Blog 156- How to Not Promote Farmer Producer Organisations: Learning From the Coconut Sector

While mobilizing farmers into Farmer Producer Organisations (FPOs) is an important strategy to double farmers’ income, promoting this approach widely without sound planning can lead to exactly the opposite. Thamban C, in this blog, offers several lessons on how to not promote FPOs by drawing experiences with coconut FPOs in Kerala.


Worldwide, farmers are often exposed to economic risks and uncertainties owing to price crashes and a high degree of price fluctuations in farm produce. Same is the case with coconut growers in India. Coconut is cultivated predominantly in small and marginal holdings in India. Many of these farmers often find it difficult to effectively utilize technologies for realizing higher productivity and income from their tiny holdings. But when mobilised as Farmer Producer Organisations (FPOs) these small and marginal coconut farmers are able to address their resource limitations and this has been amply demonstrated by various agencies including the ICAR-Central Plantation Crops Research Institute (ICAR-CPCRI). The Coconut Development Board (CDB) has been promoting the formation of FPOs in the coconut sector so as to improve productivity and promote value addition through product diversification and marketing for enhancing the profitability of coconut farming.

The coconut inflorescence sap, namely neera, is a value-added product with huge potential to be promoted as a health drink. Technologies for extracting neera from coconut palms were developed by various research institutions, including ICAR-CPCRI (Hebbar et al. 2015). Even though neera is a ‘zero alcohol’ drink, its production and marketing were restricted due to the provisions of the Abkari Act governing the production and marketing of alcoholic beverages prevailing in the major coconut producing states. However, due to the concerted efforts of CDB and coconut growers’ associations, the Government of Kerala amended the Abkari Act and created a congenial policy environment for the production and marketing of neera. Encouraged by the favourable policy environment and incentives, many coconut FPOs established neera production units in their respective jurisdictions and started its marketing. However, a substantial number of neera units managed by these FPOs have been discontinued due to various problems.



Organizing the unorganized coconut sector through farmers’ collectives was one of the important activities of CDB during the Twelfth Five-Year Plan (2012-2017). Since then, CDB has been facilitating the formation and handholding of FPOs in the coconut sector. The three-tiered FPO structure facilitated by the Board has coconut farmers organized into small neighbourhood informal groups at grassroots level as Coconut Producer Societies (CPSs), which are small scale FPOs formed by an association of 40-100 coconut growers in a contiguous area with a consolidated minimum of 4000-5000 palms.

The farmer member contributes equity in the organization and undertakes activities aimed at productivity improvement, cost reduction, collective marketing, processing and product diversification. The CPS forms the basic unit of the FPO framework in the sector. The next hierarchical tier, the CPF, is formed by combining about 8-10 CPSs. The FPOs formed are provided legal status through registration under the Charitable Societies Act and are also registered with CDB. An aggregation of 8-10 CPFs would form a Coconut Producer Company (CPC). A CPC will have around 10 lakh coconut palms under its management. So far, 9736 CPSs, 743 CPFs and 67 CPCs have been registered in the country. The progress of CPS, CPF, and CPC formation so far is summarised in Table 1.

No. States No. of CPS No. of CPF No. of CPC
1 Kerala 7226 467 29
2 Tamil Nadu 665 69 17
3 Karnataka 400 125 13
4 Andhra Pradesh 1148 82 8
5 West Bengal 216
6 Odisha 39
7 Assam 27
8 Gujarat 14
9 Maharashtra 01
TOTAL 9736 743 67

 Source: Coconut Development Board

Development of technologies for production of neera from coconut palms, awareness about its potential as a health drink and economic benefits led to widespread discussion at the policy level on creating an enabling environment to support coconut growers in order to utilize the potential of neera, who were otherwise struggling due to low market price of coconut (Box 1).

Box 1: Policy changes to support promotion of Neera

Due to the efforts of CDB and various farmer organizations, the Government of Kerala amended the Abkari Act to enable coconut growers to take up enterprises for production and marketing of neera for enhancing income from coconut farming. Meanwhile, efforts of the State Government to save the traditional toddy sector which was going through a crisis also indirectly contributed to the evolution of a congenial policy environment to support coconut growers for neera production and marketing.

The government accepted the recommendations of the expert committee constituted to study and report strategies to revive the traditional toddy sector, and for the first time granted permission to CPSs/CPFs facilitated by CDB and five other agencies for production and marketing of neera. Subsequently amendments were made to the existing Abkari Act of 1931 and rules (Kerala Sweet Toddy [Neera] Rules 2014) were framed for issuing licenses for the production and marketing of neera.

