Over the years, expert groups have identified problems related to the implementation of contract farming. These include: (i) the role of the KICs, designated in most States as registration and dispute settlement authorities, (ii) provisions on the conservation of products in contract farming, and (iii) poor publicity of contract farming among farmers about their benefits. In contract farming, agricultural production (including livestock and poultry) can be carried out on the basis of a pre-harvest agreement between buyers (e.g. B food processing companies and exporters) and producers (farmers or agricultural organisations). In the future, the producer will be able to sell the agricultural products to the buyer at a certain price, in accordance with the agreement. In contract farming, the producer can reduce the risk of fluctuations in market prices and demand. The buyer can reduce the risk of unavailability of quality products. Currently, in a small number of states, contract farming requires registration with the Agricultural Marketing Committee (AMCPA). This means that contractual agreements are registered with APMCs, which can also resolve disputes arising from these contracts.
In addition, market fees and taxes are paid to the APMC for the operation of contract farming. The Model APMC Act of 2003 provided for contract farming and was made available to states to use as a reference in the enactment of their respective laws. As a result, 20 states have amended their APMC laws for pre-union agriculture under contract, while Punjab has a separate law on contract farming. However, as of October 2016, only 14 states notified contract farming rules. Under the model bill, the producer can obtain assistance from the buyer for the improvement of production through inputs (such as technology, pre-harvest and harvesting infrastructure) in accordance with the agreement. However, the buyer cannot set up a permanent structure on the producer`s land. In this context, we are discussing contract farming, related issues and the progress made so far. According to the draft Model Law, any agreement should be registered with a contract registration and registration committee composed of officials from departments such as agriculture, livestock, marketing and rural development. Such a committee can be set up at the district, taluka or block level. In this regard, according to the draft Model Law, contract farming will be outside the scope of the State`s CCP. This means that buyers do not have to pay market fees and commissions to these APMCs to operate contract farming..
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