Can a Producer Company Export Agricultural Products

The Landscape of Indian agriculture is evolving but still small and marginal farmers often struggle with low margins, fragmented supply chains, and limited market access.

Producer company is a hybrid business model that combines the cooperative spirit with the efficiency of a private limited company.

Farmers and primary producers often ask an empowering question, “Can a Producer Company export agricultural product?”

The simple answer is Yes. Export of Agricultural products by producer company is completely legal and find its depth in the legal framework under the Companies Act, 2013.

Export of Agricultural products by producer company opens doors to higher revenues, global recognition, and sustainable growth for member-producers.

In this blog, we shall uncover the nuances of export of Agricultural products by producer company including practical steps, benefits, challenges, success stories, and actionable advice.

Table of Contents

Significance of export by Producer companies

India is one of the world’s largest producers of rice, spices, fruits, vegetables, and dairy. Still, a significant portion of produce is lost due to poor post-harvest management or sold at distress prices locally. Export of agricultural products by producer company addresses this issue in the following manner: –

Higher Price Realisation: Producer company can realise 30%-50% better prices for quality produce in international market.
Diversification: Business of producer company is diversified to international markets that reduces dependence on volatile domestic markets.
Value Addition: Processing and branding for exports command premium pricing.
Bargaining Power: When produce is pooled by members of producer companies, it meets the volume demands of global customers.

Formation and Promotion of 10,000 FPOs scheme (under the Ministry of Agriculture) and NABARD support are government schemes that encourage export of agricultural products by producer company.

The Legal Foundation of Producer Company

Producer Company are designed specifically for primary producers like farmers, artisans and others engaged in primary produce activities.

A Producer Company is a body corporate with objects or activities including-

Production, harvesting, procurement, grading, pooling, handling, marketing, selling, and export of primary produce of its members.
Processing (preserving, drying, canning, packaging, etc.).
Manufacturing or supplying machinery, equipment, or consumables primarily to members.
Providing technical services, education, mutual assistance, welfare measures, and financial services to members.
Importing goods or services for the benefit of members.

Export is permissible activity not an afterthought for producer companies. Export of agricultural products by producer company is allowed and this distinguishes producer company from traditional cooperative societies.

A Producer Company enjoys the privileges of a company like limited liability, perpetual succession, professional management, etc. and persons engaged in primary produce (or related activities) can become members in producer companies.

Step-by-Step Guide: Export of agricultural products by producer company

Incorporate producer company with clear export objects: – While filing the SPICe+ form on the MCA portal, ensure the MOA states export as an object along with specific relevant activities.
Build internal controls: – Appoint a professional CEO, set up sorting/grading units, cold storage, and processing facilities, and train members on GAP, traceability, and certifications.
Obtain necessary registrations: – Secure IEC, APEDA RCMC, GST, FSSAI (if applicable), and open a current bank account with forex facilities.
Conduct market research and identify buyers: – Use APEDA’s database, India Trade Portal, and trade fairs; focus on high-demand items like organic spices, Alphonso mangoes, grapes, millets, and herbal products.
Handle logistics and documentation: – Arrange shipping, insurance, commercial invoices, packing lists and bills of lading. At the initial stage, you can partner with Freight Forwarders and Export Houses for support.
Ensure ongoing compliance and monitoring: – Conduct regular audits, implement farm-to-fork traceability systems and renew all certifications promptly.

Benefits of Export of Agricultural products by producer company

Economic Empowerment: – Members of producer company are empowered as profits are distributed as patronage bonus based on produce supplied by each member.
Limited Liability & Professional Management: The structure of producer company provides strong governance with access to better finance.
Brand Building & Sustainability: Members when pool their resources results in member welfare and technology through collective branding and reinvestment.

How to Overcome challenges faced during Export of Agricultural products by producer company

Quality & Consistency Issues: The producer company shall focus towards member training on GAP, implement farm-to-fork traceability systems, and obtain certifications like Global G.A.P. and organic (NPOP) to meet international standards.
Capital Constraints: Producer company shall leverage NABARD schemes, FPO equity grants, bank linkages, and government subsidies for infrastructure like cold storage and processing units.
Regulatory Complexity: The members of producer company shall engage a Company Secretary or export consultant early for IEC, APEDA RCMC, phytosanitary, and FSSAI compliances.
Logistics & Infrastructure Gaps: Producer company shall partner with freight forwarders, export houses and utilize government export schemes.
Market Access & Volatility: Producer Company shall diversify products and destinations, participate in trade fairs and build direct buyer networks.
Compliance Monitoring: Producer Company shall conduct regular internal audits and maintain digital records to ensure timely renewal of certifications.

Producer Companies can turn the above challenges by acting collectively and manging the operations professionally. Producer Companies shall target government support and achieve sustainable export success.

Conclusion: Export of Agricultural products by producer company

Yes, a Producer Company can and should export agricultural products. It transforms farmers from price-takers to market leaders. By pooling resources, ensuring quality, and maintaining compliance, these entities deliver higher incomes and resilience to rural communities.

If you’re planning to form or scale a Producer Company for exports, contact us today to turn up your vision into reality. The right foundation makes all the difference.

Frequently Answered Questions

Q1: Can a Producer Company legally export agricultural products?

A1: Yes, producer company can legally export goods under the Companies Act, 2013.

Q2: What are the basic registrations needed for a Producer Company to start exporting?

A2: IEC, APEDA RCMC, GST, and FSSAI (if required) are essential.

Q3: How can Producer Companies overcome quality-related export challenges?

A3: Producer Company can overcome quality related export challenges by focusing towards member training on GAP, traceability systems and certifications like Global G.A.P. and organic produce.

Q4: What financial support is available for Producer Companies aiming to export?

A4: The schemes of government is available like NABARD schemes, equity grants, subsidies for infrastructure and easier bank financing due to collective strength.

Q5: Is professional management important for successful exports?

A5: Yes, appointing a qualified CEO and engaging consultants’ helps in compliance, marketing and scaling exports efficiently.