The Toddy-Neera Board was also established for implementing suitable interventions to make coconut farming more remunerative and to promote marketing of neera as a health drink within the state and other parts of the country. The Government of Kerala also took many steps – providing subsidy for training of neera technicians, support for CPCs for the installation of plant and machinery for neera production, and providing equity support to the coconut FPO – to promote neera production as an important measure to solve the problems of the coconut sector.

A 2016 study indicated that a total of 204 CPFs were granted licenses to produce and market neera (Table 2). Most (91%) of these licenses were issued during the period from 2014 to 2016. Only 95 (43%) CPFs initiated the production activities. The remaining CPFs could not start neera production mainly due to the lack of skilled palm climbers and lack of neera processing plant under the CPCs in their jurisdiction. It is noteworthy that only 13 federations (14%) out of the 95 CPFs who have ventured into production have continued with their activities, and in eight out of 14 districts neera production by all the CPFs was discontinued. After this data was collected in 2016, many more units discontinued neera production. We are yet to collect that data.

Table 2. Field level scenario of sustainability of interventions taken up by CPFs pertaining to production and marketing of neera in Kerala State

No. District CPFs with licence for neera production CPFs

started neera production

CPFs discontinued neera production

(% of discontinuance)

1 Thiruvananthapuram 10 6 6 100
2 Kollam 3 3 2 66
3 Alappuzha 17 9 9 100
4 Pathanamthitta 1 1 1 100
5 Kottayam 6 3 2 66
6 Idukki 2 1 1 100
7 Ernakulam 11 8 4 50
8 Thrissur 6 3 2 66
9 Palakkad 11 10 9 90
10 Malappuram 56 9 9 100
11 Kozhikode 58 35 30 86
12 Wayanad 1 1 1 100
13 Kannur 13 4 4 100
14 Kasaragod 9 2 2 100
 Total 204 95 82 86

Source: Thamban et al. 2020.

The scarcity of skilled manpower for neera tapping coupled with very high wage rate was observed to be the major factors that contributed towards the discontinuance of neera tapping (Table 3). The handholding provided by CDB had been withdrawn sooner, which also had detrimentally affected the confidence of the entrepreneurs. The supply chain of neera was not robust enough to sustain the activities with optimal distribution of revenue share. Low level of technical knowledge and marketing expertise of the entrepreneurs who ventured into the neera sector also led to discontinuance of the activities.

Table 3. Factors contributing to the discontinuance of neera production activities: CPFs’ perception (n=82)

Factors contributing to  the discontinuance No. of CPFs citing the factor
Scarcity  and high wage rate of palm climbers/neera technicians 48 (59)
Lack of continued support from CDB 32 (39)
Inadequate support from state government agencies/LSGs 21 (26)
Marketing problems 45 (55)
Low yield of neera due to poor management of coconut palms 22 (27)
CPC not formed in the area of CPF functioning to manage marketing of neera 3 (4)
Low economic viability 28 (34)
Inadequate processing facilities 3 (4)
Drudgery involved in climbing palms for tapping due to predominance of very tall coconut palms 12 (15)
Problems in tapping palms during rainy season 23 (28)
Lack of product uniformity due to non-standardised technologies for neera production 9 (11)
Spoilage due to low shelf life of neera 9 (11)

Note: Figures in parentheses are percentages.
Source: Thamban et al. 2020.

Bottled Neera


The study revealed that a substantial number of producer organisations could not sustain their activities due to various constraints related to technology, marketing and policy. These are discussed in detail below. It is imperative that there is need for a restructured support mechanism to sustain the FPOs so as to effectively carry out activities related to neera-based enterprises.

1. Lack of a support mechanism to enable FPOs to sustain interventions

Formation of CPFs and initiation of various activities for the production and marketing of neera were mainly triggered by CDB and the initial phase of these FPOs were quite encouraging. But as they entered the subsequent phase, CDB curtailed their active support in a phased manner, and the FPOs were unable to cope with the production and market-related hurdles that emerged thereafter, which ushered most of them to the exit routes. The results of the present study is in line with the earlier observations that in the case of farmer producer organizations formed with the external trigger of a programme of the government, NGO, or other agency a common challenge for institutional sustainability is how to survive once the policy or programme has ended (GFRAS 2015).

