Producer companies are preferred choice of business model amongst farmers because producer company areas of operations are not restricted to particular state as in the case of Co-operative society.
A producer Company is a group of people involved in the production of primary produce or having one or more goals relating to primary produce.
A producer company is a hybrid between a private limited company and a cooperative society.
It combines the goodness of a cooperative enterprise and the vibrancy and efficiency of a company.
Moreover, it has lesser government intervention in running company and can also access to financial institution for raising money for day to day expenses requirement.
The term “Producer Company” indicates that only certain categories of persons who are known as “primary producer”, can become shareholders in the Producer Company. Primary Producer means those persons who are engaged in primary agriculture activities such as: Animal Husbandry, Horticulture, Floriculture, Pisciculture, Viticulture, Forestry, Re-vegetation, Bee raising. There are some other business like handloom, handicraft etc. which can be activities of producer company.
There are some unique features of Producer Companies:
- Producer companies are private limited companies.
- Minimum 10 or more individuals, being producer, or any two or more producer companies, or combination thereof, are required to form Producer Company.
- Producer Company shall have at least 5 but not more than 15 directors.
- Conversion is not possible into any other business structure such as Pvt. Limited company, Public Limited Company, LLP etc.
- Producer Company shall have words “Producer Company Limited” at the end of its name. For example: Sahyog Agro Producer Company Limited.
- Voting rights in the producer company is aligned with the principle of “one man-one vote”, regardless of shareholding in the producer Companies.
Types of Producer Companies
The main type of producer companies are those involved in production, procurement or manufacture of any primary produce for its members (for further sale) and to others.
Even a business involved in the marketing or promotion of primary produce or provision of educational services to members and others can constitute itself as a producer company.
Technical Service Businesses
Any business offering technical assistance to producers, providing training and educational services or conducting research and development can register as a producer company.
Any business financing producer activities, be it in the production, marketing or development domain, can register itself as a producer company.
Businesses involved in providing infrastructure to producers, whether in the form of electricity, water resources, irrigation techniques, land utilisation, or consultation with regard to the same, may constitute themselves as a producer company.
WHAT IS INCLUDED IN OUR PACKAGE?
- 5 Digital Signature
- 5 DIN (Director Identification Number)
- Drafting of Docuemnts
- Notarization of Docuemnts
- Stamping of Docuemnts
- Filing of Forms
- PAN card of Company
All businesses can run the risk of not being able to repay their liabilities. It is a necessary evil. In this event, a sole proprietor (or individual producer) would be personally liable for all the debts of the business. The members of a producer company, on the other hand, have unlimited liability as the company is an entity in itself. Therefore, only the amount invested in the business would be lost; the personal property of the directors would be safe.
Economies of Scale
Only 15% of India's farmers own over two acres of land. The majority of farmers are, therefore, unable to safely unlock the advantages that come with economies of scale. With a producer company, multiple farmers can work as a collective and lower costs, reduce risk and even get acccess to better credit facilities. This enables better planning and bargaining power with buyers.
Rather than a single farmer managing the entire business, work within a producer company can be divided between its directors. The entity is managed by the Board of Management, which has a tenure of five years. Also, a producer company has a separate legal existence, which means that it isn't affected by the death of any of its members.
- Minimum 5 Directors
- Minimum 10 or more individuals, being producer, or any two or more producer companies, or combination thereof