Producer Company
A Producer Company is an officially established group of farmers or agriculturists to enhance their quality of life, financial support, and income. Its primary goal is to encourage cooperative businesses to form as companies and to allow current cooperatives to transition into company structures.
Authorized Activities of Producer Companies
The Producer Company is required to deal with the produce of its members and is authorized to carry on any of the following activities:
- Processing (processing also includes, preserving, brewing, vinting, drying, distilling, canning and packaging) of the produce of its members;
- Manufacture, sale or supply of equipment, machinery or consumables to its producer members;
- To provide education on the mutual assistance principles to the producer members of the producer company and others;
- To render consultancy services, technical services, training, R&D and all other required activities for promoting the interests of producer members;
- Generation, transmission and distribution of power, conservation and communication relatable to primary produce, revitalisation of land and water resources,
- Insurance of the primary produce and its producer;
- To promote the techniques of mutuality and mutual assistance;
- The welfare of members as may be decided by the Board;
- Financing of procurement, marketing, processing or other activities such as extending of credit facilities or any other financial assistance to its producer members.
- Any other activity (ancillary or incidental to the main objectives of the producer company) in order to promote mutual assistance amongst the producer members and the lines of principles of mutuality.
Benefits of Farmer Producer Companies
The following are the benefits enjoyed by a Farmer Producer Company:
- The members of the producer company initially will receive the value for the produce pooled and supplied as determined by the directors. This amount will be given out later in the form of cash/ kind/ equity shares.
- The members of the producer company will be entitled to get bonus shares in the same proportion to the shares held by them.
- The surplus (after providing provision for payment of limited return and reserves) may be given as patronage bonus* to the members of the producer company.
Loans and Investments
As mentioned above the Producer Company consist of individuals who are primary producers, and thus, are in need of financial support from time to time. Hence, a special provision under the Act was passed for giving loans to producer members. A Producer Company can provide financial assistance to its members through:
- Credit facility: This is available to any member for a period not exceeding six months (such facility must be in connection with the business of the Company).
- Loans and advances: These are provided to the producer member against security, repayable within a period not exceeding seven years from the date of disbursement of such loans or advances.
- NABARD Loan: NABARD provides support and financial assistance to meet the needs of Producer Companies. In 2011, NABARD set up a Rs. 50 crore Producer Organisation Development Fund (PODF), out of its operating surplus
