A Producer Company is a special type of business structure introduced in India to benefit producers, particularly in agriculture and allied sectors. It combines features of a cooperative society and a private limited company. Here’s a breakdown of its key aspects:

Formation and Members:

• Registered under the Companies Act, 2013.
• Minimum of 10 individuals engaged in primary produce activities or 2 producer institutions, or a combination of both, can form the company.
• Membership is restricted to primary producers or producer institutions.

Core Objectives:

• Deals with the primary produce of its members, including activities like:
  • Production, harvesting, procurement
  • Grading, pooling, handling
  • Marketing, selling, exporting
  • Processing (value addition)
• Imports of goods and services for members’ benefit.

Benefits for Producers:

• Collective bargaining power: Producer companies allow producers to come together and negotiate better prices for their produce.
• Improved market access: They can bypass middlemen and access wider markets directly.
• Value addition: Processing activities can increase the income of producers.
• Professional management: Functioning under the Companies Act ensures professional management practices.

Faq question

1. What is a Producer Company?

A Producer Company is a business entity formed by producers (farmers, fishermen, etc.) to improve their income and overall standard of living. It’s a type of company registered under the Companies Act, 2013, with a specific focus on primary produce.

2. What are the objectives of a Producer Company?

• Production, harvesting, and procurement of primary produce from members
• Grading, pooling, handling, marketing, and selling of this produce
• Exporting members’ produce and importing goods or services for their benefit

3. Who can form a Producer Company?

• A minimum of 10 individuals who are producers
• At least 2 producer institutions
• A combination of 10 or more individuals and producer institutions

4. What are the benefits of a Producer Company?

• Increased bargaining power: Producers can collectively negotiate better prices for their produce and inputs.
• Improved market access: The Company can help members reach wider markets and secure better deals.
• Value addition: The Company can process, package, and brand the produce, increasing its value.
• Reduced costs: By bulk buying inputs and sharing resources, the company can reduce costs for members.
• Government support: Producer Companies may be eligible for government subsidies and other benefits.

5. How is a Producer Company different from a cooperative society?

Producer Companies are similar to cooperatives in terms of their focus on producer welfare and democratic governance. However, Producer Companies have some advantages, such as limited liability for members and the ability to raise capital through the sale of shares.

Case laws

• Producer Companies Act: Producer companies are governed by the Companies Act, 1956, specifically Part IXA. This act defines producer companies, their objects and activities, membership, voting rights, and management.

Since producer companies are a new type of business entity, legal disputes are likely to be settled based on the existing provisions of the Companies Act and relevant judicial precedents.

Example

• Structure: Coorg Coffee Collective is a producer company formed by at least 10 coffee farmers in the Coorg region of Karnataka.
• Objective: The company’s main goal is to improve the income and livelihood of its farmer members.
• Activities:
  • Coorg Coffee Collective collects coffee beans from its members.
  • The company might process, roast, and package the coffee beans for better market value.
  • They could also bulk sell the beans to larger traders or roasters.
  • The company can negotiate better prices for supplies like fertilizers and pesticides for its members.
• Benefits for the Farmers:
  • By working together, the farmers have more bargaining power and can get a fairer price for their coffee.
  • Coorg Coffee Collective can help improve the quality and consistency of the coffee beans through shared resources and knowledge.
  • The company can directly connect the farmers to consumers, reducing the number of middlemen and increasing their profits.

Overall, Coorg Coffee Collective is a producer   company that empowers its farmer members and helps them achieve better returns for their coffee.

Additional Notes:

• Producer companies are a relatively new concept in India, introduced in the Companies Act of 2013.
• They are seen as a way to improve the condition of farmers and other primary producers in the country.
• Producer companies can deal with various primary produces, including dairy, fisheries, horticulture, animal husbandry, and more.