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Contract Farming

All Agriculture Commodities May Cover under Contract farming Law

Finance Minister Arun Jaitley announced the proposed model law on contract farming in his Budget speech. This could encompass all the agricultural commodities and not restrict itself to only one or two commodities.

According to a senior official, to re-energise farming activity in rural areas and also double farmers income, the proposed legislation, which along with the improved model Agricultural Produce Market Committees (APMC) Act and the model land leasing Act, will form part of the Centre’s integrated approach.

Jaitley said, “A model law on contract farming would, therefore, be prepared and circulated among the states for adoption.”

The legislation comes close on the heels of Centre’s attempt to amend the Land Acquisition Act, which had to abandon due to strong protest from Opposition parties. All the three pieces of legislation are model laws as land and agriculture are state subjects and the Centre has very little role to play on that.

The official said, “We will soon constitute a high-powered committee of experts to frame a law on contract farming and are confident that it would become a reality soon.”

To make improvements in the policies related to agriculture, the model law on contract farming will be formulated, said Agriculture Minister Radha Mohan Singh.

The model APMC Act has a provision to allow contract farming at present, but the official said to ensure that APMCs themselves do not become arbitrators on contract farming is the idea behind a separate model law.

The official said, “That apart, at present, most laws on contract farming framed by the state governments concern include one or two farm commodities and is only limited to marketing. But our model law will include all farm commodities and also will have a comprehensive piece of legislation starting right from distribution of seeds.”

To replace the existing law, the second legislation, which is a new model APMC Act is also in the advanced stage of formulation. Officials said that, it could be a big improvement from the existing APMC Act, which was framed more than a decade back. Another official said that, the new model APMC Act will incorporate changes and will be more relevant to current market conditions.

The Bill in question aims at enabling farmers and farming groups to lease their land for cultivation through a legal document, without dilution of ownership.

Farming reform on the cards,
Idea behind the separate law is to ensure that APMCs themselves do not become arbitrators on contract farming
The model law will subsume contract farming from the purview of APMC Act
The present contract farming framework available in the country only covers marketing of produce
The law would cover all the commodities
It would cover farming right from distribution of seeds to marketing of final produce