A producer company is a cooperative formed by producers, like farmers or artisans, to pool resources, increase bargaining power, and access markets more effectively. It operates on cooperative principles, aiming to benefit its members and enhance their livelihoods.
A producer company, also known as a producer cooperative, is a type of company formed by producers of goods or services with the primary objective of pooling resources, maximizing efficiencies, and enhancing the bargaining power of its members. These companies are often established by farmers, artisans, small-scale manufacturers, or other producers who join together to collectively market their products, procure inputs at lower costs, share knowledge and resources, and access better infrastructure or technology.
In many countries, including India, the concept of producer companies is legally recognized and governed by specific regulations. These regulations typically outline the structure, governance, and operations of producer companies, emphasizing democratic decision-making, equitable distribution of benefits, and protection of members' interests.
Producer companies can vary widely in size and scope, ranging from small-scale agricultural cooperatives to larger organizations spanning multiple sectors. They often operate on cooperative principles, such as voluntary membership, democratic control, autonomy, and concern for the community.
Pvt. Ltd. Company -Incorporation Certificate [sample]
Producer company is a corporate body of producers, farmers and agriculturists with the objective of procurement, production, harvesting, grading, pooling, handling, marketing, selling or export of the members or import of goods and services for themselves.
In simple words, this type of company is formed with the aim to improve the lives of people associated with the agriculture
industry by providing them access to technology, market, credit, etc.
It is registered as a public company under the Companies Act, 2013 and must include "Producer Company Limited" as the last words of its name.
The objects of Producer Company given under Section 581B (as per the law) are as follows:
Take a closer look at the benifits of FPO in India
Producer Company is a separate legal entity which means it can acquire assets and incur debts on its own name. The directors have no obligation to the lenders of the company.
As the producer company is formed by individuals or institutions who are primary producers, the government has passed a special provision for giving loans to the producer members. For this specific purpose, NABARD Bank was established to provide financial assistance to producers and farmers via NABARD Loan.
There are certain tax benefits and exemptions for a producer company depending upon the agricultural activity it carries on
As per the Companies Act, 2013, directors and shareholders have limited liability protection. So if there are any financial issues with the company, the assets of the director are secured and could not be seized by banks or departments.
A registered producer company can accept deposits in the form of fixed or recurring deposits and the company can advance loan to the members and farmers at lower rate of interest.
On average, it takes around 15-20 working days to register a Producer company in India subject to document verification by the Ministry of Corporate Affairs (MCA).