Producer Company

Introduction

The economy of India is an agricultural-centric economy. Around 60% of the population depends on agricultural activities for their livelihood. But, the primary producers and farmers have had a long struggle in India.

In order to address these problems, the Government of India set up an expert committee, led by Y.K. Alagh (an economist) to look into the matter. In the year 2002, they introduced the Producer companies concept to the Indian economy. Since then, they have helped primary producers gain access to input, credit, production technology, market etc.

What is a Producer Company?

A producer company is a type of business entity that allows farmers, artisans, and other primary producers to come together and form a collective enterprise. The primary objective of a producer company is to facilitate the production, procurement, and marketing of goods or services on behalf of its members.

An farmer producer company is a hybrid between private limited companies and cooperative societies, registered under the Act. They have democratic governance and each member or producer has equal voting rights irrespective of the number of shares held.

Objectives of the Farmer Producer Company

The main objective of the farmer producer company is to facilitate the formation of co-operative business as companies and to make it possible to convert the existing co-operative business into companies.

As per the Act, the objectives of a producer company should relate to all or any of the following matters: (as given in the law)

a) Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary production of the Members or import of goods or services for their benefit, provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution.

b) Processing including preserving, drying, distilling, brewing, vinting, canning, and packaging of the produce of its Members.

c) Manufacture, sale or supply of machinery, equipment or consumables mainly to its members.

d) Providing education on the mutual assistance principles, to its members and others.

e) Rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its members.

f) Generation, transmission, and distribution of power, revitalization of land and water resources, their use, conservation and communication relatable to primary produce.

g) Insurance of producers or their primary produce.

h) Promoting techniques of mutuality and mutual assistance.

i) Welfare measures or facilities for the benefit of Members as may be decided by the Board.

j) Any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner.

k) Financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial services to its members.

Benefits of a Producer Company Startup:

Collective Strength:

By forming a producer company, individual producers can pool their resources, skills, and expertise. This collective strength enables them to undertake joint production activities, negotiate better prices for their produce, and access markets that would be otherwise difficult to enter as individual producers.

Limited Liability:

A producer company provides limited liability protection to its members, separating their personal assets from the company's liabilities. This ensures that members are not personally responsible for the company's debts or obligations.

Access to Credit:

Producer companies have better access to credit facilities and financing options from banks and financial institutions. This allows members to secure loans, invest in modern farming techniques, purchase equipment, and improve their productivity.

Market Linkages:

One of the key advantages of a producer company is its ability to establish direct market linkages for its members. By eliminating intermediaries, members can access better prices for their produce and establish long-term relationships with buyers, processors, and exporters.

Government Support:

Producer companies often receive various government incentives, subsidies, and support programs aimed at promoting agricultural and rural development. These benefits can include grants, tax exemptions, technical assistance, and training programs.

Improved Bargaining Power:

As a collective entity, a producer company has enhanced bargaining power in negotiating with input suppliers, buyers, and other stakeholders. This can lead to better terms and conditions, improved market access, and higher returns for the members.

Knowledge Sharing:

Producer companies provide a platform for members to share knowledge, experiences, and best practices. This collaborative environment facilitates learning, innovation, and the adoption of modern agricultural techniques, leading to increased efficiency and productivity.

Our Producer Company Startup Services:

Consultation:

Our experienced consultants will guide you through the entire process, explaining the legal requirements, necessary documentation, and steps involved in starting a producer company.

Registration Assistance:

We will assist you in preparing and filing the required documents for the registration of your producer company. This includes drafting the memorandum and articles of association, obtaining Director Identification Numbers (DINs), and acquiring digital signatures.

Compliance Support:

We will help you navigate the compliance obligations of a producer company, including maintaining proper books of accounts, conducting annual general meetings, and filing annual returns with the relevant authorities.

Market Linkages:

We can facilitate connections with potential buyers, suppliers, and industry experts to help you establish strong market linkages and create opportunities for growth and expansion.

Financial Assistance:

Our network of financial institutions can provide guidance on accessing credit facilities and funding options available for your producer company.

Training and Capacity Building:

We can arrange training sessions and capacity-building programs to enhance the skills and knowledge of your members, ensuring they are equipped to adapt to changing market dynamics and adopt modern farming practices.

Ongoing Support:

We offer continuous support even after the registration process is complete. Our team is available to address any queries or concerns you may have and provide guidance as your producer company grows.

