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India: Centre urges states to adopt model act on contract farming

Amid estimates of record production of agricultural and horticultural produce this year, the Centre on Tuesday released a model act on contract farming and asked states to adopt it to save farmers from price volatility.

The proposed model law - State/UT Agricultural Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018 - intends to integrate farmers with agro-industries and exporters for better price realisation through mitigating market and price risks.

Once adopted by states, it’ll formally facilitate entry of private players into the farm sector as it would induce competition and ensure assured and better price of farm produce to farmers through advance agreements. It can offer assured price to farmers and save them from problem of plenty - a situation where farmers have to go for distress sale when bumper crops cause glut in the market.

The proposed law was unveiled here in presence of agriculture marketing ministers from many states including Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Haryana, Madhya Pradesh, Odisha, Rajasthan and Uttar Pradesh.

At present, some states like Maharashtra, Haryana, Karnataka and Madhya Pradesh have limited formal contract farming while some others have such informal practice in case of commercial crops like cotton, coffee, tobacco, mango, litchi, sugarcane and rubber. An absence of any exclusive law on contract farming, has, however, prevented it to pick up at the ground across the country.

It’s currently being implemented in a limited manner under provisions of the Agricultural Produce Market Committee (APMC) Act in certain states. It, however, does not provide adequate confidence to farmers and incentives to the sponsors to enter into a contract.

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