To integrate farmers with bulk purchasers including exporters, agro- industries among other buyers, for better price realisation through mitigation of market and price risks to the farmers and ensuring smooth agro raw material supply to the agro industries, Union Agriculture Minister Radha Mohan Singh today released the final model act for contract farming, “The ….State/UT Agricultural Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act 2018” at Vigyan Bhawan, New Delhi. The model act has been approved by the competent authority. The Minister also released a book titled “Intrapreneurship and Management for Farmer Producer Companies” prepared by Grant Thornton.
Salient features of the Act
- 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 Agricultural Produce Market Committee (APMC) Act.
- No permanent structure can be developed on farmers’ land or premises
- No right, title of interest of the land shall vest in the sponsor.
- Promotion of Farmers Producer Organisations (FPOs), Farmers Producer Companies (FPCs) to mobilise small and marginal farmers has been provided
- FPO/FPC can be a contracting party if so authorised by the farmers.
- No rights, title ownership or possession to be transferred or alienated or vested in the contract farming sponsor.
- 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
The then Union Finance Minister, Arun Jaitley in the Union Budget for 2017-18 had announced preparation of a “Model Contract Farming Act” and circulation of the same to the States for its adoption. Farmer producer organisations (FPOs) have a major role in promoting Contract Farming and Services Contract. On behalf of farmers, they can enter into agreement with the sponsor.
As agriculture comes under the jurisdiction of the states, the implementation of the Model Act depends on the state governments. If a state adopts the Act, it will have to pass the Model Act in the state legislature. The Model Act is just a Bill drafted by the Centre for the states. The states will be free to bring any modification in the Model Act or reject the entire draft or any provision of the Act.