GOVT REVISES CONTRACT FARMING LAW
Reworked law part of govt’s aim to liberalise agri markets
In another shot at liberalising agricultural markets, the Centre has reworked the model contract farming law that seeks to free direct deals between businesses and farmers from the oversight of agricultural produce market committees, or APMCs.
In another shot at liberalising agricultural markets, the Centre has reworked the model contract farming law that seeks to free direct deals between businesses and farmers from the oversight of agricultural produce market committees, or APMCs.
This is the second model law dealing with farm trade this year aimed at dismantling, sidestepping or reforming the decadesold, state-monitored network of markets. The model contract law, a copy of which has been reviewed by the Hindustan Times, follows the Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2018.
Conceived in the 1960s, APMC regulations require farmers to sell to licenced middlemen only in notified markets, usually in the same area as the farmer, rather than directly to buyers elsewhere. These rules were meant to protect farmers from being forced into distress selling. Over time, they have spawned layers of intermediaries, stretching the farm-to-fork supply chain. This results in a large price spread, meaning fragmentation of profit share because of the presence of too many middlemen.
Usually, farmers get the lowest share of profit. APMCs have also become hubs for cartels that rig the system to offer lower prices to farmers while driving up prices for consumers. India has about 6,800 such public-sector markets.
The revised Model Agricultural Produce and Livestock Contract Farming (Promotion & Facilitation) Act, 2018, now set to be released to states, allows firms to sign advance contracts with farmers to grow a chosen crop or its specific variety with a buyback assurance at an agreed price, giving cultivators a ready market without the oversight of the APMC system.
A model law isn’t presented in Parliament, but is instead sent to states for passage since the Centre cannot bring laws to regulate agriculture marketing, which falls in the states’ domain.
To work around APMC markets, the budget for fiscal 2019 has also proposed to develop 22,000 new or existing private rural markets. The revised provisions of the model contract law state that businesses and farmers can enter into contracts for any crop, livestock breed or poultry of their choice. The earlier version, released for public scrutiny on January 23, restricted contract farming to only those crops that are allowed by states.
The model law provides for dispute settlement at the level of the tehsil, or local administrative unit. It does away with an earlier provision that disputes could be taken for appeal to a decree court.