In a big move aimed at protecting farmers’ interests, increasing their income and providing them right minimum support price for their produce, Narendra Modi government has released the Model Contract Farming Act, 2018. Not only the Act puts emphasis on protection of farmers’ interests, it also includes services contracts including pre-production, production and post-production. “The final Model Act – State/UT Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act, 2018 has been approved by the Competent Authority,” a statement from ministry said. The centre has also appealed to states to enact such a law in the interest of farmers.
To Act provides for reasonable protection to the weaker party to the contract, i.e., the producer, the pre-agreed price, category wise as under Section 18(2), may be determined in accordance with the guiding criteria as provided in the rules, and mentioned in the agreement, the draft law said.
Arun Jaitley had announced the release of ‘Model Contract Farming Act’ in 2017-18 Budget.
“Notwithstanding anything contained in this Act or any other law for the time being in force, the sale prices, explicitly mentioned in the contract, may be determined in accordance with the guiding criteria as provided in the rules,” it said. The contract farming model law leaves it to the states to decide the prices under the ‘rules’ to be notified under the Act.
Concept of contract farming
Under contract farming, bulk purchasers such as agro-processing or exporting or trading units enter into a contract with one or more farmers so as to purchase a particular quantity of crop at a pre-agreed price. The formal contract farming concept is not much widespread in the country currently. The clauses of registration of sponsors, recording of agreement and dispute settlement mechanism are provided under the law.