Contract Farming Set to Increase Farmers Income in India

The government takes steps to provide access to the latest technology and price stability to farmers. Contract farming set to increase farmers’ income as government and private players gets involved in India.

Contract Farming and Other Ordinances

The recent ordinances and amendment to the ECA approved by the Union Cabinet will help increase farmers’ income, specifically of small and marginal ones. Also, the new laws will encourage better farm practices. Major agri-processing companies like ITC Limited, Mahindra Agri Solution, DCM, Shriram, and German wholesale retailer, Metro Cash and Carry expect supply chain efficiency from the government’s decision. 

Experts Opinion

S Sivakumar, ITC Limited said that the legal framework would align the crop varieties and management practices with the market. Also, Sukhpal Singh, chairperson, Centre for Management in Agriculture, IIM-A said that pre-agreed prices will reduce the marketing risk for farmers. Experts say that long term contracts will justify the enormous investments made by companies on technology and farms. The move will enable wholesalers to directly contact thousands of farmers and have better control over the quality of the produce. 

States Promote Contract Farming

The Odisha government promulgated an ordinance to develop a mutually beneficial and efficient contract farming system. The sponsor, who offers to participate in the value chain, including preproduction, and the farmer will enter into a contract. Also, the government cleared that recovery of loan must take place only from the sales proceeds of the farm produce.

Center Studies Tamil Nadu’s Law on Contract Farming

The Centre sees the state’s law as an improvement over the bill prepared by the Union Ministry of Agriculture and Farmers’ Welfare in May 2018. The state’s law contains more provisions to safeguard the interests of farmers than the latter. Tamil Nadu’s legislation calls for three non-official members in the dispute settlement committee as against none in the Centre’s law. Also, it allows the excessive quantity produced to be purchased by sponsors at a mutually agreed rate. Moreover, FPOs or companies can also enter into contracts with farmers in Tamil Nadu contract farming legislation.

In all, the contract farming will extend the benefits of scales of the economy to small and marginal farmers.

Get Verified Suppliers of Rice, Wheat, Dry Fruits, Pulses and Other Grains