Gov suggests allowing ‘contract farming’ under new model law

Days after the new food minister KV Thomas took charge and hinted at large scale changes in agricultural marketing, the government said it has sent a new model agricultural marketing law that allows private partnership with farmers.

Thomas had, two weeks ago, said he was in favor of large scale reforms in the current agricultural marketing laws in many states.

Agriculture laws are framed and implemented by the state governments and the Centre can only suggest changes. In most states, private companies are banned from tying up with farmers to source their products before they are harvested.

In other states like Punjab and Gujarat, state governments have already modified agricultural product marketing rules to allow companies to enter into pre-harvest contracts with farmers to assure themselves of a steady supply of produce — under a practice called ‘contract farming.’

In others, due to the ban, farmers are forced to sell their produce only after it has been harvested and that too, to ‘authorized’ traders who often form monopolies. The traders are also blamed for the occasional spikes in the prices of agricultural products like pulses and vegetables like onion.

According to the new law sent by the Centre to the states in its advisory role, such monopolies will be done away with.

“In order to provide the farmers with the choice of alternative marketing channels for sale of their produce at better and remunerative price and to encourage private investment in development of market infrastructure and supply chains, the Model Act provides for direct marketing, contract farming and setting up of market in private and cooperative sectors,” Arun Yadav, junior minister for Agriculture and Food Processing Industries, told the Parliament on Tuesday.

The provisions of contract farming, direct marketing by corporate and setting up of private and cooperative markets will facilitate better market access by farmers, reduce transportation cost and post harvest losses thus helping to increase the farmers’ income, he added.

A Committee of State Ministers in-charge of agriculture marketing has been constituted with the objective of promoting market reforms in the country and the Committee is deliberating the relating issues, he added.