{"id":1294,"date":"2013-02-06T06:47:32","date_gmt":"2013-02-06T06:47:32","guid":{"rendered":"http:\/\/blog.srr-foundation.org\/?p=1294"},"modified":"2013-02-07T07:45:48","modified_gmt":"2013-02-07T07:45:48","slug":"producer-companies-1","status":"publish","type":"post","link":"https:\/\/blog.srr-foundation.org\/?p=1294","title":{"rendered":"Producer Companies —- (1)"},"content":{"rendered":"

A\u00a0<\/span><\/i>Producer Company is a new format of structure devised to improve the working of\u00a0<\/span><\/i>agriculture sector. Over next few posts, SRRF Dialogue will look at this\u00a0<\/span><\/i>structure, its origins, current status and likely future developments. Hope the\u00a0<\/span><\/i>members would find this useful.<\/span><\/i><\/p>\n


\nIntroduction<\/span><\/b><\/p>\n

A\u00a0Producer company is a corporate structure. It allows producers of primary\u00a0produce (farmers, dairy-products producers, etc.) to organize themselves into a\u00a0corporate entity.<\/span><\/span><\/p>\n


\nInspite of India mainly being an agrarian economy, as we all know that\u00a0agriculture has become a sector from which a large number of farmers wish to\u00a0exit. This is ironic considering that a number of corporates have entered into\u00a0this business seeing the profits[1]<\/span><\/span><\/a>.One of the reasons for this, is that value addition to a product occurs only\u00a0after the farmer has already exited after sale of his primary produce, hence\u00a0s\/he cannot share in these profits.<\/span><\/p>\n


\nHistorical Evolution<\/span><\/b><\/p>\n


\nRecognising the above need, cooperative option came early into picture and was\u00a0encouraged by the Govt, however experiment with cooperatives failed (today\u00a0rather than being a panacea of problems of the farmers, large & successful\u00a0cooperatives are few & numbered. This happened because one, they were considered\u00a0more on the lines of welfare rather than undertaking business on commercial\u00a0lines. Secondly the overpowering control of the state govts through Registrar of\u00a0Cooperatives over these institutions throttled the growth of the very\u00a0institutions it was supposed to nurture[1]<\/span><\/a>.\u00a0Most cooperatives need to take permission from the state govts for a number of\u00a0activities, sometimes even for opening of offices, investment of surplus funds,\u00a0issue of bonus shares, appointment of auditors, etc.<\/span><\/p>\n


\n<\/span>Thus the idea of a Producer company came from the felt need for an alternative\u00a0institutional framework, free from regular interferences and which could easily\u00a0undertake commercial transactions. Companies (Amendment) Act 2002 gave birth to\u00a0a legal structure called \u2018Producer Company\u2019. It would be unfair, if the name of\u00a0<\/span>Dr YK Alagh is not mentioned here, who was the chairman of the Committee which\u00a0gave recommendations and hence became part of Companies Act. <\/span><\/p>\n


\nLegal\u00a0features of incorporating Producer Company will be covered in the next Post<\/span><\/span><\/i><\/p>\n

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[1]<\/span><\/span><\/a> A Study Paper titled \u2018Producer Company Model \u2013\u00a0Current Status & Future Outlook : Opportunities for Bank Finance\u2019 by EV\u00a0Murray, Faculty Member, RBI, College of Agricultural Banking, Pune.<\/p>\n<\/div>\n