Transaction Costs in Agriculture Inputs Procurement: Evidence from Farmer Producer Companies in Kolar District of Karnataka

The present study was undertaken in Kolar district of Karnataka state during 2021-22 to evaluate the economic benefits of members over non-members of Farmer Producer Companies (FPCs) in the purchase of agriculture inputs. A sample of 30 members each from six villages of Masti Venkatesh Iyengar Horticultural Farmer's Producer Company Limited-Malur (MVHFPCL) and Holur Horticulture Farmer's Producer Company Limited (HGFPCL) jurisdiction and 40 non-members from FPC jurisdiction were selected for the study. The findings of the study have shown that the prices of all agriculture inputs supplied by FPCs were less by two to three per cent compared to retailers in the market. The cumulative savings due to transaction costs (distance & time) for the purchase of agriculture inputs by members of HHFPCL and MVHPCL over non-members was ₹ 752.06 and ₹ 428.00 respectively. The incremental benefits realized through the purchase of agriculture inputs from FPCs by the members have helped reduce the production cost to the tune of ₹ 11,327. FPCs as an institutional model have helped farmers in reducing the transaction costs of the purchase of agriculture inputs.