Contract Farming: Best part of the Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Agricultural Services Act, 2020

In September, the government brought three new agricultural bills, which have become law after the President’s approval. But the farmers are not getting these laws because they say that these will harm the farmers and benefit private buyers and corporate houses. One of these is the Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Agricultural Services Act, 2020, which aims to allow contract farming. Let’s know what is contract farming and why are farmers opposing it?

Under contract farming, the farmer cultivates his land, but not for himself but for someone else. In this, the farmer does not have to spend money and a company or a man contracts with the farmer that the contractor will buy the particular crop grown by the farmer for a fixed price. All the expenses from fertilizer and seeds to irrigation and wages are from the contractor.

Contract farming not only benefits the farmers but also improves the condition and direction of farming. Apart from this contract forming is beneficial in following ways:

• Farmers will get better prices
• Farmer free from the risk of market price fluctuations
• Farmers get big market
• Opportunity for the farmer to learn
• Improving farming methods
• Helping farmers decide seeds, fertilizers
• Improvement in quality and quantity of crops

With the above benefits there are following challenges as well of contract forming:

• Promotes monopoly of big buyers
• Fear of exploitation of farmers by giving lower prices
• Difficult to understand for ordinary farmers
• Small farmers will benefit from this

Let us know the main point of the Farmers (Empowerment and Protection) Agreement on Price Assurance and Agricultural Services Bill, 2020.

• Connecting farmers directly with traders, companies, processing units, exporters.
• To fix the price of his produce to the farmer before sowing through an agricultural agreement. Assurance of price to the farmer before sowing. Additional benefit with the lowest price when the price increases.
• With the help of this bill, the risk of market uncertainty will shift from farmers to sponsors. The price fluctuation in the market will not adversely affect the farmer due to the price being fixed earlier.
• With this, farmers will have access to state-of-the-art agricultural technology, agricultural implements and improved manure seeds.
• This will reduce the cost of marketing and ensure increase in income of farmers.

• In case of any dispute, arrangements have been made to settle it locally within 30 days.
• To promote research and new technology in agriculture.

There are some doubts in the mind of general public. These doubts are:

• The contracted agricultural agreement would weaken farmers’ favor and they would not be able to determine prices.
• How will small farmers be able to do contract farming? Because sponsors can avoid them.
• The new system will be troublesome for the farmers.
• Large companies will benefit in the event of a dispute.

As per my understanding following are my concluding remark:

• The farmer will have complete freedom in the contract that he can sell the produce by fixing the price according to his wish. They will receive payment within a maximum of three days.
• 10,000 farmer producing groups are being formed in the country. These groups (FPOs) will work in the direction of adding small farmers to bring their crops to market.
• After the contract, the farmer will not be required to visit the traders. The buyer consumer will be able to take the produce from his farm.
• In the event of a dispute, there will be no need to visit the court. There will be a system to settle the dispute at the local level.