Model Act on Contract farming

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.

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.

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.

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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