What are the advantages of registering a Farmer Producer Company in India?

Introduction

Agriculture is the primary source of income for almost 58% of India’s population. Yet many farmers struggle due to a lack of access to the latest technologies and techniques, leading to crop failures and substantial financial losses. In response of these challenges, the Indian government has established an expert committee and launched the Farmer Producer Company to provide farmers with the necessary resources and support to improve their agricultural practices and livelihoods. In this blog, we will learn what are the advantages of registering a FPC (Farmer Producer Company)  in India.

What is a Farmer Producer Company?

A group of farmers that come together to increase their income and standard of living is known as a farmer-producer company. A Producer Company in India can be created with just 10 members and 2 institutions. A minimum capital of Rs.5 lahks is required to register a producer company.

What are the Advantages of registering as a Farmer Producer Company?

The primary goal of the Producer Company is to create a farmer-based society in the form of a company and facilitate the conversion of existing cooperative societies into organized companies. To achieve this, FPCs engage in various beneficial activities such as production, procurement, pooling, harvesting, grading, handling, marketing, selling, and import/export of primary products from all members.

Below are some advantages of registering a FPC (Farmer Producers Company) in India:

1. Access to modern technology

One of the main advantages of registering an FPC is that it provides farmers with access to modern technology and techniques that can help them improve their productivity and yield. FPCs can help farmers invest in modern machinery and equipment, which can help them reduce their workload and increase efficiency.

2. Accept deposits

One-time or recurring deposits are accepted in the form of deposits for a registered business. Moreover, FPCs are able to provide loans to their members and farmers at a very reasonable rate of interest.

3. Limited liability

When you register as a producer company, you are given the advantage of limited liability because you are a separate legal entity, which means that you and your members will be seen as having different identities from each other by the law.

4. Higher profit and financial stability

A key advantage of registering an FPC is that it can help farmers obtain better prices for their products. By pooling their resources and selling their products in bulk, farmers can avoid the need to sell their produce to middlemen and instead negotiate directly with buyers.

5. Easy registration and management

The process of becoming a producer company is simple, and the company can make modifications to the Board of Management by submitting a few simple forms to the relevant Registrar of the Company.

6. Greater bargaining power

One more key advantage of registering an FPC is to help farmers gain greater bargaining power in the market, enabling them to negotiate better prices for their products and gain greater control over the supply chain. This can lead to more stable prices and higher profits for farmers, ultimately resulting in better livelihoods.

Advantages enjoyed by members of FPC

Listed below are the advantages enjoyed by the members of Farmer Producer Company:

1. A significant benefit is that once the directors of the respective producer company reach a decision, members of the Producer Company obtain the predetermined amount for the combined and provided production. The remaining sum is distributed to the company’s shareholders in the form of cash or equity shares.

2. Bonus shares are distributed to members of the Producer Company in the same proportion as equity shares they own in such a company.

3. Members of the Producer Company may receive a surplus as a patronage bonus (after making provisions for the payment of the limited return and reserves). Patronage bonuses mean the distribution of surplus income among the members of a producer company according to the proportion of their patronage.

Conclusion

There are many advantages to registering a Farmer Producer Company for farmers in India. By working collaboratively, farmers can gain access to modern technology and techniques, access deposits, gain higher profit and stability, and gain greater bargaining power in the market. By registering with an FPC, farmers can become more successful, sustainable, and profitable in their agricultural endeavors.