The economy of India is an agricultural economy. About 60% of the population depends on agriculture for their livelihood. But India’s primary producers and farmers have long struggled. Here in this article, we will discuss the farmer producer company registration. Read on.
In order to address these issues, the Indian government has appointed Y.K. Alagh (economist) to investigate the issue. In 2002, they introduced the concept of a producer company to the Indian economy. Since then, we have helped primary producers access inputs, credit, production technology, and markets.
How Do You Registered a Farming Company in India
In order to register a farming company in India, you will need to follow these steps:
- Choose a unique name for your company and get it approved by the Registrar of Companies (ROC).
- Obtain the necessary licenses and permissions from the relevant government authorities, such as the Ministry of Agriculture and the Department of Animal Husbandry, Dairying, and Fisheries.
- Obtain a PAN card and TAN number for your company from the Income Tax Department.
- Prepare and file the incorporation documents, such as the Memorandum of Association (MOA) and Articles of Association (AOA), with the ROC.
- Obtain the certificate of incorporation from the ROC, which is proof of your company’s legal existence.
- Register for Goods and Services Tax (GST) and other taxes, as applicable.
Which documents are required for farmer producer company registration?
DIRECTORS & SHAREHOLDERS
- PAN Card or Passport (Foreign Nationals & NRIs)
- Voter’s ID/Passport/Driver’s License
- Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- Passport-size Photograph
- Specimen signature
REGISTERED OFFICE
- Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
- Notarised Rental Agreement in English
- No-objection Certificate from property owner
- Sale deed/Property Deed
How Many Individual Farmer Members Are Required to Register a Producer in India
The number of individual farmers required to register a Farmer Producer Organization (FPO) in India is determined by the state government and can vary depending on the state. However, according to the guidelines issued by the Ministry of Agriculture & Farmers Welfare, Government of India, a minimum of 300 farmers is required for the registration of a FPO.
What Is Difference between FPO and FPC
FPO (Farmer Producer Organization) and FPC (Farmer Producer Company) are both types of organizations that are set up to empower small and marginal farmers in India by giving them a platform to collectively market their produce, negotiating better prices and gain access to credit.
However, there are some differences between the FPO and FPC:
- Legal Status: FPOs are registered under the Indian Societies Registration Act, whereas FPCs are registered under the Companies Act. This means that FPCs have a separate legal entity and can enter into contracts and borrow money in their own name.
- Shareholders: In an FPO, the members are small and marginal farmers who have a say in the organization’s decision-making process, and they do not hold any shares. In an FPC, the members are also small and marginal farmers, but they hold shares in the company and have voting rights.
- Capital Structure: An FPO is a non-profit organization, and its capital is contributed by its members. An FPC is a profit-making organization and its capital is contributed by its members and shareholders.
- Objectives: Both FPOs and FPCs have similar objectives, but the primary objective of FPCs is to promote the economic interest of the members, who are shareholders.
What Are the Benefits of Farmer Producer Company
There are some benefits of the farmer producer company:
- Members of the Producer Association initially receive a value determined by management for the products collected and delivered. This amount will be paid later in the form of cash/non-cash/equity.
- Members of the Producers Association are entitled to bonus shares proportional to the shares held by them.
- Any surplus (after deducting qualifying income and allowances for payment of reserves) can be given to members of the producer association as a patron premium*.
What Is the Minimum Number of Members Required to Form a FPC
The minimum number of members required to form a Farmer Producer Company (FPC) in India is 10. According to the Companies Act 2013, at least 10 individuals are needed as subscribers to the memorandum of association of a FPC, and they are also the first members of the company.
It’s important to note that 51% of the shareholders in the FPC must be small and marginal farmers and the primary activity of the company must be the production, harvesting, processing, and marketing of agricultural products. The farmers that are shareholders, have voting rights and have a say in the organization’s decision-making process.
What Is Farmer Producer Companies
A Farmer Producer Company (FPC) is a type of organization that is established to empower small and marginal farmers in India by providing them a platform to collectively market their produce, negotiate better prices and gain access to credit. FPCs are legal entities and are registered under the Companies Act 2013.
FPCs are formed by a group of farmers, including small and marginal farmers, who are engaged in agricultural activities, as well as other stakeholders such as producer institutions, individuals, and institutions that are engaged in the production, harvesting, processing, and marketing of agricultural products.
The main objectives of FPCs are to promote the economic interest of the members, which are small and marginal farmers, by providing them with a platform to collectively market their produce, negotiate better prices and gain access to credit. They also help farmers to improve their skills, increase productivity, and reduce costs by providing technical support and services.
What is difference between producer company and private company?
| Points | Producer Company | Private Company |
| Incorporation | Any 10 or more persons or institutions may form the producing company. Producer Company Ltd. shall be its name, and the Memorandum shall have a limited liability provision with respect to the members. | Two individuals or companies can form a private company. The company name must use the words “Private Limited” and the memorandum can indicate whether the liability is limited (by shares or warranty) or unlimited. |
| Management | The Board may elect one or more Directors, but the total number of Directors may not be increased by more than one-fifth. These directors may serve for any length of time. Directors are jointly and severally liable for any act contrary to the provisions of law. Further, this liability is in addition to and not in conflict with any other legal obligations. | To fill a temporary vacancy, the board may designate an additional, alternate, and director. The role will be held by an additional director until the next annual general meeting. Directors are only subject to the liability that is already stipulated for directors of production companies. |
| Share capital and member rights | Members must own shares in proportion to their loyalty to the company and the share capital of the production company must be shared only. Active Members have certain rights that are transferable to other Active Members. Transferability is subject to prior Board approval and less than the par value. Each member has only one vote, no matter how many shares they own. | Shares, preferred capital, or other forms of capital can be used as shares. Neither ownership of shares under sponsorship nor the separation of rights of members is provided. |
| Penalties | Section 581ZA sets out the penalties for violating producer association regulations. | Penalties for violating the relevant rules are listed in the relevant section. |
| Reconversion of companies | Both interstate cooperatives and producer societies can be converted. | Converting from a public company to a private company and vice versa is a method of reconversion. |
Frequently Asked Questions (FAQs):-
Who can form a producer company?
A Farmer Producer Company (FPC) is a type of organization that is formed to empower small and marginal farmers in India.
Does a farmer require Fssai license?
The Food Safety and Standards Authority of India (FSSAI) is responsible for regulating the food business in India. Whether a farmer is required to have an FSSAI license depends on the nature of the farming activity and whether the farmer is engaged in food processing or handling activities.
Can a private company be converted into producer company?
Yes, a private company can be converted into a Farmer Producer Company (FPC) in India.
Who is eligible for FPO?
In India, a Farmer Producer Organization (FPO) is typically eligible for small and marginal farmers. Small and marginal farmers are defined as those who own less than 2 hectares (5 acres) of land.
Closing up
Hopefully, you got covered all your questions related to farmer producer company registration. An FPC operates on the principles of a company, where the shareholders are also the members and have a say in the organization’s decision-making process. They can raise capital by issuing shares and can borrow money from financial institutions. The profits of the company are distributed among the shareholders as dividends.