research paper on farmer producer organisation

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• Published: 12 October 2020

A scoping review of the contributions of farmers’ organizations to smallholder agriculture

• Livia Bizikova   ORCID: orcid.org/0000-0003-0475-2456 1 ,
• Ephraim Nkonya 2 ,
• Margitta Minah   ORCID: orcid.org/0000-0002-4484-2707 3 ,
• Markus Hanisch 3 ,
• Rama Mohana Rao Turaga   ORCID: orcid.org/0000-0002-4207-8821 4 ,
• Chinwe Ifejika Speranza   ORCID: orcid.org/0000-0003-1927-7635 5 ,
• Muthumariappan Karthikeyan   ORCID: orcid.org/0000-0001-8171-6868 6 ,
• Lixia Tang 7 ,
• Kate Ghezzi-Kopel   ORCID: orcid.org/0000-0002-8777-402X 8 ,
• Julie Kelly   ORCID: orcid.org/0000-0003-0796-0461 9 ,
• Ashley Casandra Celestin 8 &
• Beth Timmers   ORCID: orcid.org/0000-0001-8526-4280 10  

Nature Food volume  1 ,  pages 620–630 ( 2020 ) Cite this article

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• Agriculture
• Development studies
• Environmental sciences
• Social sciences

An Author Correction to this article was published on 02 November 2020

A Publisher Correction to this article was published on 20 October 2020

This article has been updated

Farmers’ organizations (FOs), such as associations, cooperatives, self-help and women’s groups, are common in developing countries and provide services that are widely viewed as contributing to income and productivity for small-scale producers. Here, we conducted a scoping review of the literature on FO services and their impacts on small-scale producers in sub-Saharan Africa and India. Most reviewed studies (57%) reported positive FO impacts on farmer income, but much fewer reported positive impacts on crop yield (19%) and production quality (20%). Environmental benefits, such as resilience-building and improved water quality and quantity were documented in 24% of the studies. Our analysis indicates that having access to markets through information, infrastructure, and logistical support at the centre of FO design could help integrate FOs into policy. Natural resource management should also be more widely incorporated in the services provided by FOs to mitigate risks associated with environmental degradation and climate change. Finally, farmers who are already marginalized because of poor education, land access, social status and market accessibility may require additional support systems to improve their capacities, skills and resources before they are able to benefit from FO membership.

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The adoption of the United Nations Sustainable Development Goals (SDGs) in 2015 signalled a global commitment to combat hunger and improve the well-being of small-scale producers and the environment. Small-scale producers contribute substantially to the food supply 1 , 2 , 3 , yet many experience food insecurity 4 . They are also highly vulnerable to climate change and environmental degradation 5 with particular severity in sub-Saharan Africa (SSA) and South and East Asia 6 .

Farmer organizations (FOs) such as associations, cooperatives, producer organizations, self-help and women’s groups, are collective institutions intended to support members’ interests 7 , 8 . FOs may help small-scale producers access markets, credit and rural extension services 9 , 10 as well as manage shared natural resources 11 . FOs can build farmer skills in production, marketing and leadership and strengthen psychological well-being 12 . Building on these contributions to farmers, FOs have become core elements of rural development, agricultural productivity and anti-poverty policies—especially in Africa and South Asia 13 , 14 .

Questions have arisen about the equity of FOs, including whether they serve mainly middle-class farmers, rather than the poorest and most vulnerable farmers 15 , 16 . In some contexts, FO benefits have been shown to vary depending on the crops grown, farmers’ access to resources and membership heterogeneity 14 , 17 . Experience from Kenya, Ethiopia and South Africa also indicates that FOs often depend on support from governments and other agencies 18 , 19 and that the benefits of FOs to individual members can be limited by production volumes, infrastructure challenges and inadequate banking services, as well as limited managerial and leadership skills 16 , 20 .

More evidence on the impact of FOs is urgently needed for governments and donor organizations to identify effective interventions to achieve the SDGs, including target 2.1 to fight hunger, 2.3 to improve the income of smallholders and 2.4 to promote environmentally friendly agricultural practices and responses to climate change. Although several studies have reviewed the contributions of FOs towards those objectives, most have focused on a subset of FO types and/ or individual countries 12 , 21 , 22 . Many have not applied a systematic approach 23 .

Here we explore the contributions of FO membership by reviewing the scientific literature on the impacts of FOs on small-scale producers in SSA and India—both of which have a long tradition of cooperatives and other FOs 24 , 25 . More specifically, we analyse the findings of 239 studies to elicit the contributions of FOs to income, empowerment, agricultural production, food security and the environment. Details of the literature screening and eligibility criteria can be found in the Methods and in Box 1 .

Overview of the included studies

The 239 studies included in this scoping review document FOs in 24 countries (Fig. 1 ). All studies were published between 2000 and 2019, most (192, or 80% of the total) since 2010. The majority used quantitative methodologies (53%) and involved at least 100 respondents (64%).

The map shows the number of studies analysing FOs included in the review by country ( n  = 239) in each of the 24 countries considered.

The reviewed studies included seven types of FOs (Fig. 2b ): agricultural cooperatives, farmer associations and groups, rural self-help groups and women’s groups, dairy cooperatives, producer groups, natural resource management groups and rural financial cooperatives.

a , Representation of services in the included studies ( n  = 239). Most of the studies reported the delivery of multiple services, thus the sum across all the services is above 100%. b , Services with the highest representation in the studies by FO type. c , Services with the lowest representation in the studies by FO type. Most of the studies delivered multiple services, thus the sum across all the services is greater than 100%. Financial cooperatives did not provide any of these services.

We characterized the studies by FO membership and crop type, where relevant. Out of 228 studies that provided data on membership, 171 studies (75%) involved FOs with open membership, unrestricted by gender, age or any other qualification. The other studies (25%) had exclusively or mostly women members (Supplementary Fig. 1.3 ).

Of the 238 studies that provided data on type of production, more than half (132, or 55% of the total) focused on crop production alone and included FOs working with cereals, vegetables, coffee and fruits; 24% (56 studies) focused on livestock only, and 21% (51 studies) focused on both crop and livestock production (Supplementary Figure 1.3 ). Agricultural cooperatives and farmers’ associations had the strongest focus on crop production (73% and 68% respectively). We found only limited information on other FO characteristics, such as membership costs (found for 37 studies, 15%) (Supplementary Fig. 1.4 ).

FO services for members

The services FOs provided to their members can be grouped into 11 categories (Fig. 2 ), of which the most common (129 studies, 54%) was ‘marketing services to increase product sales’ (such as connecting to specific markets to sell products, shared transport or storage of the products and the establishment of contacts between FO members and buyers). The second most common category was ‘providing access to market information’ on product prices and trends, seasonality and regional changes (111 studies, 46%). The third most common was ‘extension and educational services’, which both promote improved production and marketing practices, as well as build financial literacy (89 studies, 37%). The first and third categories were widely represented regardless of the type of FO or membership. Other services, such as linking farmers to external programmes, infrastructure development/management and policy advocacy with local/sub-national governments, were also found in some FOs, but their frequency in the reviewed studies is low.

