Marginal Farmers of India

Rural transformation has improved the Lives of Marginal Farmers in India, as well as their cooperative engagement, according to a recent study. Read here to learn more.

A recent study on marginal farmers’ engagement with cooperatives highlights the critical role of cooperative institutions, especially Primary Agricultural Credit Societies (PACS), as catalysts for poverty reduction, livelihood security, and rural transformation.

The findings assume importance as marginal farmers form the backbone of Indian agriculture but remain the most vulnerable segment of the agrarian economy.

Who are Marginal Farmers?

Marginal farmers are cultivators owning less than 1 hectare of land

• They constitute ~65.4% of India’s farmers but Control only ~24% of the total cultivable land
• They have highly fragmented landholdings, limited market power and bargaining capacity, but greater exposure to climate, price, and income shocks

Marginal farmers thus face a paradox: they dominate numerically but remain economically marginalised.

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Why Marginal Farmers Are Highly Vulnerable

Marginal farmers face interlocking constraints that reinforce agrarian distress:

• Landholding constraints: small plots limit mechanisation, diversification, and economies of scale
• Credit access issues: Dependence on informal lenders due to collateral and documentation barriers
• Input and technology gaps: Limited access to quality seeds, fertilisers, irrigation, and extension services
• Market exclusion: Weak integration with value chains and poor price realisation
• Public service deficits: Inadequate outreach of insurance, storage, and risk-mitigation mechanisms

These vulnerabilities make collective institutional support essential.

Role of Cooperatives and PACS

For marginal farmers, agricultural cooperatives, especially Primary Agricultural Credit Societies (PACS), represent the closest and most consequential institutional interface.

Why PACS Matter:

• Provide short-term and crop loans
• Enable access to inputs (seeds, fertilisers, pesticides)
• Act as channels for government schemes and subsidies
• Offer basic financial inclusion services
• Serve as potential hubs for storage, procurement, and marketing

Thus, PACS are not merely credit institutions but multi-functional rural service platforms.

Barriers Affecting Cooperative Engagement

Despite their importance, marginal farmers’ engagement with cooperatives remains uneven due to multiple constraints.

1. Farmer-Level Constraints

• Limited awareness of cooperative schemes and benefits
• Lengthy and bureaucratic procedures for loans and membership
• Physical distance to cooperative offices, especially in hilly regions
• Low digital literacy restricts access to digitised services

2. Funding Constraints at the PACS Level

• Inadequate working capital limits credit availability
• Weak balance sheets restrict diversification into non-credit services
• Acute in states such as Uttarakhand and Maharashtra, affecting outreach

3. Low Cooperative Service Uptake

• Shortage of trained staff and professional management
• Weak last-mile delivery capacity
• Geographic and logistical constraints reduce participation

4. Infrastructure Deficits

• Poor physical infrastructure (storage, IT facilities, office space)
• Shallow digitalisation limits transparency, efficiency, and scale
• Particularly evident in hilly and remote states like Uttarakhand

5. Gender Gaps in Cooperative Spaces

• Cooperatives remain male-dominated institutions
• Women farmers’ participation is limited despite their central role in agriculture
• Decision-making power and leadership positions remain skewed

Why Strengthening Cooperative Engagement Matters

• Income stability for marginal farmers
• Risk pooling against climate and market shocks
• Improved bargaining power through collective action
• Inclusive growth by integrating smallholders into value chains
• Rural transformation beyond subsistence farming

Cooperatives can convert fragmented farmers into organised producers.

Key Recommendations to Improve Cooperative Engagement

1. Strengthen PACS Visibility and Outreach

• Community-level awareness campaigns
• Use of digital platforms and local media
• Promote diversified roles of PACS beyond credit (storage, processing, marketing)

2. Mission-Mode Cooperative Empowerment

• Implement “Sahkar Se Samridhi” with a farmer-first approach
• Create a trained grassroots cadre:
  • Sahkar Shakti – Sakha/Sakhi Model
  • Local cooperative facilitators to guide farmers, especially women

3. Institutionalised Support and Ease of Access

• Reduce administrative and procedural hurdles
• Expand financial and digital inclusion for marginal farmers
• Build Digital Public Infrastructure (DPI) for cooperatives
• Operationalise a Cooperative Stack for seamless services

4. Dual Institutional Architecture

• Enable the coexistence of PACS and Farmer-Producer Companies (FPCs)
• Example: Bihar, where PACS and FPCs operate in complementary roles
• PACS focus on credit and welfare; FPCs on aggregation, value addition, and markets

5. Gender-Inclusive Cooperative Reforms

• Mandatory inclusion of women members and leaders
• Tailored financial products for women farmers
• Capacity-building and leadership training for women in cooperatives

Way Forward

• Marginal farmers are central to India’s food security, rural employment, and agrarian sustainability.
• However, without strong collective institutions, their vulnerabilities will persist.
• Revitalised cooperatives, backed by funding, technology, gender inclusion, and mission-mode governance, can transform PACS into engines of equitable rural development.

Conclusion

Marginal farmers dominate Indian agriculture but remain structurally disadvantaged. Strengthening their engagement with cooperatives, especially PACS, is not merely a welfare measure but a developmental necessity.

By addressing institutional, infrastructural, and gender barriers, cooperatives can evolve into powerful instruments of poverty reduction, livelihood security, and rural transformation, aligning with the broader vision of Viksit Bharat.

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