The Companies Act 2002 vides notification no. S.O. 135 (E) inserted part IX ‐ A of the Companies Act, 1956 (hereinafter referred to as “the Act) and introduced the concept of Producer Company[1]. In the year 2002 an expert committee led by noted economist framed legislation for incorporation of a producer company, and conversion into multi state cooperative society into a producer company and its recon version into cooperative society. No need to wait more for amendment of bye laws of a multi state cooperative society.

It aims at enlistment of rural producers for following reasons:

Rural producers have been at a potential disadvantage given their limited assets, resources, educational and access to advanced technology.

In Indian context the farmers disposes of his produce in unprocessed form there is no plough back of surpluses from value addition to the farm.

Agri business enterprises are therefore increasingly looking for direct tie up with the farmers to source the agricultural produce required by them. Ironically, at this very time we get news that between 1995 and 2005, one and a half laky farmers committed suicide across the country. A Situation of Farmers study undertaken by the National Sample Survey Organization (NSSO) of the Government of India indicates that forty percent of farmers given a choice wish to get out of agriculture. How is it that when the capitalists are rushing into agriculture in droves, the farmers are rushing to get out of it. Producer institution means a producer company or any other institution having only producer or producers or Producer Company or producer companies as its members whether incorporated or not having objects referred to in section 581 and which agrees to make use of services of the Producer Company or producer companies as provided in its articles in the statement of objects and reasons.