Custard Apple Farmer Producer Organisations: How Collective Farming Multiplies Income

NABARD impact assessment research covering 47 active Farmer Producer Organisations in Maharashtra and Andhra Pradesh working with custard apple and other horticultural crops documents that member farmers received farm gate prices 38 to 52 percent higher than non-member farmers selling identical quality fruit through traditional mandi channels during the same harvest season. Beyond price improvement, the same research documents that FPO members accessed collective input purchasing at 15 to 20 percent lower cost than individual farmers purchasing the same fertilisers, pesticides, and packaging materials from retail dealers, and received priority access to government scheme subsidies facilitated through the FPO's institutional relationships with district horticulture departments and NABARD offices. For custard apple farmers whose individual production volumes are too small to directly access supermarket buyers, export channels, or processing companies, joining or forming an FPO is the most research-validated pathway to significant and sustained income improvement.

What a Custard Apple FPO Does and How It Creates Value

Research from the Small Farmers Agribusiness Consortium and ICAR documenting successful horticultural FPOs identifies six primary value creation functions that well-managed custard apple FPOs perform for member farmers. Input aggregation involves the FPO purchasing fertilisers, grafted planting material, packaging materials, and crop protection products in bulk quantities at wholesale prices and distributing to members at cost, generating savings of ₹8,000 to ₹15,000 per acre per season compared to individual retail purchase. Collective grading and packaging involves the FPO operating a central grading facility where member harvests are sorted, graded, and packed to uniform buyer specifications that individual farmers cannot achieve independently. Collective marketing involves the FPO negotiating supply agreements with supermarket chains, export companies, and processing units that require minimum weekly volumes of 500 kg to several tonnes that no individual farmer can supply alone. Quality monitoring involves the FPO providing technical guidance on pesticide use records, GAP compliance, and residue testing to ensure all member produce meets buyer and regulatory requirements. Credit facilitation involves the FPO using its institutional status to access bank credit at lower interest rates and on-lend working capital to member farmers at the beginning of the season for input purchases.

How to Register a Custard Apple FPO in India

FPO registration in India follows the Companies Act 2013 under the Producer Company format, which is the most common legal structure for agricultural FPOs. Research from SFAC documents the step-by-step registration process that a group of custard apple farmers must complete. A minimum of 10 farmer members is required to initiate Producer Company registration, though NABARD and SFAC recommend a founding membership of 50 to 100 farmers to ensure sufficient production volume and financial viability from the start. Members collectively select a name for the company, elect a provisional Board of Directors of minimum 5 members, and engage a Company Secretary for registration filing. Registration documents including Memorandum of Association, Articles of Association, identity and address proofs of all directors, and initial share capital proof are filed with the Registrar of Companies through the MCA21 online portal. Registration typically takes 30 to 45 days and costs approximately ₹15,000 to ₹25,000 in professional fees and government charges. After registration, the FPO opens a current bank account, issues share certificates to all founding members at ₹1,000 to ₹2,000 per share, and applies for a Cluster Based Business Organisation support from NABARD or SFAC which provides handholding support for the first three years of operations.

Government Support Available for Custard Apple FPOs

The Government of India's 10,000 FPO formation and promotion scheme launched in 2020 provides the most comprehensive support package available to newly formed custard apple FPOs. Under this scheme, each new FPO receives Cluster Based Business Organisation support for 3 years from an implementing agency such as NABARD, SFAC, or state cooperative federations, covering operational guidance, accounting support, buyer linkage facilitation, and government scheme navigation assistance valued at approximately ₹18 lakh per FPO over 3 years. Equity grant support of up to ₹15 lakh per FPO matching member equity contribution is provided to strengthen working capital for input procurement and post-harvest infrastructure investment. Credit Guarantee Fund coverage of up to ₹2 crore per FPO for bank loans enables custard apple FPOs to access institutional credit without collateral that individual farmer members cannot provide. Additionally, custard apple FPOs in Maharashtra can access state government support under the Agri Business Development Programme administered through Maharashtra State Agricultural Marketing Board for pack house and cold storage infrastructure with subsidy of 40 to 50 percent of project cost.

Successful Custard Apple FPO Case Studies

NABARD annual reports and SFAC impact documentation identify several custard apple FPOs in Maharashtra and Andhra Pradesh whose performance demonstrates the income multiplication potential of the collective model. Nandurbar Sitaphal Utpadak Company in Nandurbar district Maharashtra, formed in 2019 with 187 tribal member farmers cultivating a combined 340 acres of custard apple, established collective grading and packaging infrastructure with NABARD support and secured a direct supply agreement with Reliance Fresh collection centers in Nashik and Pune. NABARD impact assessment for 2022-23 season documents member farmers receiving average farm gate price of ₹52 per kg through the FPO compared to ₹34 per kg received by non-member farmers in the same village selling through traditional agents, a price improvement of 53 percent. Kurnool Sitaphal Farmers Producer Company in Andhra Pradesh with 94 members across 180 acres secured an export order for UAE market through an APEDA-registered Hyderabad exporter in 2022, with member farmers receiving ₹68 per kg for export-grade Balanagar fruit compared to ₹38 per kg at the local Kurnool APMC during the same week.

Challenges and How Successful FPOs Overcome Them

Research from IRMA Anand and Xavier Institute of Management Bhubaneswar documenting FPO performance across India identifies governance weakness, inadequate working capital, and member free-rider behaviour as the three most common reasons for FPO underperformance or failure. Governance weakness occurs when Board of Director elections are dominated by influential local farmers who prioritise personal benefit over collective member welfare, undermining trust and member participation. Successful custard apple FPOs documented in NABARD research address this through transparent annual general meetings with independently audited accounts shared with all members, fixed term limits for Board directors, and formal member grievance redressal mechanisms. Inadequate working capital forces FPOs to delay input procurement to the disadvantage of members and miss buyer payment terms. Successful FPOs build working capital reserves by retaining 5 to 10 percent of annual trading surplus rather than distributing all profit as dividend. Member free-rider behaviour where members sell their best produce independently to the highest spot buyer while supplying only lower-grade fruit to the FPO undermines the FPO's ability to meet buyer quality commitments. Successful FPOs address this through written supply commitment agreements signed at the beginning of each season specifying minimum quantity and quality obligations of each member with documented penalties for non-compliance.