required to support the sector’s growth, particularly in enhancing the socioeconomic, technological, managerial and ecological capacities of smallholders (Hellin et al., 2009; NABARD, 2022; Salokhe, 2025b). FPOs have become increasingly central to promoting rural development, empowering farmers and ensuring food security. Recognising their importance, governments and development agencies have adopted various policy frameworks and financial mechanisms to facilitate the establishment and strengthening of FPOs (Bikkina et al., 2018; DACFW, 2020; Hellin et al., 2009; NABARD, 2015).
       
Consumer demand is shifting toward nutrient rich foods, with fruits and vegetables playing a vital role in food security and ecological sustainability (Pingali et al., 2019; Joosten et al., 2015; FAO, 2020; WHO, 2019). Horticultural crops can generate higher income than staples, supporting poverty alleviation and sustained livelihood improvement (Weinberger and Lumpkin, 2007; Galhena et al., 2013; Rai et al., 2019). However, most evidence comes from plainland states; applicability to hill ecosystems like Tripura remains untested.
 
Theoretical underpinnings
 
Michael Porter’s cluster theory (1990, 1998, 2000) posits that geographic concentration of firms, suppliers and institutions generates competitive advantages through knowledge spillovers, specialised inputs and agglomeration economies (Fundeanu and Badele, 2014; Newlands, 2003). Clusters reduce transaction costs and enable collective investment in infrastructure. Porter contended that the closeness of firms facilitates exchanges of knowledge, skills and resources and the presence of specialised suppliers and service providers incites efficiency of production (Porter, 1990, 1998, 2000). Theorists of cluster theory have increasingly emphasised agglomeration economies, whereby the spatial proximity of industries generates mutual benefits and enables resource optimisation.
       
In this regard, FPOs can be understood as administratively constructed clusters: they bring together smallholders and institutions to access input and output markets more easily, share knowledge and jointly invest in infrastructure - contributing to economies of scale, increased productivity and profitability (Newlands, 2003; Porter, 1990, 1998; PNB India, 2021). However, the theory assumes geographic proximity - a condition that may not hold when farmland is non contiguous, as in Tripura. Therefore, implementation of cluster theory into FPO design and execution must account for spatial dispersion and the need for deliberate infrastructure investment.
 
The Tripura context
 
Tripura, a developing state in northeast India, possesses favourable agroclimatic conditions for fruit and vegetable cultivation. The state produces 7.86 metric tonnes of fruits (across 60,145 ha) and 6.21 metric tonnes of vegetables (across 36,786 ha), with demand at 2.70 and 4.05 metric tonnes, respectively. Despite a marketable surplus, smallholders face ongoing inefficiencies in cost, time, access to markets, information flow and product quality, receiving a disproportionately small share of the consumer price (Dastagiri et al., 2012; RBI, 2019; MANAGE, 2017; GoT, 2023).
       
Under the “Promotion of 10,000 FPOs” and MOVCDNER schemes, 81 FPOs have been established in Tripura (Das and Das, 2022; NSO, 2021). Most FPOs are registered under either the Companies Act or the Cooperative Societies Act. This study focuses exclusively on FPOs engaged in fruit and vegetable production, as these face the most severe post harvest and marketing constraints.
       
Multiple Implementing Agencies, including SFAC, NAFED, NCDC, NERAMAC, NABARD and various State Government bodies, play a pivotal role in supporting FPOs. Cluster Based Business Organisations (CBBOs) serve as the primary promoting agencies for these FPOs (BMZ India, 2019; DACFW, 2020; NAFED, 2022; PIB India, 2021a).

A qualitative case study design was employed, as it is well-suited for exploring real world phenomena (Yin, 2014) such as FPOs in their natural setting. This approach allowed an in depth examination of how FPOs influence smallholder livelihoods within the state.
       
The study covered 12 FPOs engaged exclusively in fruit and vegetable production. These FPOs were selected from across the state of Tripura to capture variation in scheme type, operational duration and geographic distribution. Out of 81 FPOs existing in Tripura (GoT, 2023), 28 were identified as being engaged in fruit and vegetable cultivation. From these, 12 FPOs were purposively selected to maximise diversity across two criteria: the scheme under which the FPO was promoted (7 under the “Promotion of 10,000 FPOs” scheme and 5 under the MOVCDNER scheme) and geographic spread across different districts of the state.
       
Data were collected through two distinct strands. First, interviews with government officials (BDOs, ADOs and directors of the Agriculture and Horticulture Department) were conducted separately. The interviews focused on policies, schemes, implementation challenges and the overall support system for FPOs in the state. Second, interviews with FPO members were carried out across all 12 selected FPOs. These interviews involved FPO Chief Executive Officers (CEOs), members of the Board of Directors and smallholder farmer members. The number of farmer interviews per FPO varied according to availability and willingness to participate. The interviews explored members’ experiences with infrastructure, credit access, input availability, training, market linkages and intermediary relationships. FPO CEOs facilitated initial contact but were not present during the interviews with farmer members to reduce bias.
       
Data collection took place between January and March 2023. Unstructured question guides were developed based on an extensive review of the existing literature to enhance the understanding level of the topic and form a strong theoretical basis for the research. All the interview sessions were conducted in Bengali or Kokborok by the first author, with two enumerators taking field notes. In addition to primary data, documentary evidence was collected to triangulate findings. This included scheme guidelines (DACFW, 2020; SFAC, 2019), government statistical reports (GoT, 2023; Das and Das, 2022) and annual reports of the FPOs where available.
       
