Introduction
A Farmer Producer Company, or FPC, is a legal business structure that is registered under the Companies Act, 2013. The primary agricultural producers are those who register and run a Farmer Producer Company in India. It serves as a hybrid between a private limited company and a cooperative society.
Producer members own the company through non-tradable equity shares. Meanwhile, with growing demand and agricultural expansion, almost 40,000+ producer companies are registered in India. Let’s explore this guide to learn the process of forming a farmer producer company, its documentation, and the cost required to set it up.
What is a Farmer Producer Company (FPC)?
Farmer Producer Company is a business structure that is registered under the Companies Act, 2013 through the MCA V3 portal. The primary agricultural producers, such as farmers, milk producers, or artisans, register as a Farmer Producer Company in India. A minimum of 10 individuals (or 2 institutional producers or a combination) are required to register for an FPC.
The democratic control of this company is generally based on the "One Member, One Vote" principle. Under this structure, the primary agricultural individual's personal assets are protected due to limited liability protection.
Eligibility Criteria for Farmer Producer Company
To form a farmer producer company in India, the individuals are required to meet the specific membership, governance, and capital criteria. Before starting the FPC registration process, you must ensure you meet the following requirements:
- Minimum Members: At least 10 individual producers (farmers), 2 producer institutions, or a combination of both (10 individuals + 2 institutions).
- Producer Status: The designated producer members must be actively engaged in agricultural activities.
- Citizenship: All members in the farmer producer company must be Indian citizens with valid document proof.
- Share Ownership: The shares of the company can only be held by the producers, as they are non-tradable.
- Board Size: FPC requires a minimum of 5 directors and a maximum of 15 directors.
- Qualification of Directors: At least one director must be a farmer-producer and hold the specific qualification from the farming community.
- Company Name & Office: As per the rules, the name of the company must end with “Producer Company Limited” and must have a registered address in India.
- Minimum Paid-Up Capital: To start an FPC, a minimum of ₹1,00,000 paid-up capital is required.
- MOA Structure: The Memorandum of Association must primarily focus on agriculture, such as harvesting, production, processing, marketing, or related agricultural activities.
What Are the Benefits of a Farmer Producer Company?
A company registered as a Farmer Producer Company in India enjoys many benefits. Here are the core benefits associated with a farmer producer company:
- Middlemen Elimination: A registered Farmer Producer Company (FPC) collects the produce from small and marginal farmers, which they directly sell to larger retailers, processors, or exporters.
- Boost Profit Margins: By cutting down the local traders and middlemen, the farmers gain a significant margin on the aggregate produce sold (usually up to 40%).
- Improve Bargaining Power: At discount rates, the farmers can purchase quality agricultural raw materials like seeds, fertilizers, pesticides, and machinery collectively.
- Asset Protection: A Farmer Producer Company (FPC) in India is separate from its members. Therefore, the members get limited liability protection for their personal assets.
- Ownership in FPC: A farmer producer company is exclusively controlled, handled, and benefited by its farmer members, restricting external investor involvement.
- Access to Government Schemes: Businesses registered as FPCs (Farmer Producer Companies) enjoy government schemes and financial support from institutions like NABARD, the Small Farmers' Agri-Business Consortium (SFAC), and the Ministry of Agriculture.
- Tax Exemptions: Several agricultural and business incomes qualify for specific exemptions.
Documents Required for FPC Registration
To set up a producer company in India, required to provide multiple documents related to the identification of the directors, registered office proof, and additional constitutional documents. Here is the complete list of producer company documents you need to provide:
Documents for Director/Shareholder
- PAN Card
- Aadhaar Card
- Additional Government IDs (driving license, voter ID, or passport)
- Address proof (bank statement, utility bill)
- DSC (Digital Signature Certificate)
- DIN (Director Identification Number)
- Recent passport-size photographs
Documents for Registered Office
- Premises Proof (not older than 2 months)
- Rent agreement or Lease agreement (if rented)
- Property Deed/sale deed or property tax receipt ( if owned)
- NOC (No Objection Certificate)
Declarations & Consent Forms
- Form DIR-2 (consent to act as director)
- Form INC-9 (Declarations from subscribers & directors)
- Declaration certificate by a professional
- Declaration of producer status
Farmer Producer Company Registration Process
As a Farmer Producer Company is registered under the Companies Act, 2013, you can submit the application online through the Ministry of Corporate Affairs (MCA). The registration process is as follows:
Step 1: Obtain the Class 3 DSC
All proposed directors in a private limited company must obtain the Class 3 DSC (Digital Signature Certificate).
