Farmers Producer Company

What is farmers producer company?

A producer company is the one that has its objects mentioned in section 581B of companies act 1956. A producer company must have any one or more of the following mentioned objects to qualify as a producer company

1. Production, harvesting, procurement, grading , tooling, handling marketing, selling ,export of primary produce of members(Farmers) or import of goods and services for their benefit. These activities can be carried out by a producer company itself or through other institutions.
Primary produce means

a)Produce of farmers ,arising from agriculture(Including animal husbandry, horticulture, floriculture, pisciculture(Related to fish produce), viticulture, forestry, bee raising and farming plantation products)
b)Produce of persons engaged in handloom, handicrafts, and other cottage industries.
c)Any product resulting from above activity or any by-product received from conducting above activities.
d)any product which will increase the production of above mentioned activities
Processing, preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its members.
Manufacturing, sale and supply of machinery related to agriculture and allied activities to its members.
Promoting education and mutual growth principles among its members.
Providing technical, consultancy services, research and development activities for promotion of welfare of its members.
Generation, distribution and transmission of power, reviving of water bodies relatable to primary produce.
Insurance services to producers and their produce.
Any other activity either incidental or ancillary which is necessary for providing above mentioned services.
Financing farmers for procurement, processing, marketing, for any activities mentioned above

Credit facilities and other financial services to its members.

Here are Some farmers producer company benefits

More purchasing and selling power to farmers

After incorporating a producer company the produce of all producers or farmers are combined, now the producer company on behalf of all the farmers who are associated with it, can talk to a interested buyers and negotiate as now the quantities offered by the producer company is way more then offered by an individual farmer.
Easy loans

Producer companies can offer loans to farmers for purchasing seeds, equipment, tractors, irrigation pipes, manure, soil mixtures, etc. These loans are usually provided at a very affordable rates and easy repayment options so that the farmers do not have to take loans from banks or other NBFC's.
Tax benefits

Government has declared 100% tax deduction for producer companies having turnover of up to 100 crores.
Market Analytics

Producer companies are managed by qualified directors who take day to day decisions on behalf of producer companies. Unlike farmers, directors of producer companies have better understanding as to where and at what rates should the produce be sold. Directors can take important decision about changing markets and demands from buyers which is normally not understood by a farmer.
Export Markets

Exporting agriculture produce to different countries involve a lot of documentation and tedious works which cannot be managed by an individual farmers due to lack of education, monetary factors, quantifiable produce etc. As producer companies are managed by qualified directors they have a clear understanding about various export import laws persisting in the country. Earlier there was no option to farmers rather than selling their produce to middlemen which in turn used to export their produce keeping substantial margins with them and remitting only decimal margins to farmers. Now with the growth of producer companies farmers can directly export their produce and earn better margins.
Incentive Schemes

Government has provided various incentives scheme in consultation with NABARD, APEDA and various other agencies for betterment of producer companies. Government through these schemes is providing subsidies up to 100% on purchase of raw materials and machineries.

Our experts at CharteredMunshi will guide you through the entire registration process of a producer company. Let's discuss these steps in detail. Starting from the very basics

Why do we register a farmers producer company in INDIA?

Farmers are backbone of every country as farmers are the people who feed our hungry ever growing population, yet farmers are the ones who are deprived of basic human necessities. Our government has brought about many changes in farm laws from time to time for upliftment of farmers, although a fact cannot be denied that situation of farmers has not changed since independence but in a free democratic world where the developed nations are planning to find water and air on MARS by spending trillions of dollars on space technology our INDIAN farmers are still committing suicide when they are unable to repay back a loan of mere thousand rupees. One such move by the government was to bring incorporation of producer company under companies act 1956.

What is the procedure to register a farmers producer company?

Steps involved in registering a producer company is similar to incorporating a private limited company. Here are the steps involved for registering a producer company

Obtain a DSC of proposed directors.
Obtain DIN of proposed directors.
Application for name approval must be filled with MCA for reserving the name of producer company. The name of producer company must end with "Producer Company Limited"
After getting name approval for company we need to prepare documents like MOA and AOA in prescribed format by MCA and file the same with MCA.
A letter in prescribed format by agriculture officer of the area in which registered office of producer company is situated stating the number of members, their names, address etc. has to be attached along with MOA and AOA.
If the MCA is satisfied with the documents it will grant a certificate of incorporation to the company within 30 days.

FAQs (Frequently Asked Questions)

Is the liability of members limited in farmers producer company?

Liability of members of producer company is limited to unpaid amount (if any) on shares held by them in producer company.

Is Farmers Producer company a public company?

NO. After registering a producer company it will become a body corporate just like a private limited company, under no circumstances whatsoever a producer company become or deemed to become a public limited company.

How many members can a farmers producer company have?

There is no limit on maximum number of members of a producer company.

How can a producer company alter its memorandum of association?

A producer company by passing a special resolution can alter its MOA, however new objects should be persistent with objects contained in section 581B of the act. This special resolution certified by at least 2 directors should be filled with MCA within 30 days.

Can a cooperative society convert into a producer company?

Yes a co-operative society can convert into a producer company , however such co-operative society should be a multi-state co-operative society.

How many directors should be appointed in case of producer company?

A producer company should have at least a minimum of 5 directors and a maximum of 15 directors.

Can a member transfer his shares to another person in a producer company?

The shares of producer company cannot be transferred in general, however after previous approval of board a person may transfer his shares to an active member. A share of producer company can be transferred to a producer only.

Can producer company provide donation?

Yes, a producer company can provide donation to an institution or an individual for promoting general welfare of its members or producers or general public.However,such donation should not increase more than 3 % of net profits of previous year. Noi producer company will make donation to any political party or electoral trust.

Can producer company give loans?

Yes, a producer company can provide loans in form of credit facility to its members for a period not exceeding 6 months. A loan against security can also be given to members for a period exceeding 3 months but not more than seven years.

Can a producer company invest in other companies?

Yes a producer company for promotion of its objectives can invest in securities giving highest returns available from fixed deposits, bonds issued by government, can acquire shares of another producer company, can form subsidiary company and subscribe to its share capital. Producer company can also invest in shares of another company which is not a producer company, however this investment in company other than producer company cannot be more than 30% of its paid up capital and free reserves.

The Filing Desk offers hassle free registration of Producer company in Pan INDIA. Our experts will guide you with complete registration process which is mostly online. After incorporation also we will assist you in day to day functioning of producer company. Fill out our form and our expert will call you for assisting and registering your producer company in INDIA.