The field notes were translated into English for the thematic analysis by the authors manually. Methodological triangulation was achieved by combining interviews with government officials, interviews with FPO members and  documentary evidence. Further, Ethical considerations were carefully observed. Verbal and written informed consent were obtained from every participant.  All participant identities were anonymised. The authors collected data with proper authorisation from the respective authority and all are aligned with the ethical principles of social research. Relevant photographs documenting the field activities are included in Annexure 1 (Fig 1-4).

FPO Characteristics Table 1 summarises the characteristics of sampled FPOs in Tripura.


       
Four major thematic constraints and one partial success emerged from the analysis. Table 2 presents themes, sub themes and illustrative evidence.


       
Crops cultivated by sampled FPO members include pineapple, jackfruit, watermelon, dragon fruit, mango, brinjal, okra, ridge gourd, bottle gourd, bitter gourd, cabbage, cauliflower, chilli, lemon, carrot, beans, pumpkin, banana and corn. Most FPOs use share capital as primary funding; institutional credit (other than Kisan Credit Card) is negligible. Some farmers practise zero budget farming (Integrated farming), but this is not widespread. Training and extension services are provided through collaboration with state and national agencies, but coverage is uneven.
       
This case study found that FPOs in Tripura face four interconnected constraints - infrastructure deficits, financial exclusion, governance weaknesses and social barriers that limit their impact on smallholder livelihoods. Partial successes in reducing intermediary dependence for some FPOs suggest potential, but current FPOs do not yet deliver the transformative benefits reported from plainland Indian states. Fig 5 illustrates the theoretical pathway from FPO participation to sustainable livelihoods, though our findings show that in Tripura, most of these benefits are not yet realised.


 
Comparison with existing literature
 
The non operational cold chains observed in Tripura contrast with studies from Gujarat and Maharashtra, where FPOs reduced post harvest losses by 15-25% using cold storage (Gummagolmath et al., 2022). This discrepancy likely reflects Tripura’s nascent FPO ecosystem.
       
The reliance on KCCs rather than institutional FPO credit aligns with findings from Sikkim (Gurung and Choubey, 2023), suggesting that northeastern hill states face unique barriers due to terrain, small landholdings and perceived risk by commercial banks. Leadership and management skill gaps are common in early stage FPOs across India (Bikkina et al., 2018; Ramappa and Yashashwini, 2018). However, in Tripura, these deficits are exacerbated by limited handholding support from implementing agencies. Further, Scepticism toward collectivism and individualistic norms mirrors early FPO challenges in other contexts (Hellin et al., 2009). This suggests that cultural resistance is a universal implementation hurdle, not unique to Tripura.
 
Theoretical implications
 
Porter’s cluster theory (Porter, 1990, 1998, 2000; Fundeanu and Badele, 2014; Newlands, 2003) assumes geographic proximity generates agglomeration economies. Tripura’s non contiguous farmland violates this assumption. Fig 6 presents a framework for strengthening FPOs that highlights the prerequisite roles of institutional support and infrastructure investment before cluster benefits can emerge. Therefore, FPOs in Tripura represent that cluster benefits do not automatically arise from aggregation alone. Instead, deliberate infrastructure investment (e.g., shared transport, mobile cold storage) and governance support are prerequisites. This extends cluster theory to settings where spatial concentration is absent.


       
The risk opportunity matrix (Fig 7) synthesises our findings: under current conditions, smallholders face high risk and low opportunity. With effective FPO support, they could move to moderate risk and moderate opportunity. Achieving low risk and high opportunity would require the infrastructure and governance investments outlined in Fig 6.


 
Limitations
 
The following limitations are acknowledged, which provide direction to the future research and policy development: (1) cross sectional design captures FPO impacts at one time point, precluding causal claims; (2) potential social desirability bias if farmers over reported benefits to please facilitating CEOs; (3) no non FPO farmer comparison group, so not all identified constraints can be attributed solely to FPO membership.

This study examined FPO impacts on fruit and vegetable farmers in Tripura. Regarding RQs, FPO membership has partially reduced intermediary dependence and increased bargaining power for some members, but benefits remain limited. Four constraints identified: infrastructure (non operational cold chains, non contiguous farmland), finance (KCC reliance, limited institutional credit), governance (leadership skill gaps) and social barriers (scepticism, individualism). Further, for non contiguous farmland, administrative clustering alone does not generate agglomeration economies without prior infrastructure and capacity investments. Instead of entering the local market with more supply, it would be better to enter the market where the demand is, to have better realisation of prices. The findings in the research would prove to be valuable to policy formulators and developmental practitioners, among other stakeholders who are interested in ensuring sustainability and fairness during agricultural development in Tripura and other locations.

Researchers from Debarshi Mukherjee’s Lab are acknowledged for their administrative help in gathering the essential data and information for the study and for providing financial support for this research publication. The authors also acknowledge the use of AI tools for language refinement, which are institutionally available.
 
Disclaimers
 
The views and conclusions expressed in this article are solely those of the authors and do not necessarily represent the views of their affiliated institutions. The authors are responsible for the accuracy and completeness of the information provided, but do not accept any liability for any direct or indirect losses resulting from the use of this content.
 
Informed consent
 
N/A.

The authors declare that there are no conflicts of interest regarding the publication of this article.