Date: 21st January, 2021
by Shwas Bajaj, UILS, Panjab University
This Act aims at providing a national framework for the farming agreements that protect and empower farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed remunerative price framework in a fair and transparent manner.
PROVISIONS OF THE ACT
This Act seeks to create a legal framework for contract farming in India wherein farmers can enter into a direct agreement with a buyer to sell the produce at predetermined prices.
‘Sponsors’ i.e entities that may partake in an agreement with farmers to buy their agricultural produce may include individuals, companies, firms, and societies.
Farming agreements can cover mutually accepting terms between farmers and sponsors including the supply of various resources for farming, method of farming, and the quantity of produce.
The Act also provides for a three-tier dispute resolution system: the conciliation board—comprising representatives of parties to the agreement, the sub-divisional magistrate, and appellate authority.
THE MAJOR ISSUES
The principal concern with contract farming is regarding the negotiating power of the parties involved. Corporates or rich sponsors may not necessarily pay a fair price to the farmers for their produce due to the lack of the farmers’ ability to fairly negotiate or afford any sort of long-standing legal proceeding.
This establishes a national legislative framework to enable contract farming, where an agreement can be made between the farmer and the buyer before sowing under which the farmer is contracted to sell her produce to the buyer at a predetermined price. The government has argued that this will help remove some income uncertainty by providing the assurance of a buyer at a predetermined price prior to sowing.
The opposition to this stems from the past experiences of contract farming in India, which has not always been beneficial for farmers. It only led to the reinforcement of existing patterns of inequality as the contracting firm had relatively more power than the farmer.
In addition, it can lead to many malpractices against farmers including one-sided (pro-contracting agency) contract agreements, delayed payments, quality-based undue rejections and outright cheating, besides poor enforcement of contract farming provisions by the state government.
Also, the Act ousts the jurisdiction of civil courts and provides for a complex dispute redressal mechanism which would be difficult to approach for a common poor farmer.