Contract Farming may be defined as an agreement between processing and / or marketing firms for production support at production support at predetermined prices. This stipulates that
- Farmer is committed to provide a specific commodity in terms of quality & quantity as determined by the purchaser.
- Purchaser is committed to buy the produce as per the contract.
- Purchaser is also committed to support the farmer for production through inputs and other technical support.
Contract farming is becoming popular in recent years and there are number of success stories. The Contract farming needs to be further developed. Under the Model APMC Act 2003, a new chapter on ‘Contract Farming’ has been added to promote contract farming. The provisions include:
- Compulsory registration of all contract farming sponsors (such as companies)
- Recording of contract farming agreements
- Resolution of disputes, if any, arising out of such agreement
- Exemption from levy of market fee on produce covered by contract farming agreements
- Providing indemnity to producers’ title/ possession over his land from any claim arising out of the agreement.
- The provisions under this chapter enable direct sale of farm produce to contract farming sponsor from farmers’ field without the necessity of routing it through notified markets.