Steps for Regulating the Working of Contract Farming

The Consolidated Foreign Direct Investment (FDI) Policy, 2012 provides FDI in agriculture and animal husbandry, with certain conditions, in (a) floriculture, horticulture, apiculture and cultivation of vegetables and mushrooms under controlled conditions, (b) development and production of Seeds and planting material, (e) animal husbandry (including breeding of dogs), Pisciculture, Aquaculture, under controlled conditions, and (d) services related to agro and allied sectors. Besides these, FDI is not allowed in any other agricultural sector/activity.

In order to regulate the working of contract farming, the Ministry of Agriculture has framed Model State Agricultural Produce Marketing (Development and Regulation) Act, 2003 and Model State Agricultural Produce Marketing (Development and Regulation) Rules, 2007 for adoption by States / Union Territories. The Model Act, inter-alia, provides provisions for the registration of contract farming sponsors, recoding of contract farming agreements with the Agricultural Produce Marketing Committee (APMC) or a prescribed authority under the Act and dispute settlement mechanism. It also provides for protection of title or rights of the farmers over the land under such contracts. These are intended to protect the interest of farmer. Since Agriculture Marketing is State subject, the State Governments are persuaded to adopt the provisions of Model Act in the interest of farmers.