Table 1 Key differences between producer companies and traditional cooperatives.
Parameters | Producer company | Producer co-operative |
|---|---|---|
Legislation | Companies Act | Co-operative Societies Act |
Agenda/objective (s) | Multiple | Single |
Area of operation | Regional/niche | Restricted, local |
Membership size | Large | Small |
Activity | Mainly economic | Economic, Social |
Governance | Single layer | Multi-layer |
Ownership | Producer members and their agencies | Individuals, group and co-operative members |
Equity share | Tradable within member community | Non-tradable |
Profit share | Dividends on shares | Patronage based |
Voting rights | One member, one vote. Non-producer cannot vote | One member, one vote, but Government and Registrar of Cooperatives hold veto power |
Target product | Single, specific | Multiple |
Mode of business/consumer dealing | Formalized | Traditional |
Services to members | Limited (fertilizer, agrochemicals, seed and credit) | Wide (fertilizer, agrochemicals, seed, credit, technology, training etc.) |
Non-member/shareholder investment | Accepted | Not accepted |
Government support | Minimal, limited to statutory requirements | Highly patronized to the extent of interference |
Autonomy | Fully autonomous, approval from external authorities not required, audit independently. | Limited, approval required for development projects, audit by external agencies recommended. |
Borrowing power | Freedom given, many options | Restricted |
Reserves | Mandatory | Created if profits made |
Dispute settlement | Arbitration, only option | Through co-operative system |
Professionals/experts on the Board of Directors | Yes, advisory directors without voting rights. | No such provision. Co-operative development officer can be named. |
Liability in Income tax | Tax is not exempted. Relaxation given. | Exempted from income tax |
Relationship with other organizations/entities | Transaction based | Collaborative |
