Farmer Producer Company Registration

Farmer Producer Company (FPC) or Farmer Producer Organisation (FPO) has been designed, considering the needs of farmers, agriculturists, fishermen, weavers, milk producers, and individuals involved in farming activities, collectively referred to as ‘Producers’.

The main intention of the Farmer Producer Company is to ensure better income for the producers through an organization of their own as the small producers do not have the volume of inputs to get the benefit of agricultural produce on a large scale. Additionally, in agricultural marketing, there is a long chain of intermediaries, through which the producers receive only a small part of the value that the ultimate consumer pays.

On the other hand, in the Farmer Producer Company, the producers have better bargaining power, bulk buyers of the produce, and bulk suppliers of inputs. Therefore, a Producer Company deals primarily with agriculture and post-harvest processing activities on a larger scale.

Further, a Farmer Producer Company is a company registered under the Companies Act, 2013, with the aim of producing, harvesting, procuring, grading, pooling, handling, marketing, selling, and exporting the Members’ primary produce, or importing goods or services for their benefit. In this context, “produce” denotes items resulting from farming and allied activities.

A person being a “producer” or any “producer institution” can be admitted as a member of the Producer Company.

Membership of Producer Company

• A producer company can be started with a minimum of ten (10) members or two (2) or more Producer institutions or a combination of producers and Producer Institutions thereof, however, there is no maximum limit on the number of members i.e., the producer company can induct unlimited members.
• The members necessarily need to be primary producers. Here, “Producer” means any person who is engaged in any activity or connected with agriculture and allied activities.
• The Board of Directors on being satisfied that the said member/producer is no longer a primary producer or a farmer, may direct him/her to transfer their share.
• An individual with a conflicting business interest cannot join the Producer Company as a Member. Likewise, a Member who obtains a conflicting business interest will lose their membership in the Producer Company and will be expelled as per the articles.

Management

• Producer Company has to appoint a minimum of 5 Directors and a maximum of 15 Directors to manage its day-to-day affairs.
• The director shall be appointed for a tenure of a minimum period of. 1 year and a maximum of 5 years, he shall also be eligible to be re-appointed.
• Producer company also has to appoint a full-time Chief Executive Officer (CEO), who shall be independent apart from members.

Voting Rights of Members

• A Producer Company is a hybrid of a Company and a Co-operative Society. It has combined elements of both forms of organization
• Like a Cooperative society, the Producer company also works on the principle of mutual assistance amongst members.
• The Share capital of a Producer Company shall consist of equity shares only and cannot be publicly traded.
• The voting rights of individual members are based on a single vote for every Member.
• In a case where members of the Producer Company are only Producer institutions, the voting rights of such Producer institutions shall be based on their participation in the business of the Producer Company. However, during the first year of registration of a Producer Company, the voting rights shall be determined based on the shareholding by such Producer institutions.
• In a case where members in the Producer Company consist of individuals and Producer institutions both, the voting rights shall be computed based on a single vote for every Member.
• However, the Articles of the company may give the flexibility to alter the voting rights of members.

Permitted Activities of a Farmer Producer Company

• Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit by itself or through other institution
• Processing including preserving, drying, distilling, brewing, venting, canning, and packaging of the produce of its members
• Manufacture, sale, or supply of machinery, equipment, or consumables mainly to its members
• Providing education on the mutual assistance principles to its members and others
• Rendering technical services, consultancy services, training, research and development, and all other activities for the promotion of the interests of its members
• Generation, transmission, and distribution of power, revitalization of land and water resources, their use, conservation, and communications relatable to primary produce
• Insurance of producers or their primary produce
• Promoting techniques of mutuality and mutual assistance
• Welfare measures or facilities for the benefit of members as may be decided by the Board
• Any other activity, ancillary or incidental to the above activities or other activities which may promote the principles of mutuality and mutual assistance amongst the members in any other manner
• Financing of procurement, processing, marketing, or other activities specified in the above clauses which include extending credit facilities or any other financial services to its members.

Distribution of Income to Members

• Members shall initially receive the value of their produce or products pooled and supplied as determined by the Board.
• Thereafter, the withheld price may be disbursed later in cash or in kind or by allotment of equity shares, in proportion to the produce supplied to the Producer Company during the financial year as determined by Board.
• Every Member shall, on the share capital contributed, receive only a limited return.
• The company can Issue patronage bonuses to the members who have participated actively in the company other than normal dividends usually paid. Patronage bonuses can be either in the form of cash or by way of allotment of equity shares.