Most studies described FOs that provided multiple services, but 25 of the studies (4%) focused on FOs that solely provided financial services, including financial cooperatives and rural self-help and women’s groups. FOs offering multiple services typically addressed output marketing, market information and extension services and were analysed by 32% of the studies. They were mostly agricultural or dairy cooperatives, farmer associations and groups. Studies focused on the FOs from India show that rural self-help groups and women’s groups tended to deliver financial, extension and education services such as certification and improved production practices, financial literacy, marketing skills and skills for income generation, strengthening members’ access to income, savings, credit and empowerment.

FO membership impacts

The observed FO impacts could be grouped into six categories: income, yield, production quality, environment, empowerment and food security (Fig. 3a ). Of the 239 studies, 98 (41%) focused on a single measurable impact (that is ‘improved’ or ‘not improved’) in response to FO membership.

a , Proportions of studies reporting different types of impact (as percentage of studies in that category, n  = 239). b , Positive impacts by type of production and membership in the studies. c , Positive impacts by FO type. d , Positive impacts by FO services. The sum of improvements and no improvements does not add up to 100% for each impact because not all the studies analysed the respective impacts. Most (59%) of the studies delivered multiple impacts, thus the sum across all of the services is greater than 100%.

Sixty-seven per cent of the studies (161) reported only cases of improvement (in one or more impact categories) associated with FO membership; 21% (50) reported both cases of improvements and cases of non-improvements (in one or more impact categories). Finally, 12% of studies (28) reported only cases of no measurable improvement (in one or more of the impact categories studied).

Changes in income are the most investigated impact, included in 174 studies (73%). Of the 239 studies, 58% identified positive impacts on income and only 15% saw no improvements at all. These income improvements were mostly delivered by FOs engaged in crop production (55%) and with no restriction on membership (67%) (Fig. 3b ). The proportion of studies that reported improvement in incomes is similar across FO types (Fig. 3c ), except for natural resource management groups (mostly water and forest user associations), for which only a third of the studies reported positive effects. More than two-thirds of the studies analysing self-help and women’s groups reported improvement in incomes.

Among the services offered by FOs, marketing assistance for farm products and services that provide access to market information have the highest association with improvement in incomes (Fig. 3d ). Extension and financial services also seem to play a positive role, but natural resource management services do not seem to translate into short-term improvement in incomes. Our data, however, do not indicate whether income gains are achieved through a combination of these services or whether a few services on their own have a large influence on improving incomes.

In the studies that quantified changes in income (33, or 14%), increases ranged widely from 3% to 70% over the studied period (often between 2 and 5 years). Out of our 239 studies, 7 (3%) reported inconsistent income gains characterized by fluctuations over years and seasons. Such fluctuations were attributed to external and socio-demographic factors such as commodity prices, weather and climate impacts, crop and livestock losses caused by pests and diseases, varying product quality and insufficient family labour, or illness of household members 26 , 27 . However, 25 studies (10%) mentioned that FOs assisted famers to stabilize their income through access to reliable markets, higher bargaining power with wholesalers and retailers, and more stable prices through access to consistent and reliable markets. This indicates that FOs have the ability to mitigate risks that cause fluctuations in the incomes of their members.

Production quality

After income gains, improved production quality was the next most commonly reported impact. Changes in production quality were typically measured in terms of improved quality of crops, especially fruits and coffee, as well as dairy products. Positive contributions to production quality were reported in 48 studies (20%) whereas no improvements in production quality could be identified in 13 studies (5%). Positive impacts on production quality were mostly delivered by FOs engaged in crop production (65%) and in FOs with no restriction on membership (79%) (Fig. 3b ).

With few exceptions, the share of studies that find positive impacts of FOs on production quality is similar across FO types. Studies analysing rural self-help and women’s groups provide few accounts of production quality improvements and there seems to be no association between financial cooperatives and quality improvements (Fig. 3c ).

The reported improvements in production quality are mostly driven by marketing information and output marketing services, as reported in around two-thirds of the studies (Fig. 3d ). This mostly related to a switch to organic production, stronger connections with buyers and improved value chains, as found by Bezecon 28 . The provision of extension and input marketing services also seems to matter, as indicated in one-third of the studies, mostly focused on improved practices in the field, collection and storage. Other types of FO services seem to have a limited association with production quality improvements.

Yield changes

Typically, indicators to measure changes in yield include amount produced per hectare or per animal for livestock, volume of dairy products and reductions in crop losses. Positive contributions to yield were delivered in 46 studies (19%), while no improvements in yield were listed in 27 studies (11%). Positive impacts on yield were mostly delivered by FOs engaged in crop production (70%) with no restriction on membership (87%) (Fig. 3b ).

Improvements in yield were mostly driven by producer groups, farmers’ associations and agricultural cooperatives, for which approximately one-quarter of the studies reported yield improvements. Studies analysing other FO types reported yield improvements much less often or, in the case of financial cooperatives, did not report any improvements (Fig. 3c ).

As in the case of impacts on incomes, output marketing services seem to matter the most for yield improvements. Extension services and access to market information are the other two services that are associated with higher yields (Fig. 3d ). A greater capacity of producers to deploy sophisticated inputs and management practices, as a result mainly of FO extension services in combination with access to inputs, may have a strong effect on members’ yield levels, as found in Chindi et al. 29 and Wassie at al. 30 . Extension services provided by FOs have been shown to have positive impacts specifically on the use of fertilizers or high-quality and climate-resilient seeds 31 .

Environment

In 57 studies (24%), there were documented improvements in environmental parameters mostly in terms of resilience-building such as flood protection, wetland management to promote nature-based solutions to climate change, water and land conservation practices to respond to climate change impacts, improved water quality and quantity and soil conditions, and reduced erosion. All these factors contribute to longer-term yield improvement, sustainable production and risk reduction, so they can be expected to have measurable long-term effects on farmer income (beyond the period of study).

However, 15 studies (6%) mentioned no improvements or negative impacts on the environment, mostly relating to water pollution and land clearing. Positive impacts on the environment were mostly delivered by FOs engaged in crop production (53%) with no restriction on membership (78%) (Fig. 3b ).

Unsurprisingly, positive environmental impacts are predominantly reported by studies focused on natural resource management FOs. Only a few studies concerned with FOs for economic support, such as agricultural and dairy cooperatives, report positive environmental impacts (Fig. 3c ). However, it is possible that studies that focus on FOs oriented towards economic support do not measure environmental impacts. In these cases, any positive impacts in terms of income and yield may have actually resulted from sustainable practices such as improved soil and water management as well as adaptation responses to climate change impacts. The only substantial impacts were adaptation to climate change and resilience-building (11 studies, or 4.6%) and implementation of organic farming methods (10 studies, or 4.2%). There were also examples of engagement in forest and biodiversity management, addressing water quality and availability and the use of renewable energy. These activities were motivated by production needs such as irrigation or energy for processing and storage (for example Bekele and Ando 32 ) or as the outcome of particular government support campaigns to improve irrigation, for example 33 .

