Book

Recent years have seen widespread interest in the role of producer organizations, such as primary producer groups and commodity interest groups, as mechanisms for supporting agricultural development. Globally, the evolving Washington Consensus in the background of structural adjustment has called for thorough market liberalization. This was to be achieved together with other measures to overcome problems inhibiting smallholder market access, promoting increased investment in infrastructure, in legal and market institutions, and in agricultural research and extension services, together with a greater role for producer groups (Bingen et al., 2003; World Bank, 2002). Policy advocates have recognized the potential role of producer organizations in improving smallholder access to services Farmers' producer companies and their societies can be considered as hybrids between private companies and cooperative companies. The producer company concept is aimed at combining the efficiency of a fellowship with the spirit of traditional cooperatives. Producer companies aim to integrate the farmers into modern supply networks by minimizing transaction and coordination costs, while benefiting from economies of scale. They are run and owned by farmers, financially facilitated by the government, and overseen by professionals. The objective of this concept is to utilize the farmer’s company model as a bottom-up approach for smallholder farmers’ participation in emerging markets and its help in the value chain. Producer companies are an example of changes towards more profit-oriented forms of organization arising among farming communities. In India, these changes can be seen as reactions to a new market and regulatory environment. Unlike top-down models of smallholder market integration, such as contract farming or outgrowing, producer companies create and nurture an entrepreneurial spirit at the community level.