Maharashtra leads in FPO ease of doing business; MP loses crown

Maharashtra has topped the list of states with the most favourable ecosystem for the growth of Farmer Producer Organisations (FPOs), replacing Madhya Pradesh, which has slipped to second place, according to the latest Ease of Doing Business for FPOs (EoDBF) ranking.

Photograph: Shailesh Andrade/Reuters

The rankings were released as part of the State of the Sector Report on FPOs (SoFPO), launched on Wednesday.

SoFPO is an annual report brought out by the National Association for FPOs (NAFPO), Samunnati, and the Rabo Foundation.

In the 2024 ranking, Madhya Pradesh was the top-performing state, followed by Maharashtra, while Uttar Pradesh has consistently held the third position.

As of March 2025, Maharashtra had around 14,788 registered FPOs, accounting for nearly 34 per cent of the total in India, according to the SoFPO database.

The report — structured into chapters authored by subject experts — noted that just about 6,100 FPOs of the 43,928 registered as of March 2025 cornered most of the ~4,000 crore in loans sanctioned by financial institutions.

“This shows that a huge number of FPOs could still be outside the ambit of formal credit.

“Besides access to sources of formal finance, the lack of credit could stem from poor business practices, unsound business plans, and ineffective administration of FPOs could be significantly lowering the creditworthiness of many FPOs,” the report said.

On the ease of doing business ranking, Maharashtra was placed first for providing the most supportive ecosystem and best business environment for FPOs, followed closely by Madhya Pradesh.

Around 10 states were assessed for the ranking, together accounting for nearly 81 per cent of all registered FPOs in the country.

The report also identified several key reasons for FPO failures, including banks’ reluctance to meet their working capital requirements and the complexity of government schemes.

Regulatory compliance remains another hurdle, with delays in filing returns, weak record-keeping, lack of audits, and absence of goods and services tax and income-tax filings.

Without proper diagnostics, many FPOs adopted business models unsuited to local conditions — such as supplying inputs in already saturated markets or attempting aggregation without supporting infrastructure.

In several failed cases, community mobilisation — prerequisite for collective enterprise — was skipped or diluted.

Many FPOs also lacked business plans, while their boards of directors often did not have the skills needed to run such organisations, the report added.