A Producer is any person engaged in any close-knit or related activity to the primary producers. A Producer Company is thus an umbrella term that includes all of the following. Producing, harvesting, procurement, grading, pooling, handling, marketing, selling, exporting the primary producers of the members, or the imports of goods or services. Thus, these members working in the benefits of Producer Company can effortlessly access government services like MNREGA, Pension, loan, PDS, and Scholarship.

Objective

The main objective of an FPO is to ensure better income for the producers through an organized system of their own. Small producers do not have the large marketable surplus individually (both inputs and produce) to get the benefit of economies of scale

HOW FPO HELP FARMERS?

The major operations of Farmers Producer Organization (FPO) include the supply of seed, machinery, market linkages & fertilizer, training, networking, financial and technical advice. The main aim of the Farmer Producer Organization is to ensure a better income for the producers through an organization of their own.

TAX EXEMPTION

Union Budget has proposed 100 percent deduction to companies registered as Farmer Producer Companies with an annual turnover upto Rs. 100 crore on profit derived from such activities, for a period of five years from financial year 2018-19. (PIB)

Incorporation of Farmer Producer Company

Producer Company refers to a corporate establishment that deals with the cultivation, production, procurement, marking, grading, & trading of the Primary Product with the aid of its members. The concept of farmer Producer Company seeks to foster the betterment of financially aggrieved farmers in India through synergy and collective efforts.
Any ten or more individuals (producers) can come together to set up a production company but there is no upper limitation on the number of members. Or, any two or more producer entities can establish a farmer producer company.
Such entities seek to operate in line with the underlying objects, which typically revolve around the mutual growth and financial growth of the member. As such Farmer Company has no intention to serve the public domain in any way.

What are the fundamental benefits of the Farmer Producer Company?

Producer Company is also acknowledged as the hybrid of a co-operative society and a registered entity. It excels on the unique elements of a cooperative structure having governing framework similar to that of a company. Such entity primarily refers to a registered corporate served by the group of individuals (mainly farmers) as its members. 

Following is the list of benefits rendered by the farmer producer company in India.

Deposit Acceptance :
The prevailing bylaw permits the Producer Company to accept a deposit in the form of a fixed deposit (aka FD) or a recurring deposit.

Loan against security :
Farmer Producer companies are legally permitted to function as lending agencies. They are eligible to lend credit against the FD, gold, Govt securities.

Profit allocation to the members :
The profit or income generated by the farmer producer company remains within the organization and is distributed among the serving members. 

No taxes on the agricultural income :
As such, no taxes are levied on the profit generated by the Producer Company. Presently, these entities are exempted from addressing any tax obligations imposed by the IT department. 

Loan Facility to Members :
Farmer Producer companies are legally eligible to disburse the credit to the founding members.

Registration of Farmer Producer Company in India

To begin with the incorporation process, the proposed member needs to make an online application in the e-form, viz Spice+ on the MCA portal. The said form is available under the Services section of the MCA portal which the applicant can access after creating the account.