AgroSpectrum - November 2022

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Do CONTRACT FARMING Advantages Outweigh Concerns?
Contractual agreements between the farmers and agribusiness companies have gained
immense momentum in many developing countries including India. Besides ensuring
economies of scale, contract farming facilitates access to technology, capital and quality
inputs for the farmers. Consequently, the arrangements hold much significance given that
agriculture accounts for 16 per cent share in India’s GDP against its 4 per cent share in
world GDP and 55 per cent of the country’s population is dependent on it. However, there
are a number of business and legal challenges plaguing the commercial agreements
between the sponsoring companies and the farmers. Enforceability of contracts by
either party is a worrisome aspect that calls for immediate attention from the various
stakeholders. The centre announced the Model Agricultural Produce and Livestock
Contract Farming Act 2018 with a view to address such discrepancies. The primary
purpose was to legi$mate contract farming in India which has been largely based on the
provisions of Indian Contract Act 1872. AgroSpectrum India digs deeper into the contract
farming landscape to uncover the complexities and benefits.