A Comparative Cost–Benefit Analysis of Member and Non-Member Farmers of Farmer Producer Organisations: With Special Reference to Mahabubnagar and Nalgonda Districts, Telangana State

Abstract

Farmer Producer Organisations (FPOs) have emerged as an important institutional mechanism for improving the economic position of farmers through collective input procurement, better market access, improved price realisation and enhanced bargaining power. The present study examines the economic performance of FPO member and non-member farmers, with special reference to Nalgonda and Mahabubnagar districts of Telangana State. The study assesses farmers’ perceptions towards FPO functioning and compares their cost, revenue and profitability. Primary data were collected from 800 farmers, comprising 400 FPO members and 400 non-members, during July to December 2025. Six FPOs, three from each district, were purposively selected, while member farmers were selected through systematic random sampling and non-member farmers from the same geographical areas as the respective FPOs. Descriptive statistics, Cronbach’s Alpha, Chi-square test and independent-samples t-test were employed for analysis.The reliability analysis yielded a Cronbach’s Alpha of 0.86 for 31 perception statements, indicating high internal consistency. The results showed that 67.0 per cent of member farmers had moderate perception towards FPO functioning, compared with 26.3 per cent of non-members, while 61.0 per cent of non-members had low perception. The Chi-square test revealed a significant association between membership and perception levels (χ² = 134.584, df = 2, p = 0.001). Member farmers recorded higher average revenue per acre (₹2,17,058.73) and lower accounting cost (₹1,37,414.74) than non-members (₹2,11,150.65 and ₹1,39,458.33, respectively). Accounting and economic profits were also higher among members at ₹79,643.99 and ₹9,643.99 per acre, respectively, compared with ₹71,692.32 and ₹1,692.32 among non-members. The t-test indicated significant differences in accounting and economic profits (t = 3.692, p = 0.001), but not in revenue or accounting costs. The study concludes that FPO membership is associated with better farm-level profitability, although the revenue advantage remains modest. Strengthening governance, professional management, value addition, processing, market linkages and infrastructure utilisation is essential for enhancing the effectiveness and sustainability of FPOs.