What is the issue ?
- The agriculture ministry released the Model Contract Farming Act, 2018, which lays emphasis on protecting the interests of farmers, considering them as weaker of the two parties entering into a contract.
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 for.
- 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
About contract farming :
- Contract farming can be defined as agricultural production carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products.
- Typically, the farmer agrees to provide agreed quantities of a specific agricultural product. These should meet the quality standards of the purchaser and be supplied at the time determined by the purchaser.
- In turn, the buyer commits to purchase the product and, in some cases, to support production through, for example, the supply of farm inputs, land preparation and the provision of technical advice.
Advantages of contract farming :
- Minimises price risk for farmers
- The fear of post harvest losses is dealt with.