The declining profitability and rising risk associated with agriculture and allied its activities is being considered some of the major challenges in improving the livelihoods of the rural population in India. Mainly small and marginal farmers constitute the largest group of cultivators (about 85%) in Indian agriculture; having smaller than or about two hectares of operational holdings. The vulnerability to these households is largely attributed to lower scale of operation, lack of information, poor access to cheaper credit, weak participation in the consumers’ markets and consequently, exploitation by intermediaries in procuring inputs and marketing of their produce. A variety of approaches have emerged over the years to address these problems. Agricultural cooperatives, formed under the Co-operative Credit Societies Act, 1904, have long been the dominant form of farmer collectives; however, the experience with cooperatives point to many limitations, except few successful exceptions in the field of dairy farming. In recent years, collectivization of producers, especially small and marginal farmers, into producer organizations has emerged as one of the most effective pathways to address the many challenges of agriculture. Hence, on the recommendations of a high-power committee, the Government of India introduced the Companies (Amendment) Act 2002, which paved the way to Producer Companies (PCs)..