2. Lack of strategies for marketing neera

Problems related to marketing were a major hurdle in sustaining neera enterprises by CPFs which included lack of product uniformity and lack of proper adoption of the recommended neera production protocol which affected the product quality. Consumer perception studies which are essential for streamlining strategies for successful marketing before launching the commercial neera production and marketing initiatives were not conducted. Neera enterprises under coconut FPOs were finding it difficult to handle competition with other products, including soft drinks, for its market share and neera as a unique product with a nutritional edge was not appropriately positioned while marketing.

Neera Outlets at Kannur District, Kerala

3. Policy constraints which are not addressed

Though the Government of Kerala has come out with a pro-farmer policy framework for the production and promotion of neera in the state, it is highly paradoxical that, even now the product is partially under the control of the Excise Department, which is entrusted with granting licences for neera production. The producer organisations perceive it as a cumbersome process to obtain a licence for tapping coconut palms for neera and renewal of the licence every year. They also think that since neera is being promoted as a non-alcoholic health drink, it should be delinked from the Excise Department – thus making the formalities for issuing a license simpler.

4. Lack of a target specific entrepreneurial development programme

Planning and implementation of interventions pertaining to production and marketing of neera were mostly done with a general format prescribed by CDB, whereas the majority of coconut FPOs were not having a clear handle on managing the neera enterprise on their own. The asymmetry of information on the level of inherent managerial and technical expertise of the FPOs was evidently the major reason for early discontinuance of the neera business by the aspirants. A well-designed, target specific entrepreneurial development programme on various facets of the neera value chain would have helped the business aspirants to survive the inertia of business inherent in the initial phase.

5. Labour-related constraints

Scarcity of palm climbers/neera technicians coupled with high wage rates was observed to be an important factor that had adversely affected the sustenance of neera enterprises in the state. Predominance of tall coconut palms in the coconut groves in the state was another limiting factor that added to the workload of climbers engaged in neera tapping. Commitment from skilled climbers is a key factor in the successful management of a neera enterprise and in many neera units lack of punctuality of climbers and conflicts over the wage rate created difficulties in ensuring regular supply of neera.

A Neera technician from Palakkad District

6. Lack of technology assessment and refinement

Lack of product uniformity due to non-standardised technologies for neera collection across the state was another important reason perceived by CPFs for the discontinuance of neera enterprises. Spoilage due to low shelf life of neera was also cited as another reason for discontinuance. The study revealed that majority of the CPFs (73%) adopted technology developed by CDB through SIBB R&D (SCMS Institute for Bio-Science and Biotechnology Research and Development), the private R&D firm, for neera collection and processing and the remaining 27% of CPFs resorted to technology developed by ICAR-CPCRI. Interventions were not carried out by the agencies who promoted neera production and marketing for pilot testing of neera collection technologies for assessing their effectiveness and refinement of technologies to suit the techno-socio-economic requirements for further scaling up production and marketing, and comparing the available technologies on different attributes for making target specific recommendations.  Lack of back-up support for effective field level utilisation of neera technologies by the concerned agencies was thus cited as another problem by the CPFs.

7. Economic viability of the neera enterprise 

Even though a very attractive level of economic benefits was projected for neera enterprises, due to field level constraints it could not be achieved in reality. The neera collection was limited to a very limited number of coconut palms by most of the CPFs and the existing policy on neera production has prevented the CPFs from realising the economies of scale. Yield level of neera per palm per tapping day was not that attractive mostly due to poor palm health, thereby adversely affecting economic viability. Hence, scientific management of coconut palms plays a crucial role in ensuring better yield and continuous supply of neera in the upstream end (production node) of the neera value chain.

8. Lack of coordination among stakeholders

It is a startling fact that the state’s Department of Agriculture Development and Farmers’ Welfare – with its vast network of extension system in the state that includes Krishibhavans at grassroots level in every grama panchayat – was not involved in the formation of the three-tier FPO system in coconuts.  Furthermore, the coconut development schemes of Department of Agriculture were implemented with separate mechanism of farmers’ participation without utilising the existing platform of CPS, CPF and CPC structure of FPOs. This lack of coordination among governmental agencies has failed in harnessing synergy for effective management of neera enterprises.


