Producer Organisations as Cooperative Society
Producer Organisations as Cooperative Society


Primary Agricultural Credit Societies (PACS), being a registered cooperative society, has been providing credit and other services to its members. It has been observed that PACS are generally meeting the credit requirements of its members. However, there is a need to provide other services to the farmers and hence, PACS should be developed as a unit to meet all their needs. PACS are generally providing the following facilities to the members:

  1. Input facilities in form of cash or kind component to members
  2. Agriculture implements on hiring basis
  3. Storage facility

PACS can play an important role in providing these facilities to the farmers. In order to enable PACS to provide more services to its members and generate income, an initiative was taken to develop PACS as multi service centres. Some of the PACS are also assisting farmers in marketing of their produce. Thus, PACS can provide both backward and forward linkages to its members, thereby acting as a PO, in order to promote efficient crop production practices for its members on one hand and opportunities for better price realisation of their produce, on the other. Following facilities can be taken up by PACS acting as a PO to the farmers:

a) Agro-Storage centre:
Upgradation of the existing storage facility or construction of new godown along with sorting/ grading unit as per Negotiable Warehouse Receipt System. 
This will enable them to issue warehouse receipts. Based on these receipts, the farmers can get loan against the crop stored and can cultivate the next crop.
Thus, the farmers will be facilitated to get better price by holding the crops without affecting the fund flow position.

b) Agro-service Centre:

Purchase of hi-tech agri-implements like power tiller, land leveller, rotary slasher, movers, seed driller, multi crop planter, paddy transplanter, sprayers, combine harvester etc. depending upon the requirements of members. The earning will be from the rental of these equipment.

c) Agro-processing centre:

a. Primary Processing: Sorting, grading unit, waxing/ polishing unit, pre-cooling
chambers, etc.
b. Secondary Processing: Value addition to produce e.g. Mini rice mill, atta chaki,
horticulture produce processing etc.

d) Agri -information centre :

a. Testing lab for soil & water, creating panel of experts for providing services on payment basis, knowledge dissemination centre, arrange training to farmers. The testing lab & expert guidance will be available to farmers at a cost.

e) Agri Transportation & Marketing Facilities :

a. Procurement of produce, direct market linkage after aggregation and/  or processing, setting up of rural mart etc. The PACS, which are either in the area of marketing or intend to undertake this activity, may create this channel  to facilitate the farmers in marketing.

 Legal provisions for registering a PO be as a Cooperative Society

Producer Organisations can also be formed and registered as a Cooperative Society under the following Acts:

  1. Cooperative Societies’ Act of Individual State
  2. Autonomous Cooperative Societies’ Act existing in many States (minimal State intervention)
  3. Multi State Cooperative Societies’ Act, which is a Central Act

Who can form a society?

  1. A society can be formed with at least 10 members of age above 18
  2. If object of the society is creation of funds to be lent to its members, all the members must be residing in the same town, village or group of villages or all members should be of same tribe, class, caste or occupation, unless Registrar otherwise directs
  3. The provision of minimum 10 members or residing in same town / village, etc. is not applicable, if a registered society is a member of another society
  4. The last word in the name of society should be ‘Limited’, if the society is registered with limited liability
  5. Registrar is empowered to decide whether a person is agriculturist or non-agriculturist or whether she / he is resident of the same town / village, etc. and his decision would be final


Statement of Objects for Cooperative Societies

  1. The Cooperative Society can be established for purpose/s of credit, production or distribution
  2. Unlimited society is not the best form of cooperation for agricultural commodities.

However, such societies do exist and are working in several States. Unlimited society can distribute profits with the permission of State Government

Societies registration

  1. A society which has as its object the promotion of economic interests of its members in accordance with cooperative principles can be registered as a Society
  2. Similarly, a society established with the object of facilitating operation of such a society can also be registered under the Act
  3. A registered society can be member of another society, but liability of such other society must be limited, unless State Government directs otherwise

Rights and liabilities of members

  1. If liability of members is not limited by shares, each member shall have one vote irrespective of amount of her / his interest in the capital
  2. If liability of members of a registered society is limited by shares, each member will have as many votes as may be prescribed by the bye laws
  3. If a registered society has invested in shares of other registered society, it can vote by appointing a proxy
  4. A member of a registered society shall not exercise his rights as member, unless he has made payment to the society in respect of membership or has acquired interest in society, as may be prescribed by rules or bye-laws