Environmental improvements were delivered by specific services targeting natural resource management (mostly water, forest and pasture) as well as outcomes of market information and output marketing (Fig. 3d ). In addition, studies focusing on other types of FOs that deliver extension and marketing services also reported environmental improvements, as some of the promoted management practices aimed at better yields (such as small-scale irrigation and targeted fertilizer application) were provided by FO extension services that in turn contribute to improved water quality and quantity 34 . Management practices promoted by such FOs, aimed at improving yields and/or resource use efficiency (such as small-scale irrigation and targeted fertilizer application), were also found to contribute to improved water quality and quantity 34 .

For natural resource management groups, livelihoods were strengthened and made more resilient through improvements in the quality or quantity of forest resources, irrigation water or pasture. More predictable and secure access to forest resources also provided a risk management strategy to deal with income fluctuation, as illustrated by Maretzki 26 , Ingabire et al. 27 and others.

Other impacts

Of the studies on self-help and women’s groups—predominantly located in India—about 20% reported improvements in food security and 31% in social empowerment. Natural resource management groups are the other type of FOs reporting such benefits, although present in very few studies. Empowerment was measured through self-reported increases in confidence and psychological well-being and participation in domestic decision-making, as well as improved business knowledge, leadership and management skills, and engagement in civic affairs. Approximately 20% of the studies mentioned the importance of higher income and access to credit to pay school fees, health care costs or to increase savings. The information on food security benefits is limited, with only 19 studies (8%) addressing this parameter. These studies focused on assistance related to food access through income fluctuations as well as through increasing food availability due to extension support and access to inputs resulting in yield improvements.

Factors affecting FO service delivery

Studies were also assessed for their reporting of factors that could have mitigated or strengthened the impacts of the FOs’ membership and service delivery. These were placed in two groups, concerned with external and socio-economic factors, as detailed below.

External factors

To assess the reported role of external factors on FO services, we first focused on support provided by national governments to FOs (Fig. 4 ). Of the studies reviewed, 40% reported that FOs received government support in the form of input and investment subsidies, conditional and unconditional cash transfers, infrastructure support programmes to develop roads, irrigation, storage facilities and others, non-targeted support to assist with start-up costs, government-financed extension services and tax exemptions on FO products. Besides government support, 25% of the reviewed studies mentioned support from local non-governmental organization (NGOs), international projects or donor initiatives. Across the various types of FO, the highest rate of government support was reported in studies of natural resource management groups (60%), although a higher share of farmers’ associations and groups received external support when NGOs were included.

Bars indicate the proportion of each type of FO receiving support from national governments. In total, 40% of the reviewed studies reported some sort of support from national governments to FOs. Government support may include input and investment subsidies, conditional and unconditional cash transfers, infrastructure support programmes to develop roads, irrigation, storage facilities and others, non-targeted support to assist with start-up costs, government-financed extension services and tax exemptions on FO products.

Other external factors beyond government or NGO support have been reported relating to climatic, weather and extreme events that affected production, changes in local administration and migration. From these three factors, climate variability and related effects were mentioned in 30 studies (12.6%) because of their negative implications for production and yield. Local administration was listed in 17 studies (7.1%) which typically stressed the importance of relationships with local governments to improve the ability of FOs to successfully deliver services.

Some of the reviewed studies identified specific recommendations for government policies to assist in service delivery and strengthen the impacts of FOs. The most common suggestion was to direct government support to FOs through extension services, access to credit and support for market access, as well as infrastructure investment (28 studies, 12%); and strengthening natural resource management policies, mostly on water management and climate change adaptation (27 studies, 11%).

Finally, our scoping review identified a small number of studies (14, or 6%) that referred to interactions with the private sector in terms of FOs’ contracts with input companies, interactions with private-sector buyers, engagement in contract farming and private sector-driven extension provision.

Socio-economic factors

FO impacts can vary between members as households are highly heterogeneous in terms of their socio-economic characteristics and ability to take advantage of FO services. Sixty-eight of our studies identified factors influencing membership and service delivery (Table 1 ). These factors (which are inter-related) include gender and gender relations, access to land, education and poverty levels and remoteness/access to infrastructure. We also found four studies (1.7%) that identified support to purchase inputs for production or access education for poor households 21 , 35 .

As our scoping review shows, the literature on the impacts of FO membership on small-scale agricultural producers covers different types of FO in multiple countries of SSA and India. Positive impacts on farmers’ income, yield and production were found, as well as some benefits for food security and the environment.

FO services and members’ incomes

Our review revealed that FO services that enhance access to markets—for example, product marketing and market information—have positive impacts on member income as well as yield and product quality. This is consistent with the broader literature, which argues that the diverse services that FOs provide to connect small-scale producers to markets lead to positive impacts by assisting the individual members to overcome challenges such as low quantity or quality of products and frequent supply constraints, as well as by assisting with skill development and access to inputs 22 . In addition, access to financial services was shown in our findings to be critical to achieve improved income 23 . Member access to credit will be even more crucial for FOs to respond to future challenges such as climate change impacts and risk management, which require additional investments in climate-resilient crops, irrigation or insurance 36 .

Extension and educational services delivered by FOs have a substantial presence across all types of FOs in our review and delivered positive impacts. These services addressed skill, knowledge and information deficiencies that the members faced in relation to production decisions and practices. Types of services included information about input application, farming practices and production systems; market information; health and safety; and managerial and business skills—as well as knowledge about environmental stewardship and sustainability. These services would ideally be bundled flexibly and responsively to meet specific and dynamic local production constraints and market opportunities. In practice, however, providing these services to individual ssmall farmers is costly; collectives such as FOs make extension services more cost effective and feasible 23 . FOs can provide the institutional infrastructure for effective knowledge management, applied research and practical innovation to respond to diverse local production constraints or changing market conditions. Our results reinforce the value of extension services in the context of FOs and are consistent with literature findings that FO extension services benefit smallholders by improving financial literacy and the uptake of sustainable practices to achieve productivity and income gains 36 , 37 .

We infer from these results that policy development and programming should support FOs in the effective delivery of services that provide access to markets—both input and output—through targeted market information, infrastructure investment to improve market access mostly focused on road development, logistical support and extension to improve outcomes across different forms of FOs. Smallholders would probably benefit from FO provision of financial services such as consolidating and administering small-scale loans, seasonal input financing or crop insurance schemes based on measurable climate parameters (such as rainfall) rather than complex, case-by-case yield calculations. This set of multiple services for extension, infrastructure, market and financial services should be central to the design of FOs.