Registration Procedure

The process of registering a Producer Company is similar to that of a Private Limited Company. Digital Signature (DSC) and Director Identification Number (DIN) must be obtained first for the proposed first Directors of the company. Once, Digital Signature (DSC) and Director Identification Number (DIN) are obtained, an application for name reservation is to be filed with the relevant Registrar of Companies (ROC).

There is a requirement under the Act that the name of a producer company must end with the words “Producer Limited Company”. Once, the suggested name is approved by the Registrar of Companies (ROC), an application for incorporation is to be filed in the prescribed format for the incorporation of the Producer Company. Once the Registrar is satisfied with the application and the required documents filed for incorporation of Producer Company, he will approve the same and issue Certificate of Incorporation.

Procedure and Documentation Required to Incorporate a Producer Company

• The first step is to obtain a Digital Signature Certificate (DSC) from all the directors. Documents required to obtain a DSC are:
• PAN Card of the Director
• Aadhaar Card of the Director
• Photo
• Email Id
• Contact Number
• After obtaining the DSC, the next step is to obtain the Director Identification Number (DIN) by filing form DIR – 3 or SPICe+ Form along with a self-attested Identity proof, address proof, and a photo.
• Then the name of the production company is to be finalized. For that, Form SPICe+ to the Registrar of Companies (ROC) is to be filed by giving 2 names in the order of preference along with the significance of the names. The name shall have the words PRODUCER COMPANY at the end.
• After the name is approved by the ROC, the following documents are to be prepared:
• The Memorandum of Association is to be drafted by incorporating all the objects that the company intends to follow.
• The Articles of Association is to be drafted containing all the by-laws of the company.
• An affidavit has to be signed by all the subscribers of the proposed company declaring their legal competency to act as the subscribers.
• A utility bill and a NOC have to be taken from the owner whose address is to be used as the registered office of the company. If it is not owned, a lease agreement will be attached to the form.
• All the drafted documents will be attached to Form SPICe+ and uploaded to the ROC website. On proper verification, the ROC will issue a Certificate of Incorporation and the company can start its business operations.
• This form of establishment promotes the primary producer who is in a low-income group to optimize their income with collective bargaining and by selling the products directly to consumers.

Starting a producer company can be a transformative step for primary producers. With our comprehensive services, you can embark on this journey with confidence, knowing that you have the necessary expertise and support to establish a successful and impactful producer company.

Contact us today to learn more about our producer company startup services and take the first step towards building a thriving collective enterprise that empowers farmers, artisans, and primary producers.

FAQs of Producer Company Start up:

What is a producer company?

A producer company is a type of business entity formed by primary producers, such as farmers, artisans, or small-scale entrepreneurs, with the objective of collectively carrying out production, marketing, and other related activities for the benefit of its members.

Who can form a producer company?

Any group of ten or more individuals engaged in primary production activities, or two or more producer institutions, can form a producer company. The members must be involved in activities such as agriculture, horticulture, animal husbandry, fishery, or small-scale industries.

What are the benefits of forming a producer company?

Forming a producer company offers several advantages, including collective strength and bargaining power, access to credit and financing, market linkages, limited liability protection, government support and incentives, knowledge sharing, and the ability to undertake joint production and marketing activities.

What is the process of registering a producer company?

The process of registering a producer company involves several steps. It includes choosing a unique name, drafting and filing the memorandum and articles of association, obtaining Digital Signature Certificates (DSCs) and Director Identification Numbers (DINs) for the directors, and submitting the necessary documents to the Registrar of Companies (RoC) along with the prescribed fees.

Are there any specific requirements for the memorandum and articles of association of a producer company?

Yes, the memorandum and articles of association of a producer company must contain specific clauses related to the primary objective of the company, the rights and obligations of members, the distribution of profits, the utilization of income for the benefit of members, and other relevant provisions as per the Companies Act or the applicable jurisdiction's regulations.

Can a producer company distribute profits to its members?

Yes, a producer company can distribute profits to its members, but the distribution must be in proportion to their participation in the activities of the company. The Companies Act specifies that the primary objective of a producer company should be the promotion of the economic interests of its members.

Tags regarding Producer Company Start up:

Agricultural business, Farmer collective, Artisan group, Small-scale entrepreneurs, Collective enterprise, Joint production, Marketing activities, Market linkages, Limited liability, Access to credit, Government support, Social impact.