Draft Model Agricultural Produce and Livestock Contract Farming Act, 2018

  • The Union Ministry of Agriculture and Famers Welfare has unveiled Model Agriculture Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018 to ensure better price to farmers.
  • It is aimed at reducing farmers’ risks by creating assured market for their produce at pre-agreed price, while encouraging investment from agribusiness and food processing industries by enhancing productivity and cost efficiency.
Salient features
  • The draft Model Act seeks to create regulatory and policy framework for contract farming and services.
  • Based on this draft Act, states legislatures can enact law on contract farming as agriculture falls under state list of Constitution.
  • It is promotional and facilitative Act and not regulatory in its structure.
  • It not only covers contract farming in agriculture crops but also in livestock, dairy and poultry products.
  • The Model Act lays special emphasis on protecting interests of farmers, considering them as weaker of two parties entering into a contract.
  • It also takes into consideration services contracts all along the value chain including pre-production, production and post-production in addition to contract farming.
  • It has provision for Registering and Agreement Recording Committee (Officer) for purpose at district, block, taluka level for online registration of sponsor and recording of agreement.
  • It makes mandatory for covering contracted produce under crop and livestock insurance in operation.
  • It keeps contract framing outside ambit of Agricultural Produce Marketing Committee Act.
  • Under it, no permanent structure can be developed on farmers’ land or premises.
  • It does not vest right, title of interest of the land on sponsor.
  • It provides for promotion of Farmer Producer Organization (FPOs) or Farmer Producer Companies (FPCs) to mobilize small and marginal farmers.
  • Under it, FPO/FPC can be contracting party if so authorized by farmers.
  • No rights, title ownership or possession can be transferred or alienated or vested in contract farming sponsor etc.
  • It assures market safety to contract farming producer by ensuring buying of entire pre-agreed quantity of one or more of agricultural produce, livestock or its product of as per contract.
  • It establishes Contract Farming Facilitation Group (CFFG) for promoting contract farming and services at village or panchayat at level.
  • It provides accessible and simple dispute settlement mechanism at the lowest level possible for quick disposal of disputes.

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