Producer Company is a company registered under the Companies Act 2013 and shall carry on any of the following activities:
(A)Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of members or import of goods or services for their benefit;
(B) Processing including preserving, drying, distilling, brewing, venting, canning and packaging of produce of its members; and
(C)Manufacture, sale or supply of machinery, equipment or consumables mainly to its members.

Over 85% of the Farmers in India are small and marginal farmers with land holdings of less than 2 hectares. This fragmentation in farmers and farm lands, leads to disorganization and it is not viable for Indian farmers to adopt the latest technologies. 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.

Some of its features are:-

  • Seperate Legal Entity:
    A producer company is a legal entity established under the Act. Therefore a producer company has wide legal capacity and can own property and also incur debts. The members (Directors) of a producer company have no liability to the creditors of a producer company.

  • Tax Benefits:
    The Indian Income Tax Act, 1961(“the IT Act”) specifically exempts tax on agricultural income under section 10(1). However, IT Act does not essentially provide any special benefits or exemptions to producer companies by definition. But subject to the kind of agricultural activity carried out, certain tax benefits can be availed.

  • Member Benefits :
    The members will initially receive the value for the produce or products pooled and supplied as the directors may determine. Even they are eligible to receive bonus shares in proportion to their shareholding.

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