A farmer producer company brings multiple advantages for owners. Primary producers like farmers, milk producers, fishermen, weavers, rural artisans, and craftsmen create a cooperative society or other legal entity that shares its profits and benefits with all members.
Now that you know what it is, let's explore some advantages of this company.
Benefits of a Producer Company
- Separate Legal Entity
It's a legally formed separate corporate organisation developed under the Companies Act, which has its own legal limits. The producers hold shares in their own company, which carries out business activities, utilising the primary produce/ product. In all, all member producers draw benefits via profit shares.
- Tax Exemption
Being a cooperative society, it enjoys tax leverages. If its annual turnover is up to INR 100 crore, it does not need to pay any tax. They receive a 100% deduction in tax for being associated with farmers, who are the strongest pillar of the Indian economy.
- Easy to Manage
Unlike other companies' management, this company has simple management. Upon Farmer Producer Company registration documentation, the board of management can be changed for effective and efficient production. This very board proactively controls and manages the overall functions of the entire company.
- Loans And Investment Benefits
It's indeed a significant step to provide funds to these producer companies. The government does it for supporting the initial producers with funds frequently. For this purpose, the government has introduced NABARD bank to assist these organisations of farmers with loan facilities. Simply put, the farmers now have a government-run bank whose main role is to offer loans to them for a time period, which should not be extended beyond six months. With this financial support, these companies meet their needs easily.
- Continue to Stay Up & Running
Being a separate lawful entity, it does not have any risk to its existence. Even if the owner dies, it continues its journey. Simply put, this entity can continue to stay up and running until it is dissolved in a legal manner.
- Good Governance
Fortunately, the government appears in a key role in keeping the interest of such organisations' members. The government continues to come up with some privileges and leverages for ensuring their success.
- Financial Support
Like NABARD, there are some other bodies like SFAC, Departments of Government, and Corporate Domestic and International Aid Offices that financially support. Besides, they are there to provide additional dedicated assistance to the Producer Organization Promoting Establishment (POPI) so that it can achieve next-level growth.
- Assistance to Members
A producer organisation ensures that individual producers can have more salary. It helps in purchasing the products in bulk at an inexpensive cost. As being bought in bulk, it costs way lesser in transporting the produce or product. Overall, these organisations help in saving money for farmers.
Besides monetary benefits, these organisations provide data to individual producers for authorising them. Once authorised, these societies allow individual producers to hold their produce till the market value rises up. This action eventually results in generating more revenue for producers.
- Incredible Schemes & Facilities
A producer company provides an improved platform to the primary farmers who seek support for uplifting their lives. The most valuable is their accessibility to advantageous government schemes or services, such as MNREGA, Pension, loans, PDS, and Scholarships.
The concept of a Producer Company was launched in India under with the Companies Act, 2013. It offers opportunities to people who are into farming or production (what has been grown or produced, particularly by farming) to incorporate a company. Typically, it requires 10 or more producers (persons involved in, or in activities related to, produce or growth), two or more producer institutions, or a group of 10 or more producers and producer institutions. This organisation needs a minimum of 5 directors to start with an authorised capital of INR 5 lakh. Besides, it can have equity capital. All in all, the procedure of a farmer producer is like registering a private limited company.