In terms of avenues for future research, our scoping review indicates that the benefits provided by a given FO may differ between individual members 14 , 38 . Although we found information comparing benefits for marginalized groups (as discussed below), this aspect of the analysis warrants further research. Similarly, further investigation of the positive spill-over effects 39 of FOs on non-members and local communities would strengthen the case for FOs in supporting smallholder livelihoods.

Limited FO benefits for marginal producers

Reviewed studies mostly focused on those smallholder households with sufficient resources to benefit from engagement in FOs. Although the broader literature identifies several characteristics, such as farm size, gender of the household head, education and age, that influence FO membership and the heterogeneity of impacts 40 , our findings reveal that distance of households from markets is also an important variable hindering FO benefits. Gassner et al. 41 argue for differentiating among smallholders on the basis of the availability of resources. Households engaged in small-scale farming as a livelihood may have varying income and assets, resources to reinvest in agriculture or access to better-paid non-farm jobs to transition out of farming 38 . Those households that are on the margin and lack resources are likely to incur higher transaction costs to access FO services 39 and thus need to be supported, while possible barriers and incentives need to be carefully revisited to make FOs more accessible 42 .

The gender of the household head was a prominent factor; studies suggest that benefits such as income, yield and production quality are lower for female-headed farm households 40 . FOs seem to be less effective for younger, less literate and female farmers, even if they become members. In addition, women (both married and unmarried) are often constrained in their ability to take advantage of FO services to improve crop yield, production systems and marketing. Some studies suggest that the homogeneity of women’s self-help groups positively affected women’s likelihood of joining, as a higher proportion of female members is more appealing to other women 43 . In India, rural self-help groups and women’s cooperatives show positive impacts on women’s empowerment and access to credit, but often limited impact on domestic gender relations 44 .

Our results on gender, combined with our results on the other characteristics of marginalization (for example, distance to market) indicate that marginalized groups of farmers are less likely to participate in or to benefit from participation in FOs. This implies that policy development and programming in Africa and India should focus on the levers that induce them to more actively engage in FOs. Marginalized small-scale farmers may require different support systems to first improve their capacities, skills and resources as well as connections to infrastructure before they are able to benefit from FO membership. With regards to gender, policy development and programming should focus on improving the participation of women in FOs. One way is to mobilize women to form female-focused FOs and provide support through agricultural extension aimed at building the abilities of women farmers in areas such as production technology uptake and marketing 45 .

Limited food security benefits

This scoping review found a very low number of studies evaluating the contributions of FOs to food security compared with studies on improving income. This may also be due to our sample selection criteria, which may have resulted in studies that focused on non-marginalized small farmers for whom food security may not be a research outcome of interest.

Gains to food security attributable to FOs require additional research, as few previous studies examined this relationship. Although marginal, remote and socially disadvantaged households are the ones who typically suffer from food insecurity and who would gain most from FO participation, the studies show that marginalized producers are particularly difficult to engage in FOs for the reasons discussed above. It is also worth further studying food security impacts among more prosperous farmers, as improvements in indicators such as income or yield do not always translate into better food security or nutrition if, for example, households spend additional income on non-food items 46 .

We suggest that a distinction be made by policymakers between food security versus income or poverty reduction when prioritizing interventions in smallholder agriculture. For marginalized farmers who have limited capacity to benefit from FO membership, food security challenges require different interventions. Instead of improving production systems or market access, these might instead focus on, for example, basic social protections, income support, nutritional supplements or seasonal food security packs 41 .

FO services and natural resource management

Natural resource-based FOs were able to address soil erosion, improve water availability and contribute to reforestation and forest rehabilitation, thereby improving member resilience through access to higher-quality resources. These impacts were mostly achieved using targeted services to strengthen collective management of water, forest and pasture. The extensive work on common pool resources has demonstrated the ability of self-organized collectives to sustain key resources 47 and our results align well with this body of work. Research more specific to FOs has shown, for example, that FOs designed for collective forest, water and pasture resource management in Africa and other parts of the world 48 , 49 have resulted in positive impacts for members.

Some studies reported that climate change and weather events affected FO members’ ability to produce and sell crops due to negative impacts on harvest and impacts on markets and related infrastructure. To promote sustainable agricultural practices and address climate risk, FOs should reassess whether input use, extension services, production technologies and resource management practices are consistent with sustainability and climate resilience criteria. This could lead to greater attention to sustainable production practices and more judicious natural resource management to preserve ecosystem function under increased climate stress. These additional complexities will challenge FOs to devote more resources to innovation but they will become increasingly important to ensure the sustainability of agricultural production systems and risk-adjusted returns to farmers 50 .

Our findings show that fluctuations in farmers’ incomes in FOs is at least partly because of climate change-induced uncertainties, but at the same time we find that very few types of FO offer natural resource management services. The type of FOs that predominantly focus on natural resource management seem to be successful in delivering positive environmental impacts. The literature also suggests that other types of FO targeting the environment may improve yields, but not report on these services 51 . The implication of these findings for policy development and programming is that broader ecosystem and natural resource management should be more widely incorporated in the extension services of FOs to mitigate the risk induced by environmental degradation and climate change. This may require better documentation of current practices that contribute to the environment, as well as training and investment in innovation for FOs to demonstrate the benefits of new, more sustainable practices—so that they feel confident promoting such practices in agricultural systems.

Government role in supporting FOs

The literature shows that, on the one hand, governments play a substantial role in creating and supporting FOs. They can provide initial financial assistance 15 , 16 as well as long-term support to increase asset levels that contribute to FOs’ competitiveness and investment opportunities 9 . Moreover, government-subsidized FOs can become a buyer of last resort for farmers to sell their products, but often at lower prices than they would receive in a market 52 . Product price fluctuations were a substantial feature in many of the reviewed studies, so improved price stability was an important benefit of FO membership. Contrastingly, external support can also prop up weak and dysfunctional FOs and prolong inefficiencies 53 , with FO membership possibly representing a way of insulating small-scale producers from the hardships of essential structural change 53 .

Given the important role of governments in creating and supporting FOs, as well as the potential for political interference, the data extraction criteria used here identified available information on government and/or donor support for FOs, as well as cases where FOs do not provide the details of such support.

Final remarks

Our findings suggest generally positive evidence for the ability of FOs to provide important benefits to their members, and although only a minority of studies explicitly identify the role of government in the FOs that they study, this role was mostly a constructive one. There is abundant support in the broader literature 23 for widespread participation in FOs; governments can be more proactive in supporting them by promoting legal frameworks for FO operation and providing access to credit and extension services to enable more widespread and effective engagement of small-scale farmers in FOs. Finally, while the contribution of government and support of NGOs can be substantial, the connections between this support and FO benefits has not been well documented in our sample of studies, indicating the need for additional research to explore the supporting role of governments and other entities in FO performance. Specific investigation of FO engagement in politics and policy, as well as the influence of governmental and other programmes on these FOs, would be beneficial to gain a fuller picture of FO contributions to members’ livelihoods and environmental sustainability.