Promoting FPOs in a hurry to meet the targets without adequate technology refinement and market assessment can do more damage to the fledgling FPO movement. FPOs do need continuous handholding support to help them deal with the technical and marketing challenges in enterprise development. There should also be mechanisms to respond to policy and institutional bottlenecks that can constrain the scaling up of new farmer enterprise. In other words, Farmer Producer Organisations (FPOs) need support not only at the FPO level, but also at the promotion and ecosystem level (Aneesha 2021). We should also learn from the mistakes that ensued from the hasty promotion of FPOs, such as the one in the coconut sector, so that we can continuously make improvements in the way we initiate and mentor FPOs.


Aneesha B. 2021. Towards ecosystem support for strengthening Farmer Producer Organisations. AESA Blog 154 (August 2021), Agricultural Extension in South Asia.

GFRAS. 2015. Producer organisations in rural advisory services: Evidence and experiences. Position Paper. Lindau: Global Forum for Rural Advisory Services.

Hebbar KB, Arivalagan M,  Manikantan MR,  Mathew AC,  Thamban C, Thomas GV and Chowdappa P. 2015. Coconut inflorescence sap and its value addition as sugar – collection techniques, yield, properties and market perspective. Current Science 109 (8):1411-1417.

Thamban C, Subramanian P, Jayasekhar S, Jaganathan D and Muralidharan K. 2016. Group approach for enhancing profitability of small holders through technology integration – Reflections from coconut farming. Journal of Plantation Crops 44(2):158-165.

Thamban C, Jayasekhar S, Chandran KP and Rajesh MK. 2020. Sustainability of Farmer Producer Organisations – The case of producer organisations involved in the production and marketing of ‘neera’ in the coconut sector in Kerala, India. Journal of Plantation Crops  48(2):150-159.

Dr Thamban C is Principal Scientist (Agricultural Extension), ICAR-Central Plantation Crops Research Institute (CPCRI), Kasaragode, Kerala, India (email:



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  • Excellent Blog to alert that a program with unlimited possibilities will be throttled if suggested support is not provided. The message should reach all the concerned so that steps will be taken soon to save money, efforts and enthusiasm and enterprise of several farmers and their organizations.

  • “Dr. Thamban deserves a word of appreciation for this blog. While many researchers are interested in disseminating learning from success cases, Dr. Thamban deviates from the normal path and has given many insights relating to the failure of coconut FPOs.
    We have been hearing about FPOs for the past few years. I think one phase is over. Whether any attempt has been made to evaluate the functioning of FPOs and get empirical evidence for at least two questions- a) How far the objectives of the FPOs have been met? b) How many FPOs are in profit? Before making any policy corrections, is it right to enter into the ambitious programme of starting 10,000 FPOs. After all, we are dealing with public funds.
    I have come across two reports- a) Emmanuel V Murray (2020) ‘Policy for FPOs- Walking on three legs’ which is worth reading. Another one is by Azim Premji University (2020) ‘FPOs- Past, Present and Future’. According to this report, only 14 % of the FPOs have a paid up capital (PUC) of Rs. 10 lakhs and above, while 49 % of them have a PUC of Rupees one lakh or less.
    What I could get from the reports is that farmers are at the receiving end of poor policy and planning.
    Against the above background , Dr. Thamban’s blog should be an eye opener for the policy makers and those who advocate large scale setting up of FPOs.
    I am told that the Department of Agriculture, Govt of Kerala is also planning to establish one FPO per block, as a target-oriented programme. Hope the concerned authorities will consider the learning from failures and accordingly will move forward. Business plan of an FPO is an important activity and many of the FPOs do not give importance to this.

  • After a long time , I read a blog having huge practical implications basing it on the failures. I instantly recollected, former president Dr. Abdul Kalam’s statement, “Don’t read success stories, you will only get a message, read failure stories, you will get some ideas to get success”. Since Dr Prasad has already elaborated very nicely with his detailed comments above, I would not repeat them here, but I would say, there are interesteing lessons for extension scholars especially on the need to learn from failures, limitations of the target driven approach, lack of coordination etc . I wish more of our scientists colleagues, extension professionals start looking at these kinds of discontinuance too and generate policy relevant lessons. Unfortunately, many of our colleagues find no dividends in reading this kind of scholarly articles over saying Good Morning, Happy Anniversary, Happy Birthday etc in professional groups too. Congratulations to Dr Thamban and to AESA for continued efforts to bring before us professional contents to improve the practice in development paradigm. Always look forward to AESA for such professionally enriching blogs, good practices & Meeting notes!

