This report surveys the recent literature on producer organizations with a specific focus on factors affecting their establishment and their impact on farmers' market performance and welfare. The report also discusses producer organizations' role in improving farmers’ bargaining power and allowing them to respond to various challenges which result from dynamic changes characterizing commercial relations within the food supply chain. Key factors supporting the emergence and development of producer organizations include human and social capital, networking, interpersonal relationships between members (with an important role of trust) and the functioning of enforcement mechanism used to govern group behaviour. The existing literature provides also strong evidence that access to information and farming experience positively affect the emergence of producer organizations. There is also some evidence that larger farms are more likely to join collective action.