In addition to the government and NGO support to FOs, there is a growing interest in engagement with the private sector 54 . The number of studies assessing the impacts of such engagement was low in our review. Future research should focus on exploring whether the nature of supporting organization (government/NGO/private players) makes much difference in the performance of FOs.

A final caveat is that the papers in our sample may be subject to publication bias, as studies reporting positive results concerning FO impacts are more likely to be published than studies reporting insignificant or negative results. Twenty-eight of the studies included in our review (12%) provide accounts of no measurable improvement in FO members’ livelihoods. However, we cannot rule out the possibility of a larger publication bias because of this preference for positive results 55 , 56 .

Scoping review and protocol pre-registration

Scoping reviews do not seek to ‘synthesize’ evidence nor aggregate findings from different studies 57 , 58 , but rather provide a narrative or descriptive account of available research without focusing on the strength of evidence 58 . Other types of review that do require quality appraisal, such as systematic reviews, often include a lower number of studies than scoping reviews 57 . The outcomes of scoping reviews can include policy and practice recommendations and suggestions for areas of study that are not currently well addressed in the literature.

This scoping review was prepared following guidelines from the Preferred Reporting Items for Systematic Reviews and Meta-Analyses extension for scoping reviews (PRISMA-ScR) 59 . This approach comprises five steps: (1) identifying the research question (that is, “what are the services that farmer organizations provide to members, and what impacts do those services have on small-scale producers’ livelihoods and the environment?”); (2) identifying relevant studies using pre-determined definitions (see Box 1 ); (3) study selection; (4) extracting and charting the data; and (5) collating, summarizing and reporting the results.

Box 1 Key definitions for the identification of relevant studies

Small-scale producers.

Rural producers that meet at least two of the four following criteria: land size, labour availability (especially family members), market orientation (that is, whether production is for personal consumption or sale/barter in markets) and economic size.

Farmer organization

Formal or informal membership-based, collective action institution with the purpose of assembling and possessing established organizational structure to support members in pursuing their individual and collective interests. One essential function is to organize relations with the external world to mediate between members and others who act in their economic, institutional and political environment. This definition includes farmers’ associations, farmer cooperatives, farmer clubs, farmer groups, producer organizations and women’s groups.

FO services

Actions, strategies or activities undertaken by FOs to help small-scale producers/smallholder farmers generate more income and have better access to food and other raw materials. Typical examples are agricultural extension, education, training and other ways to work with or for farmers.

Environmental impacts

Positive or negative impacts of FO services on the environment. Positive impacts may include improved water quality, greater water availability, reduced erosion, reduced pollution, greater use of renewable energy, greater climate change resilience and lower vulnerability. Negative impacts could include water, soil and air pollution, deforestation and so on.

Livelihood impacts

Changes to the capabilities, assets (stores, resources, claims and access) and activities required for living.

Sustainable livelihood

A livelihood that can cope with and recover from stresses and shocks, maintain or enhance its capabilities and assets, and provide livelihood opportunities for the next generation; it also contributes net benefits to other livelihoods at the local and global levels and in the short and long terms. In this scoping review, income and food security are the two most important components for measuring impacts on livelihoods.

Databases, search methods and citation management

A search strategy was developed and tested by the authors to identify all available publications pertaining to the research question. Search terms included variations of the key concepts in the research question (that is FOs and the geographic regions of interest). Searches included the following electronic databases: CAB Abstracts and Global Health (accessed via Web of Science); Web of Science Core Collection (accessed via Web of Science); and Scopus (accessed via Elsevier). Full search strategies used for each database, including grey literature, can be accessed in their entirety at https://osf.io/4gt3b/ .

In addition to scholarly literature, the authors also conducted a comprehensive search of grey literature using custom web-scraping scripts. The authors tested search strings on each website before initiating web-scraping. An existing Google Chrome extension was needed to scrape dynamically generated websites. The authors combined and removed duplicated results from the databases and the grey literature searches using a Python script.

Eligibility criteria

A total of 239 studies were included in the review on the basis of the following inclusion criteria: (1) explicit reference to small-scale farmers, small-scale producers or smallholders; (2) explicit reference to farmer organizations, as defined in the protocol ( https://osf.io/4gt3b/ ); (3) explicit reference to SSA, individual SSA countries or India; (4) published after the year 2000; (5) explicit reference to the impacts of FOs on livelihoods, including food security, income or the environment; (6) focus on agricultural production (crop or animal) for human and animal consumption; (7) no focus on stallholder activities in forestry, agroforestry, fisheries and aquaculture; (8) use of primary and secondary data to demonstrate contribution to outcomes; (9) published in English or French. The PRISMA flow diagram summarizes the study selection process and indicates the number of articles excluded at each phase of screening (Supplementary Fig. 1.6 ). The data extraction template (available in the Supplementary Information ) documented the study type and various aspects of FOs and their membership.

Study selection

Studies were selected following a three-stage process. The first stage involved title screening, a process where the main elements of each study are reviewed, such as the PICo components (participants, intervention and comparator, but not outcomes) that can help identify the corpus of relevant studies 60 . Title screening helped to considerably reduce the workload of citation screening while maintaining high recall of relevant studies 60 . In this study, manual title screening was enhanced by machine learning to accelerate the process. The machine learning model provided additional metadata about each study, including the identification of a study population and study geography. The additional metadata accelerated the speed with which title screening could be conducted. The second stage consisted of uploading the remaining articles to Covidence, a systematic review software package that performs title and abstract screening to exclude articles that did not meet the inclusion criteria. Two independent authors reviewed each title and abstract, and a third independent author resolved discrepancies. In the third stage, a single reviewer performed full-text screening of papers that met all inclusion criteria and those whose eligibility could not be established during title and abstract screening. Supplementary Fig. 1.6 presents the study selection process and indicates the number of articles excluded at each phase of screening. Some of the papers presented multiple studies such as ref. 61 covering two studies from Ethiopia, ref.  62 covering studies from Kenya and Uganda, ref.  63 covering India and Ethiopia, ref.  64 covering two studies from Kenya and ref.  65 covering two studies from India. Thus, the number of studies that this review refers to ( n  = 239) exceeds the number of papers ( N  = 234) included in the review. In addition, some of the included studies used aggregated household data that did not allow us to clearly separate FOs of the same type and that, in some cases, operate in adjacent locations and/or belonged to the same umbrella organization. Because the studies often discuss services and impacts across the multiple FOs, we were not able to clearly separate these FOs in the studies; this could have led to underreporting of the total number of FOs that have been studied in the individual papers.

