History of contract farming in India
Contract farming in India was introduced in India in late19th century where Indian farmers produced Indigo under British Government. Mahatma Gandhi's remarkable 'Champaran Satyagraha' had historical milestone in fair contract farming in India but the contract farming came to limelight in the late 1990s with the entry of PepsiCo. In 1997, it set up a tomato processing plant in Punjab and started tying up with local farmers to grow tomato varieties needed for ketchup. In India, contract farming was regulated under Indian contract Act, 1872. The model APMC Act, 2003 provides specific provision for contract farming. The Department of Agriculture and Farmers Welfare had released Model Contract Farming Act, 2018. The key proposals of model contract farming act includes setting up a state-level agency called Contract Farming (Development and Promotion) Authority.
Explanation of Model I: In this model the farmers are directly dealing with the buyer. This model can be implemented for small-scale of operations. The price of the commodity is fixed with the mutual agreement with the farmer and buyer. Generally buyer is not providing any services unless and until it is agreed upon in the agreement.
This story is from the October 2021 edition of BANKING FINANCE.
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This story is from the October 2021 edition of BANKING FINANCE.
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