Small and marginal farmers account for 85% of the agricultural land holdings in the country. Some of the key constraints of small and marginal farmers/ lessee cultivators, are poor business skills, inadequate and timely availability of extension services and lack of credit access due to limited borrowing capacity & collateral security, low output, fragmented landholdings and lack of price discovery/ market access. Further, they don’t have an organizational or financial scaffolding to aggregate, add value and market the agricultural produce to realize optimum price for their produce. Due to continued fragmentation, the number of small and marginal farmers are growing annually, which further intensifies this problem.
FPOs are basically farmers' collectives with membership mainly comprising of small and marginal farmers (about 70 to 80%) and registered under appropriate legal statute i.e. as a Co-operative/Society/Producer Company, etc. The objective of these organisations is to take advantage of the economies of scale by way of produce aggregation, value addition and collective marketing, thus realizing the optimal returns of their produce, besides enhancing the farming efficiency and improving bargaining power of farmers.