Data extraction and analysis

A data extraction template for scoping reviews originally developed in ref.  66 was adapted for this scoping review. The data extraction template is available in Supplementary Data 1 . Extracted data included all basic citation information and each study’s location, design and methodology. We also extracted data about FOs in the studies, including their type and cost of membership, number of years in operation and focal activities of crops and livestock. These indicators were selected because of their reported potential influence on achieving impacts in the literature 9 , 52 , 64 . We also collected information about the services FOs provide to members, including marketing services, output marketing, market information, financial services, technology services such as education, extension, research, skills, technology access, infrastructure development and management, managing common property resources and others.

The impacts of FOs were separated into categories, detailing impacts of FOs services on livelihoods, agricultural production and the environment. As stated in Box 1 , livelihood impacts include changes in income and food security. We also collected impacts that are often reported on the literature on FOs’ impacts such as improvements in yield, production quality and empowerment 67 , 68 , 69 .

Given that SDG target 2.4 concerns the linkages between agricultural production and the environment, information about the impacts of FOs on the environment was also collected. The environmental impacts were identified as the outcomes of services primarily aimed at improving the benefits to members such as income, yield or production quality (for example through access to irrigation, improved grazing land or reduced impacts of climate change on production). Environmental impacts included resilience-building and responses to climate change such as flood protection and changes in water quality and quantity, soil characteristics and erosion, land in production/set aside, biodiversity, the use of renewable energy sources/reduced used of fossil fuel-based energy and others. To specify the impacts, we also collected any quantification noted in the studies such as percentage change in income, change in yield and production quality, percentage of change in land use and others. Similarly, we documented the presence or lack thereof any external and socio-demographic factors that could potentially influence the impacts of FO services.

The data extraction also included an assessment of the quality of the methodology used in each of the included papers. We examined whether sampling methods were clearly specified and whether the sampling strategy for both qualitative and quantitative studies were suitable—in particular, if the sample selection was based on specific criteria to select the FOs’ members and non-members of the FOs and if these criteria were explicitly listed in the study. Next, the studies were reviewed for their methodology justification based on the studies’ research design, focusing on two criteria: if the methodology used control groups and/or conducted pre- and post- assessments when assessing the FOs’ benefits to the members. Finally, we assessed whether a clear description of the method and methods used for data analysis and its appropriateness to make sure reported FO’s benefits to the members are based on data collected from the sample instead of for example based on literature. Based on these criteria, studies lacking clearly-stated methodological approaches and/or deemed inadequate were classified as low quality (Supplementary Table 1.1 ).

We synthesized data on FO services and their impacts on livelihood and the environment in the context of documented external and socio-demographic factors. Contextual details on the basic characteristics of FOs included in the studies, such as their geographical location, years of operation, membership type and fees can be found in Supplementary Figs. 1.3 and 1.4 .

Data availability

All data are available from the corresponding author on reasonable request.

Code availability

The scripts used for literature screening/selection and data analysis are available on request from the corresponding author. The protocol for this study was registered on the Open Science Framework before study selection, and can be accessed at https://osf.io/cxrwb/ .

Change history

20 october 2020.

An amendment to this paper has been published and can be accessed via a link at the top of the paper.

02 November 2020

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Acknowledgements

We thank the Federal Ministry of Economic Cooperation (BMZ Germany) and the Bill & Melinda Gates Foundation for funding under the project Ceres2030: Sustainable Solutions to End Hunger.

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Margitta Minah & Markus Hanisch

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K.G.-K. and J.K. led the search process, contributed to title screening and writing. L.B. liaised with M.M., R.M.R.T., M.H., A.C.C. and B.T. on the search process, coordinated the paper screening, contributed to screening at all stages, developed the data extraction template and contributed to data extraction, data analysis and writing. E.N. and L.T. identified the overall research question and contributed to article screening at the abstract stage and writing. R.M.R.T., C.I.S., E.N. and M.K. supplied specific aspects of cooperatives in Africa and India and FOs focused on natural resource management expertise, and contributed to writing. L.B., M.M. and R.M.R.T. led the data analysis and the policy recommendations.

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Supplementary information.

Supplementary Figs. 1.1–1.6, tables, methods and references.

Supplementary Data 1

Data collected from the included papers using the data extraction categories.

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Bizikova, L., Nkonya, E., Minah, M. et al. A scoping review of the contributions of farmers’ organizations to smallholder agriculture. Nat Food 1 , 620–630 (2020). https://doi.org/10.1038/s43016-020-00164-x

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Farmer Producer Organizations: Implications for Agricultural Extension

Agriculture Extension Journal, 2018

5 Pages Posted: 9 Sep 2020

D.K. Krishna

ICAR- Indian Agricultural Research Institute (IARI) - Division of Agricultural Extension

Date Written: June 15, 2018

The Government of India recently announced $34 million for setting up a “Producers Development and Upliftment Corpus (PRODUCE)” under the National Bank for Agricultural and Rural Development. Marketing of agricultural produce is a complex process in India. Farmers do not have access to market, they are selling their produce to the intermediaries operate in the market due to this, their profit margin is reduced and their farming business becomes a non-viable one. We can mobilize farmers in groups and build their associations called as farmer producer organization (FPO). FPO is a means to bring together the small and marginal farmers and other small producers to build their own business enterprise that will be managed by professionals. FPO offers small farmers to participate in the market more effectively and helps to enhance agricultural production, productivity, and profitability. This paper examines the current mode of the operation of FPO and effectiveness of the FPO with reference to the small farmers in India. This article studies the potential role of FPOs (POs, and more generally, producer organizations) in the context of the large prevalence of smallholder agriculture in India.

Keywords: Agricultural marketing, collective bargaining, economies of scale, farmer producer organization, farmers, National Bank for Agricultural and Rural Development, smallholder agriculture, sustainable agriculture

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Icar- indian agricultural research institute (iari) - division of agricultural extension ( email ).

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Determinants of Smallholders’ Participation in Farmer Producer Companies–Insights from West Bengal, India

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Acknowledgements

The paper has been drawn from M.Sc (ARD) thesis of first author on ‘ Transforming Agriculture to Agri-business through Farmers Producers Organisation – A Case Study in West Bengal ’ submitted at Integrated Rural Development and Management (IRDM) of Ramakrishna Mission Vivekananda Research & Educational Institute (RKMVERI), Narendrapur, West Bengal in June 2018. Authors would like to thank profusely the Chief Executive Officers (CEOs) and Board of Director (BODs) members of Baruipur Vegetable Producer Company Ltd . and Panskura Vegetable Producer Company Ltd. , farmers of the sample villages and all the Faculties associated with IRDM Faculty Center of RKMVERI, Narendrapur, West Bengal.

