University / Organisation : Institute for social and economic change (ISEC) Bangalore,India
Paper or project ? paper
Title : Determinants of Farmers Participation and their Export Potential in the Grape value chain through Farmer Producer Organizations’(FPOs) In India: A New Institutional Economics Approach
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Abstract : The emergence of Farmer Producer Organizations (FPOs) in India represents a vital institutional innovation to empower smallholder farmers in high-value agricultural sectors. This study examines the determinants of export potential among grape growers and evaluates how FPO membership influences their participation and their export potential as well as price realization. Drawing on the New Institutional Economics (NIE) framework, which emphasizes transaction costs, institutional arrangements, and collective action, this research utilizes a primary survey dataset of 220 farmers (120 FPO members and 100 non-members) from three major grape-producing regions in India. Empirical methods including logistic regression, instrumental variable two-stage least squares (IV-2SLS), and the Heckman two-step selection model are employed to identify both the likelihood of their participation, export potential its impact on income. Results indicate that FPO membership, access to training, education, landholding size, and reduced transaction costs significantly influence their participation and their export engagement. FPO members, on average, earn ₹13.72/kg more in export markets and incur 66% lower transaction costs compared to non-members. The Heckman model confirms positive selection bias correction and highlights the causal relationship between institutional participation and improved market integration. These findings reinforce the critical role of institutional structures promoting value chain and export competitiveness of smallholder in global value chains to increase the farmers welfare and income. Keywords: Farmer Producer Organizations, Grapes, Value Chain, Transaction Costs, Market Access, New Institutional Economics.