  • An excellent piece by Dr. Thamban. His unparalleled experience and insight reflects in the article. Such articles from real workers who knows both technology and extension science are of immense value for younger generation extension scientists and field workers.

  • “An honest and pragmatic analysis of a failure of a developmental intervention, with an “entrepreneurial ecosystem” perspective. One striking aspect of this blog is that D Thamban, with his rich experience and analytical approach, has precisely pointed to the weak links in this intervention. This is not merely a blog about a failure of an intervention, it is an “evidence-based” evaluation report which may be of immense use to development planners and policymakers. I wish to elaborate few aspects mentioned in his blog.
    1. FPOs along with other farmer-based entrepreneurship interventions are primarily designed to address the value chain problems, which directly affect the “producers share” of consumer’s rupees. In these approaches, the “intermediaries” in the value chain, who grab over 50% of the retail price of the product, are considered problematic and their roles are assigned to farmers. The primary producers are assigned additional roles of the middlemen like, marketers/ aggregators/ retailers/ processors etc. These roles are institutionalised into farmers collectives (eg SHG/ FIG/FPO/ Cooperatives). When someone who is a “primary producer”, is compelled to assume other roles in the value chain, for getting a higher share of consumer price, it brings a complex situation. Considering risks involved in establishing and stabilising a new business targeting a “niche market” (like neera- a health drink) with “amateur entrepreneurs” like farmers groups/ collectives, continuous Govt support for funding, marketing and business mentoring for the first three to five years (valley of death) is very essential. If we say that agriculture is a CDR profession, Agri-business is much complex than production.
    2. Another significant aspect of his blog is the struggles the FPOs faced while producing and marketing a product “neera” – a product that needs regulatory clearance for its production. From an entrepreneurship perspective, any product which requires “regulatory compliances” for production and marketing, targetting a “niche market” (e.g. health drink), will have only a few takers.
    3. In my view, the strength of this blog is that it follows an “entrepreneurial ecosystem” (EES)approach in analysing the experience of FPOs. The EES is the emerging approach for entrepreneurship development, where the creation and growth of new ventures are determined by interdependent actors such as policy, finance (e.g. availability and access to funds for new businesses and also during their growth stages), culture (e.g. consumption practices ), business support (e.g. business mentoring through incubators – legal, accounting etc), human capital and market. This is a clear departure from the traditional extension view of entrepreneurship where business creation and success is largely determined by the entrepreneur qualities (e.g. achievement motivation, innovativeness, etc) and technology”

  • An excellent note on the issues faced by FPOs in general and coconut FPOs in particular. Department of Agriculture is also running similar programs parallel to the FPOs, as rightly pointed out in the blog. For instance, the Keragramam scheme of the department is grounded on the same concept aiming to boost, area production and productivity of the palms with an area approach. Producer level societies are formed at the panchayath level to promote scientific farming practices in coconut gardens. At present, Agricultural officers of the department are tasked with mobilizing farmers and organizing producer societies. If the interventions can be routed through the already functioning coconut FPOs, it would greatly benefit the farmers and lessen the responsibilities of overburdened agricultural officers. Moreover, though the Neera is a much potential product, it still remains underrated in the market. The reasons for the same are many including lack of proper marketing strategies and shortage of skilled labourers for tapping. Developing a category of skilled labourers by CDB as in the case of other crops (Eg: Labour banks for rice) may be a viable solution.

  • Very good Blog that puts FPOs in perspective demanding intense soul searching. A very good narration of the teething issues with respect to FPOs. The complexities associated with FPOs are further compounded because of the very nature of business dynamics involved with Neera. Experiences of FPOs dealing with other commodities may help policy makers and planners to get a 360 degree feedback.

  • This blog must serve as an eye opener for all those who are promoting FPOs in different sectors. It is always wise to evaluate any model at least on a pilot basis before expanding it. The decision to promote FPOs in all the districts of the country without an objective evaluation of the existing FPOs appears to be a fatal mistake. Even though the intention of the policy makers to help the small holders is good, a bad decision is after all a bad decision.
    This reminds me of a famous quote “Good decisions come from experience and Experience come from taking bad decisions – Mark Twain”. At this stage it is necessary to address the problems of the existing FPOs so as to enable them to sail through before venturing into promoting FPOs.
    Congratulations to Dr. Thamban, C for coming out with a thought provoking blog and thanks to AESA for making it available to us.