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Das, R., Mandal, S. Determinants of Smallholders’ Participation in Farmer Producer Companies–Insights from West Bengal, India. Decision 48 , 327–342 (2021). https://doi.org/10.1007/s40622-021-00287-5

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Producer organizations and contract farming: a comparative study of smallholders’ market strategies in South India

The fundamental restructuring processes of agri-food networks in developing and emerging markets have intensified the debate on how to improve the integration of smallholders into so called modern value chains. In this context, the company-driven contract farming model and the member-based model of producer organizations are discussed by practitioners and in the scholarly literature as alternatives to traditional market systems. This study compares the models’ abilities to address economic challenges of highly fragmented and small-scale dominated agriculture on a household as well as on an aggregate level. It analyzes empirical data from the Indian floriculture sector with the global value chain approach. The study reveals that the smallholders perceive both contract farming and producer organization to be beneficial for their households’ economic risk situation, while only the producer organization has a positive effect on the households’ income. The contract farming benefits production and value chain efficiency, whereas the producer organization does not show an impact in these respects. We thus observe that the contract farming model increases value creation in the overall chain, but it does not raise the producer’s value capture; while the producer organization model does not heighten value creation in the overall chain, but it lifts the producers’ value capture. The organization’s individual capabilities determine how each model addresses the economic challenges. Overall, the author argues that contract farming and producer organizations are supplementing, not competitive, strategies and should be applied in combination.

Acknowledgement

The author would like to thank Martina Fuchs and Martin Franz for their support and the anonymous referees for their comments on earlier versions of this paper.

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Journal of Global Operations and Strategic Sourcing

ISSN : 2398-5364

Article publication date: 21 November 2023

Issue publication date: 8 February 2024

Farmers producer organisations (FPOs) play the most crucial role in the agriculture supply chain system, aiming to redress the balance between farming and marketing activities of agricultural produce. The purpose of this study is to assess the performance of FPOs using data envelopment analysis (usually referred to as DEA) on 34 FPO units selected from the state of Rajasthan.

Design/methodology/approach

One of the most commonly used techniques to examine business performance is the application of DEA. The application of DEA requires the selection of inputs and outputs. This study takes three inputs and three outputs based on the insights drawn from the field survey. While the input variables consist of total assets, paid-up capital and the number of economic activities, the three output variables are turnover, net profit and number of members benefitted. Broadly, these variables encapsulate the operational performance of the business units.

This study’s findings reveal that the estimated relative efficiency score of the input-oriented CCR (Charnes, Cooper, and Rhodes) model ranges from 0.06 to 1. Interestingly, only one FPO has reported a relative efficiency (RE) score of one, whereas the remaining FPOs fall below the efficiency frontier. However, 15 FPOs report an RE score of one in the output-oriented CCR approach. Considering the estimates obtained in the input- and output-oriented BCC (Banker, Charnes and Cooper) models, this study found that about 20% of the FPOs report an efficiency score greater than 0.80. Moreover, three FPOs are on the frontier line. An examination of the scale efficiency score in the input-oriented model, 45% of the FPOs have an efficiency score greater than 0.80, whereas almost all FPOs achieve a scale efficiency score greater than 0.80 in the output-oriented model. Overall, the results imply that the FPOs should place greater emphasis on the efficient utilisation of the inputs to enhance the overall business performance and productivity.

Research limitations/implications

The findings of this study provide vital insights into the specific inputs and outputs that determine the performance efficiency of FPOs and identify the potential areas for improving the existing inefficient FPOs.

Originality/value

This study contributes to the repository of the existing empirical studies in three distinct ways. First, the authors hardly found any previous studies that quantitatively assess the business performance of FPOs using the DEA technique. Second, the effort to identify the slacks associated with each input and output variable in input- and output-oriented models gives insights on improvable areas for inefficient FPOs. Third, the authors attempt to demystify the empirical obfuscations by highlighting the major challenges FPOs face in the state of Rajasthan.

• Business performance
• Data envelopment analysis

Acknowledgements

This work was supported by the Indian Council of Social Science Research (ICSSR), Government of India, New Delhi, and is funded through the project File No. 02/3777/GN/2021–22/ICSSR/RP/MJ entitled, “Opportunities and Challenges in Enhancing Farm Income through Farmer Producer Organizations: A Case study of Rajasthan”.

Muniyoor, K. and Pandey, R. (2024), "Measuring performance of farmer producer organisations using data envelopment analysis", Journal of Global Operations and Strategic Sourcing , Vol. 17 No. 1, pp. 74-87. https://doi.org/10.1108/JGOSS-05-2023-0049

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Present Status, Role and Challenges of Farmer Producer Organization

Asian Journal of Agricultural Extension, Economics & Sociology

Farmers can increase their income by increasing the productivity, decreasing the cost of cultivation in their field, ensuring the competitive price for their product with a transparent price discovery mechanisms, and also by integrating allied activities in farming, organizing the farmer producer organizations (FPOs) will be the best solution for attaining our target goal. Farmer Producer Organizations (FPO) consist of many collective Producers, especially small and marginal farmers to form an effective association to collectively address many challenges in agriculture practices, such as improved access to investment, technology, inputs, and markets availability. Farmer producer organization ensures better productivity and income for the member producers through an organization of their own. Its main purpose is to enhance the productivity of the farmer by providing linkage to the farmers, where the members will get more benefits. This review article throws light on the various dimen...

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ankit pathania

Agriculture has always been a lifeline of the Indian economy, providing livelihood to millions of farmers. However high production costs, and low access to credit, as well as poor market linkages hinder the sector’s growth. This adversely impacts the livelihood of small and marginal farmers, which comprises around 85 per cent of the sector. Thus the collective action is an acclaimed strategy to deal with these challenges that small-scale producers face in the agriculture sector. Aggregation and consolidation provide a means for these farmers to unite and reap the benefits of economies of scale and collective bargaining. Specifically, farmer organizations such as cooperatives, associations, unions, groups and federations with different organizational structures have been identified to play a key role in enhancing farmers’ access to markets and has the potential to transform the face of agri-business in the country. Therefore organizing the farmer into Producer Organisations (POs) wil...

INTERNATIONAL JOURNAL OF AGRICULTURAL SCIENCES

Dr SHRIDEVI VALAMANNAVAR

Farmers are the backbone of our country. Since a decade number of small and marginal farmers keep on increasing. Due to the fragmented holding and improper management practices in farming inadequate access to market making them agriculture more unviable. Same time increasing demand for the quality and fresh food products is providing the greater opportunities to the farmers. Farmers Producers Organisations is the great ray of hope to tackle these above mentioned two problems effectively. It plays a greater role to narrow down the relationship between Agriculture and Marketing. The farmers who were registered in Farmers Producers Organisation get a good support from both state and central government; technically as well as financially. This approach is very helpful to small and marginal farmers to develop themselves in the global agricultural and to take control over market effectively. However, majority of these located in rural areas and suffer from the problems like Inadequate Professional Management and Manpower, Poor start-up capital, lack of technically skilled man power, ineffective capacity building training programmes. There is a need to find the solution and to need bring policy changes to handle this problem to empower our farmers to and Indian economy too.

