Introduction
Small and marginal farmers often face three challenges: low bargaining power, high input costs, and poor market access. Registering as a Farmer Producer Company (FPC) provides a legal structure that empowers farmers to overcome these issues collectively.
In this article, we highlight the Top 10 benefits of registering an FPC, with examples and practical insights.
1. Collective Bargaining Power
When farmers sell individually, buyers dictate the price. As an FPC, farmers pool produce and negotiate collectively. Bulk selling always fetches better rates.
👉 Example: An onion FPC in Maharashtra increased selling price from ₹7/kg to ₹12/kg after aggregation.
2. Lower Input Costs
Inputs like fertilisers, seeds, and machinery can be purchased in bulk at wholesale rates. This reduces per-unit cost and improves profit margins for members.
👉 For business models built around input supply, see our article: [Top Business Models for FPCs].
3. Market Access & Linkages
FPCs can directly connect with:
- Institutional buyers (supermarkets, processors).
- e-NAM (National Agricultural Market).
- Export markets and commodity exchanges.
This eliminates middlemen and ensures better returns.
4. Value Addition & Processing
FPCs can set up small processing units for cleaning, grading, packaging, or even branding products. This adds value to raw produce and fetches higher prices.
Example: A paddy FPC in Odisha set up its own rice mill and began selling branded rice packs.
5. Branding & Quality Assurance
By marketing under one collective brand, farmers can build customer trust. Consistency in quality also helps in entering organised retail markets.
6. Access to Credit & Finance
Banks, NABARD, and SFAC trust registered companies more than informal groups.
- FPCs can access collateral-free loans under the Credit Guarantee Scheme.
- They can also raise equity capital through the SFAC Equity Grant Scheme.
👉 For funding options, see: [Funding Sources for Farmer Producer Companies].
7. Government Support & Subsidies
FPCs are eligible for several schemes:
- NABARD’s Produce Organisation Development Fund (PODF).
- SFAC’s Equity Grant & Credit Guarantee.
- State-level support (subsidised infrastructure, training).
👉 Detailed list in our article: [Government Schemes for Farmer Producer Companies (2025 Update)].
8. Tax Benefits
Agricultural income is exempt under Section 10(1) of the Income Tax Act. Certain FPCs also get tax holidays for initial years. Subsidies received may also qualify for exemptions.
👉 See full details in: [Tax Benefits & Subsidies for FPCs].
9. Risk Sharing & Social Security
By working collectively, risks (price fluctuation, crop failure, input shortages) are shared among all members. Social solidarity strengthens resilience in rural communities.
10. Democratic Governance & Limited Liability
- One member, one vote → ensures fairness.
- Members’ liability is limited to their shareholding.
- No single entity can dominate decision-making.
Bonus: Capacity Building & Networking
Many government and donor agencies offer training, workshops, and market exposure visits exclusively to FPCs. This builds long-term capacity and connects farmers to national value chains.
Conclusion
Registering an FPC transforms farming from an individual struggle into a collective enterprise. Farmers not only earn better but also gain recognition, access to schemes, and a stronger voice in policy.
In summary, the benefits include:
- Better prices, lower costs.
- Access to markets, finance, and subsidies.
- Professional management with democratic governance.
👉 The next step after understanding benefits is to explore how to register: [Step-by-Step Guide to Registering an FPC].