Producer Companies in India

Book excerpt: Organising small producers for dealing with production and market risks has been an issue of much debate and research. The co-operative model has been the predominant form of organization of such producers in the past across the developing world and more so in India whether for input supply or output handling and marketing. In 2002, the Companies Act was amended to make space for producer or farmer companies under the Act. As a result, over the last decade, hundreds of producer companies have been promoted by different stakeholders like government, NGOs, farmers’ unions and some corporate agencies to link farmers with markets and create better bargaining power to deal with modern and changing markets. In this context, this study examines the nature and process of promotion of producer companies in India and their performance and dynamics across four states, commodity sectors, and promoters within agricultural sector with the help of case studies of two dozen such companies. It compares and contrasts the Indian producer company structure with traditional co-operatives and with similar innovations in other contexts like Sri Lanka’s farmer companies. The study analyses the performance and the problems of the producer companies from various perspectives, and examines policy and organizational issues to provide guidelines for better structuring and management of this innovative form of producer collectivization in India and the developing world.