Lok Sabha Question No. 945 (UNSTARRED), answered on 2018-07-24
Subject: Model Act on Contract Farming
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: VASANTHI M., A. ARUNMOZHITHEVAN

## GOVERNMENT OF INDIA MINISTRY OF AGRICULTURE AND FARMERS WELFARE DEPARTMENT OF AGRICULTURE, COOPERATION AND FARMERS WELFARE

## LOK  SABHA UNSTARRED QUESTION NO. 945

TO BE ANSWERED ON THE 24 TH  JULY, 2018

## MODEL ACT ON CONTRACT FARMING

945.   SHRIMATI VASANTHI M.: SHRI A. ARUNMOZHITHEVAN:

Will the Minister of AGRICULTURE AND FARMERS WELFARE कृ ष एवं कसान कयाण मंी be pleased to state:

- (a) whether it is true that the Government has released model law for contract farming and if so, the details thereof;
- (b) whether the two draft proposals brought forward by the Government on contract farming received wide criticism from industry and farmers groups, if so, the details thereof and the steps taken  by  the  Government  to  address  the  concerns  expressed  by  the  industry  and  farmers groups on contract farming;
- (c) whether the Government has asked the State Governments to adopt the model act on contract  farming  and  if  so,  the  details  thereof  and  the  response  of  the  State  Governments thereto; and
- (d) whether it is also true that once the contract farming is adopted, it would help entry of private  players  into  the  farm  sector  as  it  would  induce  competition  and  ensure  assured  and better  price  for  farm  produce  to  farmers  through  advance  agreements  and  if  so,  the  details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF AGRICULTURE AND FARMERS WELFARE

कृ ष एवं कसान कयाण मंालय म राय मंी (SHRI GAJENDRA SINGH SHEKHAWAT)

- (a): Yes  Madam.    The  Government  has  formulated  and  released  a  progressive  and facilitative Model Act 'The ----State/ UT Agricultural Produce & Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018' in May, 2018 for its adoption by the states/Union Territories (UTs). The aforesaid Model Contract Farming Act covers the entire value and supply chain  from  pre-production  to  post  harvest  marketing  including  services  contract  for  the agricultural produce and livestock.
- (b): The  first  draft  of  Model  Contract  Farming  Act  was  circulated  to  the  States/  UTs  and concerned central Government Ministries/ Departments to solicit their comments. In addition, it was also placed on public domain in December, 2017 by uploading on departmental website for extensive consultations with various stakeholders including farmers, trade & industry, economists, policy makers. It elicited huge response from within India and from abroad. Based on suggestions received, draft model Act was modified and placed again in public domain in February, 2018 for soliciting further comments/suggestions. All the suggestions/views received thereafter  were  considered/addressed      and  incorporated  to  give  its  final  shape  as  'The  ---State/  UT  Agricultural  Produce  &  Livestock  Contract  Farming  and  Services  (Promotion  & Facilitation) Act, 2018' in May, 2018.

(c): The Government convened a meeting of State Agriculture Marketing Ministers' in May, 2018 under the chairmanship of Union Agriculture Minister to release the model Act for adoption by States/Union Territories and also to explain them the details of the provisions of said Model Act. In the meeting, Union Agriculture Minister requested the states/UTs to adopt the Model Act, as  it  may  be  an  effective  tool  for  mitigating  price  risk  and  market  uncertainty.  There  was unanimity among the states to adopt this Model Act.

(d): Model Act being a facilitative one with wider scope of contracts in the entire agri-value chain  starting  from  pre-production,  production  to  post-production,  private  players  including Farmer  Producer  Organizations  (FPOs)  will  be  encouraged  to  engage  themselves  in  the contract farming and services contracts under the Act. The contract farming under this model, will help in mitigating the price risk and market uncertainties through advance agreements and would encourage entry of private players into the farm sector.

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