NEW FRAMEWORK FOR CONTRACT FARMING

A new agricultural bill has been passed by the Lok Sabha on the 20 th of September, 2020, with an
intend to help small farmers, permitting them to directly get into a written agreement mentioning
all the terms and conditions for supply, quality, grade, standards and the price that is to be paid
by the corporate houses willing to buy the farm produce, without getting any license from the
APMC. Until now the farmers were not permitted to sell their production to agro companies
without going through a licensed trader. The basic objective of the Agricultural Produce
Marketing Committee Act was to specify procedures and systems to establish an effective
infrastructure for the marketing of agricultural produce. However, The APMC act defines
designation market areas as those which stretch from market areas which can range from a block
to an entire district, the farmers in a market area could only sell his produce to the designated
APMC and were restricted from going to any other APMC or any other district. Now, with the
new ordinance the farmers can get into a contract with any company in the entire country. Even
though the bill allow farmers to enter into a contract with the agro business firms or large
retailers on pre agreed prices and sell their produces outside the APMC ‘mandis’, there has been
issues and fears raised within the farmers that under the contract farming the private sectors may
‘bulldoze’ the farmers into entering into unfair contracts for prices below Minimum Support
Price (MSP), the bill also diminishes the state control and affects the revenue of the state
governments making them incapable to regulate in case the private sectors resort to unethical
practices. However, the Agricultural Minister, Narendra Singh Tomar has clarified that the
farmers will have the power to fix a sale price of their own choice for the produce, to get a better
price of their produce, and that in case any dispute arises among the farmer and the corporate
house, there will be no need to go the courts repeatedly as there will be a local dispute redressal
mechanism.