The Companies Act defines a Producer as any person engaged in any activity connected with or relatable to any primary produce (Produce: “things that have been produced or grown, especially by farming”). A Producer Company is thus a body corporate having an object that is one or all of the following:

- production, harvesting, procurement, grading, pooling, handling, marketing, selling, the export of primary produce of the Members or import of goods or services for their benefit.  
 

Further, the Producer Company must deal primarily with the produce of its active Members and must allow to carry on any of the following activities by itself or through other entities – on behalf of the members.

- processing including preserving, drying, distilling, brewing, venting, canning and packaging of the produce of its Members;  
- manufacture, sale or supply of machinery, equipment or consumables mainly to its Members;  
- providing education on the mutual assistance principles to its members and others;  
- rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members;  
- generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communication relatable to primary produce;  
- insurance of producers or their primary produce;  
- promoting techniques of mutuality and mutual assistance;  
- welfare measures or facilities for the benefit of Members as may be decided by the Board;  
- any other activity, ancillary or incidental to any of the activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner;  
- financing of procurement, processing, marketing or other activities which include extending credit facilities or any other financial services to its Members.

Characteristics of a Producer Company

- The registered producer firm will be considered as if it were a Private Limited Partnership.  
- The maximum number of participants is 50.  
- To start a producer business, ten or more ‘Primary Producers’ are necessary. A minimum of two people are required to register them, much like a private limited company.  
- A minimum authorized and paid-up capital of INR 5 lakh is required.  
- The maximum number of directors is five.  
- The profit share will be proportional to the amount of money invested and the amount of money contributed by the firm.  
- It will never become a publicly traded corporation.  
- The members’ liability is restricted to the unpaid amount of the shares they own.

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