Producer Company registration

All you need to know about the NABARD schemes for Farmer Producer Company Introduction Indian farmers are the backbone of the country's economy, serving as the primary source of food production for the entire nation and comprising nearly 60% of India's total workforce. However, there is a need to enhance the benefits that farmer-producer companies deserve for their hard work. These companies often face challenges in accessing adequate financial resources. To address this issue, NABARD, the National Bank for Agriculture and Rural Development, plays a pivotal role. NABARD is a nationalized bank that is committed to empowering farmer-producer companies operating in the agriculture sector by providing them with a range of financial services through PODF, OFPO, and other schemes. In this blog, we will discuss the NABARD schemes for the Farmer Producer Company. What is a Producer Company? A Producer Company (PC) is a legal entity formed by primary producers such as farmers, milk producers, fishermen, weavers, rural artisans, and craftspeople. A producer company can be a cooperative society or any other type of legal entity that allows the members of the company to share its earnings and benefits. What is a farmer-producer company? A farmer-producer company is a combination of a cooperative society and a Private Limited Company. It is a company created to provide collective marketing of agricultural goods. The company is referred to as a Farmer Producer Company if: A legally registered group of producers come together to perform farm-related activities. The producers who join the company become the shareholders. It includes procurement, production, harvesting, cultivation, marketing, and other related activities of the primary producers. A portion of the profit earned is divided among the members. The remaining profit is kept as a reserve for future growth and development of the company. Schemes for a Farmer Producer Company by NABARD A nationalized bank called NABARD offers financial support to farmer-producer companies that are engaged in agricultural production. NABARD offers several schemes for farmer-producer companies, which are as follows: A. Producer Organization Development Fund (PODF) The National Bank for Agriculture and Rural Development (NABARD) established Producer Organization Development Fund (PODF) on April 1, 2011, with an initial capital of 50 Crores, as a project to support Producer companies. Farmer producer organizations (FPO) will get financial assistance through this fund in the form of grants or loans. It also attempts to assist FPOs in increasing their capacity and establishing market connections. Under this fund, the following companies or organizations are eligible to get a loan: Registered Producer Companies Mutually aided cooperative society Industrial cooperative society Producers cooperatives Registered Farmer federations Other registered federations Above mentioned companies or organizations can perform the following activities: Financial Support Direct lending by way of term loans Working capital loan Composite loan covering both term loan and working capital Subordinated debt Capacity Building Business development Skill development in both farm and off-farm sectors Technological extension Training, Exposure visits Agricultural University tie-ups Market Linkage Setting up marketing infrastructure facilities Tie-ups with buyers for the purchase of bulk produce Partnerships with large corporates What is the process to obtain a loan under the PODF? The Farmer Producer Company has to follow the below-mentioned process to obtain a loan under the Producer Organization Development Fund (PODF): 1. Form a Farmer Producer Company (FPC): The first step to obtaining a loan under PODF is to form an FPC. The FPC should be registered under the Companies Act, 2013 or any other relevant legislation. 2. Meet the Eligibility Criteria: The FPC should meet the eligibility criteria specified by NABARD to avail of the loan. Some of the key eligibility criteria include a minimum of 500 members, a minimum paid-up share capital of Rs. 5 lakhs, and a minimum of 3 years of operation. 3. Prepare a Detailed Project Report (DPR): The FPC should prepare a detailed project report (DPR) for the activities for which the loan is required. The DPR should include details such as the project cost, funding pattern, repayment schedule, and expected outcomes. 4. Apply for the Loan: The FPC should submit the DPR along with the loan application to the nearest NABARD office. The loan application should be accompanied by relevant documents such as the FPC’s registration certificate, PAN card, and audited financial statements, and should be in the prescribed format. 5. Loan Appraisal and Sanction: NABARD will appraise the loan application based on various factors such as the feasibility of the project, the financial viability of the FPC, and the creditworthiness of the FPC. If the loan application is found to be eligible, NABARD will sanction the loan. 6. Loan Disbursement and Monitoring: Once the loan is sanctioned, NABARD will disburse the loan amount to the FPC. NABARD will also monitor the progress of the project and the utilization of the loan amount. B. Other schemes for Farmer Producer Company by NABARD 1. Producer organization development and upliftment corpus A fund called PRODUCE (Producer Organization Development and Upliftment Corpus) was established in 2014–15 by the Indian government with the help of NABARD with an initial capital of Rs. 200 crores. The major goal of this fund is to promote FPOs by establishing around 2000 more Farmer Producer Companies. 2. Off-farm producer organization The agriculture sector includes farm and off-farm activities. Therefore, to promote the off- farmer activities like handcraft, handloom, etc, the NABARD introduced a scheme called OFPO (off-farm producer Organization), which is very similar to FPOs. People who are engaged in off-farm activities can come together to join an OFPO so they can also avail the benefits of economies of scale. 3. Central sector scheme The Government of India has proposed a new scheme called the Central Sector Scheme for forming and promoting 10,000 FPO. It aims to provide financial assistance and financial support to the FPOs. It also helps to improve cost-effective production and the creation of new job opportunities. Conclusion Agriculture is the backbone of the Indian economy, but because farmers are unorganized, it is difficult for them to adopt new technology and purchase high quantities of inputs because of a lack of finances. They also face considerable hardship because they cannot sell their produce in quantity at a fair price. Producers can profit from economies of scale and strong bargaining power for the sale of their products by bringing them under the cover of the organized sector, which allows them to obtain inputs and other commodities at lower prices.

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