Producer Company

Core Objectives of Farmer Producer Company

calendar02 Sep, 2022
timeReading Time: 3 Minutes
Objectives of Farmer Producer Company

On the recommendation of Y.K. Alagh, an expert committee led by noted economists set up producer companies in 2002 by incorporating a new chapter into the Companies Act of 1956. The producer company is a corporate body registered as a Producer Company under the Companies Act, 1956. Its principal activities consist of processing, grading, procurement, production, handling, pooling, harvesting, marketing, selling, export of primary produce of the members or import of goods or services for their benefit. It also includes promoting mutual assistance, financial services, welfare measures, and insurance for producers or their primary produce. Further, we will be discussing the objectives of Farmer Producer Company.

The main idea behind the FPOs is that the farmers who produce agricultural products can form groups and register themselves under the Companies Act of 2013[1]. Now we will discuss the objectives of Farmer Producer Company

Objectives of Farmer Producer Company

The following are the main Objectives of Farmer Producer Company

  • Harvesting, Procurement, Pooling, Production, Selling, Grading, Handling, Marketing, export of primary produce of members or import of goods or services for their benefit.
  • Processing includes drying, brewing, venting, canning, preserving, distilling and packaging the produce of its members.
  • One of the main objectives of Farmer Producer Company is rendering technical services, training, education, consultancy, research and development and all other activities to promote its members’ interests.
  • Revitalization of land and water resources, Generation, Transmission and Distribution of Power, their use, communications and conservation relatable to primary produce.
  • Sale or supply of machinery, manufacture, equipment or consumables mainly to its members.
  • Promoting mutual assistance, financial services, insurance of producers, welfare measures, or their primary produce;

Functions of Farmer Producer Company

A Farmer Producer Company or FPC is a group of farmers that work together to increase their revenue & enhance their standard of life. This company can be formed in India with ten members and two institutions. More than 80% of farmers are unorganized & have tiny/marginal holdings. This company encourages farmers and assists them in reaching their economic potential by pursuing the following goals.

  • Production
  • Procurement
  • Grading and harvesting of vegetables and fruits
  • Poling and Handling
  • Agricultural Product Marketing
  • Exporting, Importing and Selling Agricultural Products.   

Benefits of Farmer Producer Company

The following are the benefits of Farmer Producer Company

  • The liability is limited to the unpaid amount of shares held by them.
  • It is a hybrid of the Company and Co-operative Society and enjoys the benefits of professional management of a Private Limited Company.
  • The farmer producer companies are registered under the Companies Act 2013, which is central legislation.
  • There is no maximum number of members, and it can be increased as per need and feasibility.
  • Producer Institution and Individual can be admitted as members.
  • The farmer producer company with an annual turnover of more than 100 Core are required to pay tax on profit derived from farm-related Activities.
  • The producer company’s board can engage professionals to manage its office bearers or Directors.
  • Government/Non-government organizations, banks and other financial institutions provided financial support to farmers Producer Company.

Benefits to a member of Farmers Producer Companies

The benefits to the member of Farmers Producer Company are mentioned below

  • Better Efficiency
  • More Income to Producer
  • Equal Voting Rights for members
  • Limited Liability
  • Financial Assistance from Company
  • A platform for government Initiatives
  • Entitled for Insurance
  • Educational and Technical Services
  • Export and participation in commodity exchanges

Problem Faced by Farmers Producer Companies

The following are the problems faced by the Farmers Producer companies follows.

  • There is a restriction on trading in the share of Farmer Producer Company; as of now, there is no exit route for investors. The non–producer cannot invest in the equity of these companies.
  • Since Farmers Producer Company is a profit-oriented company with limited access to get a donation, these companies are profit-oriented organizations with limited avenues to get donations. The banks are unfamiliar with the concept, so these companies have limited access to banks.
  • For trading in agricultural products, it must have APMS – Agricultural Produce Marketing Committee license to there is needed to make efforts to promote nature producer companies.
  • Hence Agricultural Income is exempted from tax; it would be appropriate that Farmers Producer Company is also given exemption set by farmers.


In this article, we majorly discuss the main Objectives of Farmer Producer Company. Further, we have also discussed the Lack of amenities and land fragmentation makes it challenging for most farmers in India to attain good value for the primary output. Regarding purchasing at the lowest prices, getting access to financing and loans, adopting new technologies & developing direct links to the market, producers in India benefit from the economies of scale provided by producer businesses.

Read our Article:Farmer Producer Company Registration Process: Explained

Saiyam Shah

Saiyam Shah has done his LL.M in Business Law from Amity Institute of Advanced Legal Studies – Amity University. His area of interest is legal research related to Indirect – Tax and Company law. He has prior experience in Tax litigation, dealing with various Income – Tax Assessments and has good drafting skills in filing arguments and replying to Income – Tax Notices.

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