Producer Company

Companies Act, 2013 lists Producer Company as a type of Private Limited Company of which only ‘primary producers’ can become shareholders. The term ‘primary producer’ encompasses a wide range of agricultural activities in addition to vegetation, such as horticulture, beekeeping, pisciculture, animal husbandry, floriculture, re-vegetation etc. Non-agricultural businesses such as handloom, handicrafts etc. are also eligible for registration as a producer company. However, the concept of Producer Companies has been developed mainly for farming and post-harvest processing activities, and is aimed at the empowerment of farmers through better organization.

Minimum 5 directors and 10 producer members (or two or more producer companies) are required for registration of a Producer Company. There can be a maximum of 15 directors. Minimum paid-up capital required is INR 5 Lakhs. Production is not limited to the harvesting of produce; a Producer Company can be involved in other activities also like Production, Technical Assistance/ Training/ R&D for Producers, Infrastructure to Producers, Marketing of Primary Produce, Financing to Producers.

By organization of these farmers into producer companies, economies of scale can be unlocked and the livelihood of farmers can be improved. Thus the concept of Producer Company is aimed at empowering farmers by creating clusters of farmers organized as a Producer Company. Producer companies, unlike OPCs, cannot be converted into any other business structure such as LLPs, Pvt. Ltd. Companies, Public Limited Companies etc. Every Producer Company name must be suffixed by the words “Producer Company Limited”.

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