Impact of farmer producer organizations on market access and price realization of horticultural crops

Abstract:

Farmer producer organizations (FPOs) have been promoted across East Asia as a vehicle for improving smallholders’ bargaining power, yet rigorous evidence on their actual price impact for perishable horticultural crops remains scarce. This research traced eight seasons of market transactions (2019 Kharif through 2023 Rabi) for three horticultural commodities chilli pepper, spring onion and Asian pear marketed by 14 registered FPOs in Gangwon and Gyeonggi provinces, South Korea, and compared the prices received with those obtained by matched non-FPO farmers selling through conventional wholesale mandis. FPO members consistently received higher prices: the weighted average premium across all commodities and seasons was 24.7%, ranging from 18.3% for spring onion to 33.8% for Asian pear. Price premiums widened over time, from 16.4% in 2019 Kharif to 29.1% in 2023 Rabi, coinciding with FPOs’ progressive shift away from wholesale mandis toward direct institutional and retail channels. By 2023, direct-market sales accounted for 38.2% of FPO produce volume, up from 12.3% in 2019. Market channel diversification was the single strongest predictor of price premium in a panel regression model (coefficient 0.41, P<0.001). FPO membership also reduced price volatility: the coefficient of variation for seasonal prices was 11.8% among FPO members versus 19.4% for non-FPO farmers. Transaction cost analysis showed that aggregation, grading and transport expenses consumed 7.3% of gross revenue for FPO members, compared with 12.6% borne individually by non-FPO farmers. These results provide empirical support for continued policy investment in FPO capacity building, particularly in post-harvest handling and direct-market linkage.