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By-Aswani C Rajeev

The bill relates to contract farming which enables the farmers to create a contract with buyers like food processing units, wholesalers prior to production. As a result farmer will have assured price before sowing. It will also attract private investment in farming and links these farms with global market.


Contract farming is a contract which is between the farmers (producers) and large buyers, exporters and retailers (buyers). This agreement is framed before the production or rearing of any farm produce. Individuals, partnership firms, companies, limited liability groups and societies who may enter in to an agreement with farmers in order to purchase farm produce are known as ‘sponsors’. This farming agreement can be between the farmer and sponsor, or farmer, sponsor and third parties. If the third party is involved in the agreement, the role and services has to be mentioned in the agreement. A registration authority can be established by the state government to facilitate electronic registry of farming agreement.

The duration of this agreement is maximum 5 years. Minimum period will be one crop season or one production cycle of livestock. In case of production cycle beyond 5 years it can be mutually decided by the farmer and the sponsor. This agreement may provide for the terms and conditions for supply of such produce, including the time of supply, quality, grade standards, price etc. and also the terms related to farm services. For facilitating farmers to enter in to written farming agreements, Central government may issue necessary guidelines along with model farming agreements. The parties to the agreement may adopt the quality, grade and standard of a farming produce which are compatible with agronomic practices, agro climate and such other factors. The grade and standards shall be monitored and certified during the process of cultivation or rearing, or at the time of delivery by third party qualified assayers to ensure impartiality and fairness.

The price to be paid by the sponsors for farming produce is determined and mentioned in the farming agreement itself. Such price is subjected to variation then it shall explicitly provide for a guaranteed price to be paid for such produce and a clear price reference for any additional amount over and above the guaranteed price, including bonus or premium to ensure best value to the farmer. The method of determining price, guaranteed price or additional amount shall be annexed to the farming agreement.

Delivery of the farm produce is to be taken by the sponsor at the farm gate within the agreed time. It is the sole responsibility of the sponsor to ensure that all preparations for the timely acceptance of such delivery have been made. Before accepting the delivery of farm produce, the sponsor has a right to inspect the quality or any other feature of such produce as specified in the farming agreement. Otherwise he shall be deemed to have inspected the produce and shall have no right to retract from acceptance of such produce at the time of its delivery or thereafter.

In case of seed production the bill requires the sponsor to pay at least two-third of the agreed amount at the time of delivery. Remaining amount can be paid after due certification within 30 days from the date of delivery. In all other cases full agreed amount must be paid at the time of delivery itself. A receipt slip must be issued stating the details of sale proceeds. The State government may prescribe the mode and manner in which payment shall be made to the farmer. Farming produce under a farming agreement will be exempted from all state acts aimed at regulating sale and purchase of farming produce. Such produce will also be exempted from any stock limit obligations applicable under the Essential Commodities Act, 1955, or any other law.

No farming agreement shall be entered for the purpose of any transfer, including sale, lease and mortgage of the land or premises of the farmer. Sponsor is prohibited from acquiring ownership rights or making permanent modifications on farmer’s land or premises. A farming agreement may be linked with insurance or credit instrument under any scheme of Central or State government or any financial service provider in order to ensure risk mitigation and flow of credit to farmer or sponsor or both.

The bill also provides that an aggregator or farm service provider may also become a party to farming agreement and role & services of him should be explicitly provided in the agreement. Aggregator means any person including a Farmer Producer Organization who act as an intermediary.

After entering in to the agreement the parties by mutual consent may alter or terminate such agreement for any reasonable cause.


The agreement shall explicitly provide for a conciliation process and formation of a conciliation board consisting of representatives of parties to the agreement. Whenever a dispute comes between farmer and sponsor, it shall be first referred to the conciliation board. When a settlement is arrived during the course of conciliation proceeding, a memorandum of settlement shall be drawn accordingly and should be signed by the parties of dispute. If the farming agreement doesn’t provide for the conciliation process or parties to the farming agreement fail to settle their dispute within a period of thirty days, any such party may approach the concerned Sub-Divisional Magistrate.

Every order passed by the Sub-Divisional Authority shall have same force as a decree of a civil court and be enforceable in the same manner as that of a decree under Code of Civil Procedure, 1908. Any aggrieved party by this order may prefer an appeal to appellate authority, who shall dispose this appeal within thirty days. The manner and procedure for filing a petition or an application before the Sub-Divisional Authority or Appellate Authority shall be prescribed by the Central government. No action for the recovery of any amount due in pursuance of an order, shall be initiated against the agricultural land of the farmer.


Farmers have been protesting against the bills ever since it was promulgated as ordinance in June. The bills aim to do away with government interference in agriculture trade by creating trade areas free of middle men and government taxes outside the structure of APMCs along with removing restrictions of private stockholding. The issue is not about the bills it is also about the process of introducing the bill. The attempt to pass the bill without proper consultation creates a mistrust among different stake holders including state governments. Other concern which triggered the fear of farmers is the recent trends in agricultural income and prices. Part of people see these bills as corporatization of agriculture, at the same time withdrawal of government support. Immediate withdrawal of Minimum Support Prices guaranteed by the government also inflamed them. There is a genuine fear from farmers about the reasons of bringing these bills. We cannot point out or highlight the direct evidence of crony capitalism. The entry of corporate groups in agricultural sector can led to a plethora of responses both affirmative and negative.

The middlemen are a part of the large process of agriculture. Farmers are familiar with the functions of these middlemen and they too see it as crucial part to complete the chain of agriculture. Dominant concern has been expressed by the farmers in Punjab and Haryana. Farmers in these state have concern about the continuance of the MSP based public procurement operations. The interventions made by government such as raising import duties and reducing export duties also instill fear about the actions of government. The above stated things are the major concerns pointed by people including the farmers, from these bills.


Farmers (Empowerment & Protection) Agreement of Price Assurance & Farm Services Bill relates to contract farming that allows the farmers to tie up with large scale buyers, food processing units and wholesalers. Through this bill, farmers will have assured price prior to production. Market risk can be shouldered to sponsor who engage in contract with the farmer. It also opens private investment in farming and a link in global market. Farmers will get access to technology and advice for high value agriculture. They will engage in direct selling rather than involving intermediaries. Farmers are getting an adequate protection by prohibiting the sale of their land to sponsors. Effective dispute redressal mechanism is also brought to deal with disputes arising between the sponsor and farmer. However these 3 bills are not accepted by the farmers as well as politicians. A proper way of introducing a bill is not seen here, as a result, it was opposed by different political parties and leaders. Different factors has led to instill fear among farmers like withdrawal by government.

Many other reasons has created a total withdrawal from these bills. Farmers started to protest in order to save themselves from the concerns. Government has a duty to protect the interest of different farmers as they feed the nation. India is a country which follows traditional methods of agriculture and larger income is generated from this activity. Therefore, government should clear all the concerns related to these bills, which pullbackthe farmers from living a peaceful life.


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