In contract farming, private agro-processing and exporting companies enter into an agreement with farmers to purchase a specified quantity of an agri commodity on mutually agreed terms
In order to fulfil Centre’s objective to double farmers’ income by 2022, the Uttar Pradesh government is all set to adopt contract farming as part of its multi-pronged strategy to enhance their income in the state after many failed attempts by previous regimes. Speaking at a conference on doubling farmers income, state agricultural production commissioner Raj Pratap Singh said that the state government is also planning to amend the APMC Act in order to give farmers alternative choices so as to boost investment in the sector. In contract farming, private agro-processing and exporting companies enter into an agreement with farmers to purchase a specified quantity of an agri commodity on mutually agreed terms. This type of integration between growers and agro-processing units will not only help farmers in getting a better price for their produce but also reduce post-harvest losses to a large extent. “Contract farming is already being carried out privately, but state legitimacy is needed to help farmers in a bigger way,” he said, adding that increasing agricultural production is not the answer to the ills of the farm sector.
“What needs to be done is to increase farmers’ income and in that light, contract farming becomes a key driver. By this method, farmers are promised an assured market and good price and consumers are assured of relatively low-price goods,” he stated. Speaking on the sidelines of the conference, another official of the agriculture department said that the draft amendment to APMC Act is ready and is being vetted at various levels. “The idea of bringing in a contract farming law is to protect farmers from price volatility, particularly in perishable items. Such a law will protect farmers from market fluctuations as it will ensure assured and better price of agricultural and horticultural produce to them through advance agreements and also give companies interested in investing in the sector assured supply for a fixed time period,” the official said. Apart from paving the way for introducing contract farming, the government is also in the process of making other sweeping changes in its Agricultural Produce Marketing Commodities (APMC) Act like allowing entry of private players, opening of private mandis, beginning of e-trading, among other things, all aimed at increasing farmers’ income, he said. The UP government has recently constituted a commission — Krishak Samriddhi Aayog — which is headed by chief minister Yogi Adityanath and has agriculture minister Surya Pratap Shahi as its vice-chairman.
The Centre has already asked the states to amend their APMC Acts on the lines of the Model Act sent to them to facilitate marketing reforms, including contract farming, in the agriculture sector, giving special treatment to fruits and vegetables. According to the national sample survey office (NSSO), Uttar Pradesh is among the states where farmers’ income is quite low. Data quoted by the NITI Aayog, in one of its recent policy papers, shows 23.2% of the total farm households in UP had an income even below the poverty line in 2011-12. This was the fifth lowest after Jharkhand, Odisha, Bihar and Madhya Pradesh and only a little above the national average of 22.5%. Interestingly, successive governments in the state have tried pushing for the cause of contract farming right from 2005, when Mulayam Singh Yadav was the chief minister. But he had to drop the idea after a lot of criticism by opposition parties and others who claimed that the move will harm farmers’ interests in the long run to the extent that they may might have to lose their land to private companies. Thereafter, Mayawati, too, introduced a new agri policy in 2007, opening the doors for private participation in agriculture in the state, but was forced to roll it back after severe criticism from the Samajwadi Party and the BJP. After coming to power, the Akhilesh Yadav government too tried to introduce contract farming under the new name of ‘agreement farming’ but dropped the idea midway over apprehensions of giving rise to political controversy.