Nabard Loan For Producer Company

The concept of Producer Company was introduced to allow farmers cooperatives to function as a corporate entity under the Ministry of Corporate Affairs. A Producer Company is a registered company 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. IndiaFilings can help you register a producer company or private limited company. In this article, we mainly look at the loan provided by NABARD for producer company in India.

Producer Organization Development Fund

In 2011, NABARD has set up a Rs.50 crore Producer Organization Development Fund (PODF) for supporting producer organizations and adopting a flexible approach to meet the needs of producers. Under this scheme, financial support in the form of a grant and/or loans are provided for any registered Producer Organization, Producer Company, Producers Cooperatives, Registered Farmer Federations, MACS (Mutually aided Cooperative Society), Industrial Cooperative Societies and other registered federations set up by producers.

An organization will be defined or called as a Producers Organization or Producer Company, if:

It is formed by a group of producers for either farm or non-farm activities;
It is a registered body, and a legal entity;
Producers are shareholders in the organization;
It deals with business activities related to the primary produce/product;
It works for the benefit of the member producers;
Portions of profit are shared amongst the producers and the balance goes to the share capital or reserves.

Reason for Setting up Producer Organization Development Fund

Majority of the Indian farmers find it hard to realize optimal value for their produce due to fragmentation of land holdings and lack of post-harvest processing facilities. Majority of the Indian Farmers (85% of the 12.5 crore farmer households in India) are small and marginal farmers with landholdings of less than 2 hectares. This fragmentation in farmlands leads to disorganization and it is not viable for Indian farmers to adopt the latest technologies.

By organization of these farmers into producer companies or producer organizations, the farmers can utilize economies of scale to procure inputs at a lower cost, adopt latest technologies, get access to finance, build linkages to market, develop post-harvest processing facilities and gain more selling power. Thus the concept of producer company and the Producer Organization Development Fund are aimed at empowering farmers into creating organizations or clusters.

Loan for Producer Company or Producer Organization

The Producer Organization Development Fund (PODF) will be used to support Producers Organizations or Producer Companies by providing credit support, improving capacity and building market linkage. The objective of the fund is to meet end to end requirements of Producers Organization as well as to ensure their sustainability & economic viability.

Under the scheme, activities that fall within the domain of agriculture, allied sectors & non-farm sector are supported. Activities like harvesting, storage, processing, packaging and/or marketing of the produce/ product are eligible for support under the PDOF Fund.

To be eligible for assistance under the PDOF Fund, the Producer Company should be formed by the primary producers of agriculture & non-farm sector. The Producers Organization or company must act only for the benefit of the producers. Further, the shares of the producer company cannot be sold to non-producers and if an existing member desire to leave the producer company, then the shares can only be purchased either by existing producers or by enrolling a new primary producer.

Eligible Institutes to Avail Assistance

There are conditions to avail the assistance for which the basic eligibility has to be met. The following categories of companies are allowed:

Producer Companies (POs)
Producers’ Organizations (POs)
Primary Agricultural Cooperative Societies (PACS)
Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) as Multi-Service Centre (MSC)
and other professional organizations

The eligible category of companies can opt for the below type of assistance from the NABARD or the assistance will be provided for the below type of activities:

Training/ Capacity Building
Market Linkage
DPR Preparation
Administrative Cost
Incentive for the Promoting Agency
Mobilization of Farmers
Establishment & Registration
Training to Board of Directors
Administrative Expenses of PO
Preparation of Business Plan
Training to Chief Executive Officer of POs
Support to POPIs for handholding/ nurturing of POs

More details can be received from: NABARD Plot C-24, G Block, Bandra Kurla Complex, BKC Road, Bandra East, Mumbai, Maharashtra-400051.

For more information about the Producer Organization Development Fund, visit NABARD Website or IndiaFilings.com

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Frequently Asked Questions

Common questions about NABARD Loan for Producer Company Funding in India.

A Producer Company is a registered company formed by a group of producers, such as farmers, to collectively produce, harvest, procure, grade, pool, handle, market, sell, or export their primary produce. It is a legal entity owned and controlled by the producers themselves, allowing them to benefit from economies of scale and better bargaining power.

The PODF was set up by NABARD in 2011 with a corpus of Rs. 50 crore to support and empower producer organizations and companies by providing financial assistance in the form of grants and loans. The objective is to meet their end-to-end requirements, ensure their sustainability and economic viability, and facilitate activities like harvesting, storage, processing, packaging, and marketing of their products.

Producer Companies, Producers' Organizations, Primary Agricultural Cooperative Societies (PACS), Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) acting as Multi-Service Centres, and other professional organizations formed by primary producers in the agriculture and non-farm sectors are eligible for assistance under the PODF.

The PODF supports a wide range of activities related to agriculture, allied sectors, and non-farm sectors, including training and capacity building, market linkage, preparation of Detailed Project Reports (DPRs), administrative costs, incentives for promoting agencies, mobilization of farmers, establishment and registration, training for board of directors and chief executive officers, administrative expenses, and preparation of business plans.

The PODF aims to empower small and marginal farmers, who constitute the majority (85%) of the 12.5 crore farmer households in India, by organizing them into producer companies or organizations. This allows them to leverage economies of scale, procure inputs at lower costs, adopt modern technologies, access finance, build market linkages, develop post-harvest processing facilities, and gain better selling power.

To be considered a Producer Organization, a company must be formed by a group of producers for either farm or non-farm activities, be a registered legal entity, have producers as shareholders, deal with business activities related to the primary produce or product, work for the benefit of the member producers, and share a portion of the profits among the producers, with the balance going towards share capital or reserves.

No, shares of a Producer Company cannot be sold to non-producers. If an existing member desires to leave the company, their shares can only be purchased by either existing producers or by enrolling a new primary producer.

The PODF was established to address the challenges faced by Indian farmers, such as fragmentation of land holdings, lack of post-harvest processing facilities, disorganization, and the inability to adopt new technologies or realize optimal value for their produce. By organizing farmers into producer companies or organizations, the PODF aims to empower them and facilitate their economic viability.

Producer Organizations or Companies can apply for assistance under the PODF by contacting NABARD and providing the necessary documentation and details about their organization, activities, and requirements. The application process and specific requirements may vary, and it is advisable to consult with NABARD for the latest guidelines and procedures.

IndiaFilings can assist in registering a Producer Company or a Private Limited Company, which is a necessary step for producers to form a legal entity and become eligible for assistance under the PODF or other government schemes. IndiaFilings provides services related to company registration, compliance, and legal formalities, enabling producers to establish their organizations efficiently.