Home / Latest News / Central Govt through NITI Aayog is bringing a Model Law on Contract farming to safeguard small Farmers

Central Govt through NITI Aayog is bringing a Model Law on Contract farming to safeguard small Farmers


Small Farmers, Pic courtsey Wikipedia
Small Farmers, Pic courtsey Wikipedia

Law aims to help farmers who do distress sale of Agricultural Produce at cheap rates and are not able to hold it.

In a move intended to protect farmers against the price volatility, particularly in the perishables like onions, tomatoes and potatoes, Niti Aayog is drawing up a model law on contract farming for approval by Cabinet by June,2017.

As the market fluctuations have made distress sales with dramatic photographs of the farmers dumping kitchen staples on the roads, Central Government’s think-tank is considering options that can reduce risks for the farmers by balancing entry of the private players with the safeguards for the agriculturalists.

Ramesh Chand, Agriculture Expert and member of NITI Aayog said that,”We have been working on model law for quite some time. Meetings with the States’ Representatives were held last year”.

Bringing a model law on the contract farming was announced as part of the reform measures in Union Budget.

Law on contract farming is considered important for entry of the private players into sector as it would induce competition and ensure better price of agriculture and horticulture produce to the farmers through advance agreements.

Once states come on board and adopt proposed law, farmers can enter into agreements with the private entities\buyers who may, in turn, invest in the technology and bring in management skills to increase the productivity and reduce transaction costs.

At present, the farmers suffer losses when a bumper crop causes a glut in market or in a situation where their produce is unable to reach the ‘mandis’ in the time for a variety of reasons.

Therefore, main idea behind contract farming is to integrate farmers to agro-processing units for better price realisation. It will also take care of their post-harvest losses, if any.

Model Agricultural Produce Market Committee (APMC) Act was first circulated to the States during 2003 for contract farming agreement. Though 20 states had amended legislation, only 12 have so far notified rules for implementation.

Chand further added that,”If implemented properly by States, both these reform measures will go a long way in doubling farmers’ income by 2022″.
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