Asian Journal of Agricultural Extension, Economics and Sociology

jerul halpati

Madhavi Ganesan

Producer Company is a new concept of organizing and uniting the farmers under one umbrella to help them compete in the market collectively, by increasing the yield and getting higher net returns for their produce. The farmers are mobilized into farmer groups and their capacity is enhanced to turn them into Producer Company. This paper examines the process involved in forming and nurturing the producer company and steps taken to achieve empowerment of farmers. Case study method was used to study two producer companies which have been involved in the production of vegetables. The results reveal that benefits to members of the producer company are significantly higher than non-members and they can earn a substantial profit of Rs. 2.1 lakhs by marketing their produce. Address for correspondence: V. Jagadeesh Pandian Research Scholar Centre for Water Resources, Anna University, Chennai – 600 025, Tamil Nadu, India Mobile: 91 9994479116 E-mail: [email protected] INTRODUCTION When ...

Academia Letters

Srinivas K J

tripurari satyanarayana

Encyclopedia of the UN Sustainable Development Goals

Mehdi Khayyati

The Indian Journal of Agricultural Sciences

Subodh Agarwal

Present study was carried out to examine the status and growth of Farmer Producer Organizations across the states in India based on the secondary data collected for the periods 2015–16 to 2020–21. It was found that SFAC and NABARD promoted 3044 FPOs registered in the country. NABARD supported 2168 FPOs (71.22%) and remaining 876 FPOs (28.78%) have been supported by SFAC. Madhya Pradesh has the largest number/share of FPOs accounting to 10.15% of the total FPOs registered throughout the country. The FPOs promoted by SFAC increased at the compound growth rate of 15.22% and those promoted by NABARD increased at the rate of 1.34% per annum. At the country level, the average number of farmers per FPO are found to be 582. In addition, about 50% of the total farmers who are members of FPOs belong to five states, namely Madhya Pradesh, Karnataka, West Bengal, Maharashtra and Tamil Nadu. The region-wise study revealed that central region has the highest average number of FPOs (194.67) promot...

aditi mathur

The aim of Farmer Producer Organisations is to ensure better income for the producers through an organization of their own. This study has included Ahmednagar, Aurangabad, Jalgaon, and Pune districts of the state of Maharashtra, India because of their highest frequency of FPOs. It was found that the majority of the FPOs selected were engaged in the production and marketing of the crops and the maximum share of the FPOs was promoted by NABARD, World Bank scheme. The majority of FPOs members were in the range of 101-500, while the majority of FPOs were established between 7-8 years. Inadequate contribution by the members exists because of the poor economy and inadequate finance, lack of transport, distance of the market, storage facility, and lack of access to office buildings.

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SBTi releases technical publications in an early step in the Corporate Net-Zero Standard review

30th Jul 2024

The SBTi releases research on considerations for a more effective approach to scope 3 emissions. This is an early step in the review of the Corporate Net-Zero Standard; guidance remains unchanged until process is complete.

The Science Based Targets initiative (SBTi) is today publishing four technical outputs as an early step in the process for the revision of the SBTi Corporate Net-Zero Standard.

The SBTi announced the timeline and published the Terms of Reference for the review of the Corporate Net-Zero Standard in May 2024, ensuring that the Standard continues to align with the latest scientific thinking and best practice, and addresses challenges related to scope 3 target setting.

Scope 3 emissions make up 75% of the average company’s footprint - and are the major challenge when it comes to corporate decarbonization, as well as presenting the greatest opportunity. As a leading voluntary standard-setter, the SBTi is responding to the experiences of the thousands of businesses that have had their targets validated by the SBTi to explore options to develop a more effective approach to addressing scope 3 emissions and enhance the impact of its Corporate Net-Zero Standard.

The outputs issued today

As an early step in the process to review the Corporate Net-Zero Standard, in line with the regular review cycle, the SBTi is today releasing four technical outputs:

• Scope 3 discussion paper : A discussion paper setting out the SBTi’s initial thinking on potential changes being explored around scope 3 target setting, including underlying principles and concepts. The discussion paper is informative by nature and does not propose draft requirements or criteria.
• Evidence received on the effectiveness of Environmental Attribute Certificates : The release of all evidence submitted as part of the open call for evidence which ran September to November 2023 on the effectiveness of Environmental Attribute Certificates (without SBTi assessment).
• This is the first of the three distinct reports that will be published as outlined in the Terms of Reference; the reports on the other EAC instruments will be published at a later stage.
• Findings of independent systematic review on the effectiveness of carbon credits in corporate climate targets : A statement on the findings of the assessment conducted by an independent third party on peer-reviewed academic literature on the effectiveness of carbon credits when used as a substitute for direct abatement. The statement summarizes the process followed, findings and limitations of this research exercise.

While the evidence submitted and examined reveals some trends and provides insights, the findings of the publications are mixed and further work is needed in the next stage of the process to draw conclusions.

Environmental attribute certificates

The scope 3 discussion paper explores scenarios on how environmental attribute certificates, including carbon credits, may be used in science-based target-setting contexts. The three scenarios it outlines related to carbon credits do not include offsetting emissions - a situation in which companies buy credits instead of reducing emissions within their value chains to make claims against set targets. In each of the illustrative scenarios outlined in the scope 3 paper, the priority remains the direct decarbonization of the value chain. Credits cannot be used as a substitute for this.

Two of these scenarios outline how credits might be used to provide evidence of decarbonization within the value chain or the permanent storage of carbon to counterbalance the impact of residual emissions to meet the requirements in the current Corporate Net-Zero Standard. The scope 3 paper also outlines a scenario in which companies take on an expanded responsibility for their emissions. In this case, credits might be used to cover emissions excluded from target boundaries established within the current standard - ensuring they go above and beyond the existing requirement for decarbonization within the value chain. This could incentivize additional finance for climate action, without diverting resources from emissions reduction within their businesses.

These scenarios are illustrative only and should not be considered as guidance. They will help to inform the ongoing process.

Following today’s announcement, a draft Corporate Net-Zero Standard will be released for public consultation towards the end of Q4 2024. SBTi welcomes and encourages contributions from civil society, business and government. The SBTi will publish a summary of feedback received, respecting data privacy and data protection regulations, that will be considered by the SBTi to inform the development of the standard.

Stakeholders are also invited to share feedback on the scope 3 discussion paper via this feedback form .

Sue Jenny Ehr, Interim CEO, SBTi said: “Today’s announcement marks a key step in the revision process for the Corporate Net-Zero Standard. Over the last decade, the SBTi has validated the targets of over 5,000 companies with another 3,000 companies having committed to submit targets for SBTi validation. Targets are the first step to decarbonization and it is important that the SBTi conducts a comprehensive process to revise the Standard to help companies take the lead on climate action and drive down emissions.”

Alberto Carrillo Pineda, Chief Technical Officer, SBTi said: “The outputs released today are a critical step in understanding how the SBTi can develop a more sophisticated approach to scope 3 to help more businesses set targets. The SBTi believes that direct decarbonization must remain the priority for corporate climate action and looks forward to the extensive public consultation on the draft Corporate Net-Zero Standard.”

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