Contract farming is a much-needed vehicle to bring new crops, technologies, and markets to farmers. Union Agriculture Minister releases Model Agriculture Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018.
What is contract farming?
Under contract farming, agricultural production (including livestock and poultry) can be carried out based on a pre-harvest agreement between buyers (such as food processing units and exporters), and producers (farmers or farmer organisations). The producer can sell the agricultural produce at a specific price in the future to the buyer as per the agreement. Under contract farming, the producer can reduce the risk of fluctuating market price and demand. The buyer can reduce the risk of non-availability of quality produce.
Salient features of Model Contract Farming Act, 2018 are:
- The Act lays special emphasis on protecting the interests of the farmers, considering them as weaker of the two parties entering into a contract.
- In addition to contract farming, services contracts all along the value chain including pre-production, production and post-production have been included.
- “Registering and Agreement Recording Committee” or an “Officer” for the purpose at district/block/ taluka level for online registration of sponsor and recording of agreement provided.
- Contracted produce is to be covered under crop / livestock insurance in operation.
- Contract framing to be outside the ambit of APMC Act.
- No permanent structure can be developed on farmers’ land/premises
- No right, title of interest of the land shall vest in the sponsor.
- Promotion of Farmer Producer Organization (FPOs) / Farmer Producer Companies (FPCs) to mobilize small and marginal farmers has been provided.
- FPO/FPC can be a contracting party if so authorized by the farmers.
- No rights, title ownership or possession to be transferred or alienated or vested in the contract farming sponsor etc.
- Ensuring buying of entire pre-agreed quantity of one or more of agricultural produce, livestock or its product of contract farming producer as per contract.
- Contract Farming Facilitation Group (CFFG) for promoting contract farming and services at village / panchayat at level provided.
- Accessible and simple dispute settlement mechanism at the lowest level possible provided for quick disposal of disputes.
- It is a promotional and facilitative Act and not regulatory in its structure.
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