Producers are the group of persons who produce either goods or services for creating utility.

They usually produce with the help of factors of production.

Types (Kinds) of Producers:

Producers are of following types:

(i) Agricultural (Primary) Producers:


These producers mainly produce goods related to agriculture and its allied activities. They generally produce food crops, vegetables, fruits, flowers and forest products. Moreover, they also concentrate on fishing, animal husbandry, cattle rearing and other agro-based products like poultry farming, mushroom production etc. These primary producers mainly exploit (use) natural resources to produce goods.

(ii) Industrial (Secondary) Producers:

These producers mainly produce goods related to industry or manufacturing units. These producers are engaged in large-scale, small- scale and tiny scale industrial units. They produce various types of finished goods for several manufacturing units.

(iii) Service (Tertiary) Producers:


To produce both agricultural and industrial goods various types of services are required. These services include transport and communication services, banking and insurance services, storage services, etc. The producers who produce all these services are called service (tertiary) producers.

Importance (Significance) of Producers:

There are several important roles a producer has to play.

Following are some examples:

(i) Supply of Different Goods and Services:


Supply comes from the producer side. The producers or firms supply various goods and services in the market according to the demand of the consumers. Hence, if the number of producer increases, then the total supply of goods and services will also increase.

(ii) Entrepreneurship:

Producers are also entrepreneurs. They are the main coordinators of all the factors of production like land, labour, capital etc. They usually take the responsibilities to allocate the factors of production for conducting smooth business activities.

(iii) Optimal Use of Resources:

Producers are the leading persons, who take the initiatives to utilise all the economic resources, like forest resource, land resource, mineral resource, water resource, human or labour resource etc. optimally or efficiently for the production activities. The optimal use of these resources helps the country to achieve the path of economic development.

(iv) Export Promotion:

The producers of export-oriented goods and services help to reduce the balance of payment deficit of the country by promoting more exports. These producers mainly produce goods services and for export and thus foreign exchange reserve will increase automatically.

(v) Increase in Income and Employment:

Producers by increasing production from small scale to large scale increase the income and employment of the society as well as the country. Not only that, more number of industries will flourish along with the rise in income and employment opportunities.


(vi) Rise in Demand for Factors of Production:

Producer by creating demand of their product in the market indirectly create derived demand. Thus, with the increase in the demand of a particular product, the factors of production, i.e., land, labour, capital etc. responsible for the production of that product’s demand will also increase automatically.