Producer Company is a special business Model. 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: breeding or caring of animals in the farm.
- Horticulture: Producing, growing plants, fruits or vegetables.
- Floriculture: Growing Flowers.
- Pisciculture: Fish farming.
- Viticulture: Producing grapes.
- Forestry: Preserving forest.
- Re-vegetation: Rebuilding or replanting disturbed land.
- Bee raising: keep bees to collect honey.
There are some other business like handloom, handicraft etc. which can be activities of producer company. 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. 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.
There are some unique features of Producer Companies:
- Producer companies are private limited companies.
- Though it is private limited companies but its members can be more than 50 members
- 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: Vanilla India Producer Company Limited.
- Minimum Paid up capital must be Rs. 5 lakh.
- Voting rights in the producer company is aligned with the principle of “one man-one vote”, regardless of shareholding in the producer Companies.
Why Producer Company:
- Producer companies can take the advantages of various central and state government schemes like “Rashtriya Krishi Vikas Yojana funds, National Food Security Mission” and so on.
- Equity Grant Scheme: To raise the capital base, a grant of upto Rs. 10 lakh is provided to each Producer Company.
- Credit Guarantee Fund (CGF): This will cover 85% of the loans given by banks to Producer Companies.