What is Farmer Producer Company?
- Farmer Producer Company is a company registered under the Companies Act, 2013, which has the objective of production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit. Produce are things that have been produced or grown, especially by farming.
- The main aim of Farmer Producer Company is to ensure better income for the producers through an organization of their own. Small producers do not have the volume individually (both inputs and produce) to get the benefit of agricultural produce on large scale. Additionally, in agricultural marketing, there is a long chain of intermediaries, through which the producers/farmers receive only a small part of the value that the ultimate consumer pays. Whereas in Farmer Producer Company, the primary producers have better bargaining power, bulk buyers of produce and bulk suppliers of inputs. Therefore, a Producer Company deals primarily with agriculture and post-harvest processing activities on a larger scale.
- Farmer Producer Companies as an Institution have been conceptualised and structured, taking into the considerations of farmers, agriculturists (termed as ‘Producers’), with a view that the business activities relating to agriculture, be channelized and governed in a formal manner.
- A person being a “producer” or a “producer institution” (whether incorporated or not) can be admitted as member of Producer Company.
- Any person engaged in any activity connected with or related to any primary produce will be treated as producer. Primary produce means the produce of farmers from agriculture and allied activities or produce of persons engaged in handloom, handicrafts and other cottage industries, including any by-product and product resulting from ancillary activities thereof.
- “Producer Institution” means a producer company or any other institution having only producer or producers or Farmer Producer Company or Producer Companies as its member whether incorporated or not having any of the objects referred to in section 581B and which agrees to make use of the services of the Producer Company or Producer Companies as provided in its articles.
Benefits to Company (Farmer Producer Company) :
- The liability of the members is limited to the unpaid amount of the shares held by them. Hence, the private assets of the members are not liable losses incurred by company.
- A Farmer Producer Company is hybrid of Company and Co-operative Society, thus enjoying the benefits of professional management of a Private Limited Company as well as mutual benefits derived from a Cooperative Society.
- Producer Companies are registered under Companies Act 2013 which is a central legislation and is comparatively more liberal with minimal government control in the management of the Company as compared to Co-operatives Societies.
- There is no limit for maximum number of members and the number of members can be increased as per feasibility and need.
- All fiscal and other concessions, licences, benefits, privileges and exemptions granted to the inter-State co-operative society under any law, shall be deemed to have been granted to the Producer Company.
- Individuals and producer institution (whether incorporated or not) can be admitted as members.
- Producer Company having an annual turnover up to Rs. 100 crore need not pay tax on profits derived from farm-related activities.
- The Board of Producer Company can engage professionals to manage its affairs and appoint them as Office bearers or Directors.
- Preferred by Banks, Financial Institutions and other Governmental/Non-governmental organisation which provides technical, managerial and financial support to Farmer Producer Company.
- The area of operation for a Producer Company is the entire country giving flexibility to expand business in a free and professional manner.
Benefits to members of Company (Farmer Producer Company) :
- Better Efficiency : The farmers/producers have skill and expertise in producing. However, they generally need support for marketing of what they produce for which the Producer Company will basically take over the responsibility right from procurement of raw material to delivery of the final product at the ultimate consumers’ doorstep.
- More Income to Producer : Farmer Producer Company shall reduce the overall cost of production by purchase of inputs on bulk and then sell/market the produce in bulk thus, fetching better price per unit of produce.
- Equal Voting Rights to Members : The voting rights shall be based on “one vote per member” and in case of Producer Company consisting only of producer institutions, then the voting rights shall be based on the participation in the business.
- Limited liability : The liability of the members is limited to the unpaid amount of the shares held by them. Hence, the private assets of the members are not liable losses incurred by company.
- Financial Assistance from Company : The Board of Farmer Producer Company may, subject to provisions in articles, provide financial assistance to the members of the Producers company by way of credit facility and loans and advances.
- Platform for Government Initiatives : It can work as a platform to facilitate better access to government services, like PDS, MNREGA, Scholarships and Pensions, etc. It can liaison with the Government Departments for convergence of programmes, like drinking water, sanitation, health and hygiene.
- Entitled for Insurance : The Company can avail insurance for the producers or their primary produce to indemnify against any risk of losses.
- Education and Technical Services : Producer Company shall help producer in brand building, Packaging, Labelling, Standardization, Quality control, providing storage facility and provide such training and services as it may deem fit.
- Export and participating in commodity exchanges : Farmers can export their agricultural produce as well as can aggregate the produce of its members, and sell it using the commodity exchanges agricultural produce.
At Registration Arena, we are continuously available to help you understand how to register a farmer producer company. Producer Company Registration in India can be done through Registration Arena in all major cities including Hyderabad, Mumbai, and New Delhi, Chennai, Kolkata & all other Indian cities.