Producer Companies in India- Experiences and Implications

Abstract

The concept of ‘Cooperative’ is one of the options available for the producers to get organized themselves to moveup in the supply-chain by value addition and business ownership. However, the cooperative system in the country has been infected by several inadequacies. Hence, there was an amendment of Companies Act 1956 during 2002 that paved the way for incorporation of ‘producer companies’. Since then, about 150 producer companies have been established in India covering a wider range of commodities. ‘Producer Company’ is the hybrid between a private limited company and a cooperative society. It combines the goodness of cooperatives and efficiency of corporate company. Most of the initiatives on producer companies are start-ups and promoted by NGOs/ development agencies/ sponsoring organizations. There are certain serious issues to be addressed for the effective functioning of producer companies. The effective functioning of ‘producer company’ model in India and scaling-up of this concept may bring prosperity to the future of peasants at a scenario wherein huge challenges pose before Indian agriculture. The best practices followed by the successful producer companies across the country in capacity building, awareness creation, promotional efforts etc are to be documented and disseminated. This paper intends to document the genesis and spread of producer companies, selected experiences and challenges ahead and to suggest policy implications for promotion.