Step 2: Apply for DIN
Each proposed director is required to hold a separate Director Identification Number (DIN). It serves as the identification proof for the directors in the company.
Step 3: Company Name Reservation
To reserve the company name, you must file Part A of the SPICe+ form directly on the MCA V3 portal.
Step 4: Draft the Incorporation Documents
Prepare and draft the incorporation documents like the Memorandum of Association (MOA) and Articles of Association (AoA). Both must outline the rules and regulations related to the primary agricultural objective.
Step 5: File SPICe+ Form
Submit Part B of the SPICe+ form along with supporting documents and information, including director/member IDs, registered address proof, applicant's address proof, and other core paperwork.
Step 6: Use the ANGILE-Pro-S Form
To simultaneously apply for PAN, TAN, GST certificate (if applicable), and bank account, use the ANGILE-Pro-S, a linked form.
Step 7: Certificate of Incorporation
Once all documents are verified by the Registrar of Companies (ROC), you will get the Certificate of Incorporation along with the Company Identification Number (CIN). It serves as the legal document for your Farmer Producer Company's existence.
What Is the Farmer Producer Company Registration Cost?
For the registration of a Farmer Producer Company in India, the cost can range between ₹15,000 and ₹40,000+. The exact cost for a set of FPCs depends entirely on the authorized capital, stamp duty, and whether you register yourself or hire a professional for the same. The cost is categorized as:
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Note: The above-mentioned cost is only used during the Farmer Producer Company Incorporation. But additional costs are associated after its incorporation for annual filing, audits, and other compliances.
How Long Does FPC Registration Take?
The complete process of Farmer Producer Company generally takes 4 to 8 weeks. However, if the documents are accurate and you fulfil all the requirements, as specified by the ROC, then the process may take only 20-30 working days. The timeline for FPC is as follows:
- Member Documents Collection: Takes a few weeks, usually the longest process
- DSC & DIN: Usually 1-2 Days
- Name Approval: 1 to 3 Working Days
- SPICe+ Processing by RoC: 5 to 10 Working Days
The whole process can extend up to 4-5 working days, or more, depending on your documents' accuracy and consistency.
Conclusion
Registering as a Farmer Producer Company in India opens the gate to a better market and improves direct sales. The members of the producer company enjoy the vast benefits, including bypassing the involvement of middlemen for the sale of produce. Make your Farmer Producer Company registration journey faster and streamlined with JustStart experts. Handle the complete process from documentation to online application filing.
Frequently Asked Questions
Q1. What is the full form of FPC?
Ans. FPC stands for Farmer Producer Company, a business structure registered under the Companies Act, 2013, by primary agricultural producers.
Q2. What is the Difference between FPO vs FPC?
Ans. FPO, or Farmer Producer Organization, is a broad, generic term used for a collective of groups of primary agricultural producers who join to meet specific requirements related to agriculture. Whereas “Farmer Producer Company” is a business structure incorporated under the Companies Act.
Q3. How many members are needed for a Farmer Producer Company in India?
Ans. At least 10 individual members or 2 producer institutions or a combination of both are required, and there is no maximum limit for members. Whereas, the minimum limit of members is 5 and the maximum is 15.
Q4. What is the minimum capital required for an FPC?
Ans. The minimum paid-up capital required is ₹1,00,000, contributed by the collective founding farmer members.
Q5. Can an FPC convert into a public company?
Ans. No, an FPC is a hybrid entity; therefore, it is restricted from being converted into a public limited company in India.
Q6. Does an FPC pay income tax?
Ans. No, on the core agricultural income, it does not pay income tax. But FPC is still required to file the Income Tax Return (ITR) annually.
Q7. How long does FPC registration take?
Ans. It generally takes 4 to 8 weeks for the complete Farmer Producer Company registration, from documentation preparation to application filing on the MCA V3 portal.
Q8. How much does it cost to set up a farmer producer company?
Ans. For the registration of an FPC, it generally takes ₹15,000 to ₹40,000, or can increase, depending on authorized capital, stamp duty, and professional service costs.
Q9. Can non-farmers invest?
Ans. No, non-farmers like angel investors, VCs, or external investors cannot hold equity shares in a Farmer Producer Company.
Q10. Can a Farmer Producer Company issue shares to investors?
Ans. No, an FPC is restricted from issuing shares to external investors because the ownership and membership are strictly limited to the primary producers.
