Empowering Farmers: Understanding Farmer Producer Companies in Simple Terms

Introduction:

India’s economy heavily relies on agriculture, with about 60% of the population depending on farming for their livelihoods. However, farmers, the primary producers, have faced challenges over the years. To address these issues, the Government of India, led by economist Y.K. Alagh, formed an expert committee. In 2002, they introduced the concept of Producer Companies to help farmers access resources like credit, technology, and markets.

What is a Producer Company?

A Producer Company is a legally recognized group of farmers to improve their living standards. Governed by the Companies Act, 2013, it can be formed by 10 individuals, 2 institutions, or a combination of both. This company is a mix of private limited companies and cooperative societies, providing equal voting rights to each member.

Objectives of a Farmer Producer Company:

The main aim is to promote cooperative businesses among farmers and convert existing cooperatives into companies. According to the Companies Act, the objectives include various activities related to production, processing, marketing, education, and welfare of members.

Authorized Activities of Producer Companies:

A Producer Company can deal with the produce of its members and carry out activities such as processing, manufacturing, providing education, and more. This helps in adding value to agricultural products and ensures the well-being of the members.

Pre-Incorporation Checklist:

1. 10 or more individuals or 2 or more institutions can form a Producer Company.
2. No upper limit on the number of members.
3. Minimum paid-up capital is required.
4. Minimum 5 directors (maximum 15) are needed.
5. Cannot be converted into a public company but can become a multi-state co-operative society.

Registration Procedure:

Similar to a Private Limited Company, the process involves obtaining a Digital Signature (DSC) and Director Identification Number (DIN). The name must end with “Producer Limited Company.” Once approved, the company is registered with the Registrar of Companies.

Procedure and Documentation:

1. Obtain DSC from all directors.
2. Obtain DIN by filing relevant forms.
3. Finalize the name of the company.
4. Prepare Memorandum and Articles of Association.
5. Obtain an affidavit from subscribers.
6. Obtain a utility bill and NOC for the registered office.
7. Submit all documents via Form SPICe+ to the ROC for verification and approval.

Benefits of Farmer Producer Companies:

Members receive fair value for their produce. Entitled to bonus shares. Surplus income is distributed as a patronage bonus.

Loans and Investments:

A special provision allows Producer Companies to provide financial assistance to members through credit facilities, loans, and advances. Collaborations with institutions like NABARD further enhance financial support.

Tax Benefit:

While the Income Tax Act exempts agricultural income, specific benefits depend on the agricultural activity. For instance, income from selling green tea leaves is tax-free, but processing them for tea production incurs tax. The tax benefit varies based on the nature of the agricultural activity conducted by the Producer Company.

Best Regards,

Madhav Joshi (Co-Founder)

Heerglobal Agritech Collaborations Pvt. Ltd.

Gandhinagar, Gujarat, India

Website: www.heerglobalcollaborations.com

Email: contact@heerglobalcollaborations.com

Phone: +91 95379 85839