BETWEEN THE Punjab Contract Farming Act 2013 and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act 2020, another law on contract farming – the State/UT Agricultural Produce & Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018 – also known as Model act 2018 was legislated by the Union government.

Experts said that of around 20 states that had already amended their APMC Acts by 2016-17 under the provisions of the Centre’s Agricultural Produce Marketing Committee Act-2003, nearly 14 had notified the rules related to contract farming even before Model Act 2018 was notified.

Why did the government bring in the 2020 Act when Model Act-2018 was already in place for contract farming?

Experts say that with Model Act -2018 already in place, there was no need to bring the new law in 2020. Rather, some amendments could have been made to the earlier law to make it more farm-friendly. Then the government should have waited a few years to observe how the states were making or implementing the provisions of the law.

Now the 2020 Act on contract farming will supersede the 2018 law. Keeping the 2018 law as base, some states had enacted own legislations on contract farming. Now, such laws will also stand null and void.

Similarities between the 2018 and the 2020 Acts

Experts observed several similarities between the 2020 Act and Centre’s Model Act, 2018. The provision titled ‘Object and period of agreement’ in the 2018 Act mentioned leasing of farm land.

“The 2018 Act has provisions for the producer leasing out agricultural land to the sponsor – lessee, which is not legally inconsistent as of now. But, how can a committee mandated to legislate on contract farming step into the domain of land leasing issues when there exists a separate Model Act for land leasing by the NITI Aayog apart from the state-level laws? This clearly would allow sponsors full access to farmland, not just through contract farming, but also encourage corporate farming disguised as contract farming. There is a similar provision in the 2020 Act too,” said Dr Sukhpal Singh, professor, Centre for Management in Agriculture (CMA) Indian Institute of Management, Ahmedabad (IIMA),.

The professor, with three decades’ experience in the subject of ‘contract farming’, added that in the Centre’s 2020 Act, there is a term called ‘farming agreement’, which is used and being confused with other arrangements like sharecropping or leasing pacts. “The confusion has led to the Rajasthan Amendment Bill, 2020, assuming that sponsors can lease farm land,” he said.

“Both Acts link contract price to market price, which is the antithesis of contract farming philosophy. The reason for undertaking contract farming is that the desired quality of produce and at reasonable cost are not available to the agency in the open market. Now going back to the same mandi does not speak very well about the Act,” said Dr Sukhpal Singh.

He further said: “In the 2018 Act, two-third of the value of the payment is to be made at the time of delivery (of crop), while the rest is to be done after the assessment of quality. If assessment of quality is pending, how can the buyer make any payment for the produce? In the 2020 Act, quality, grade, and standards for the pesticide residue, food safety, labour and social development standards may also be adopted in the agreement, but these aspects are only suggested and not made mandatory even though labour exploitation in contract farming is quite prevalent and also affects India’s export reputation in the global market fair trade and ethical products”.

Both the Acts suggest that a farming agreement may be linked with insurance or credit instruments under any scheme of the central or state government or any financial service provider to ensure risk mitigation and flow of credit to farmers or sponsor or both.

Is there any similarity between 2018 Act and Punjab’s 2013 ACT?

Some experts say that in several ways, the 2018 Act seems to be a copy of the Punjab law. For instance, Punjab calls for setting up of a Contract Farming Commission (CFC), while the 2018 law calls for setting up of the Contract Farming and Services (Promotion and Facilitation) Board for regulation of contract farming.

In both Acts, the buyer will be registered with the registering authority and have to submit reports of the contract transactions to it.

Both Acts provide that the buyer has to make arrangements for packing and weighing of the produce and to hand over the slip to the farmer.

In both Acts, if the buyer fails to make payment at the time of delivery as per the agreement, it will have to be made within 30 days with interest as prescribed. If the said payment is not made within 30 days, it shall be recovered as an arrear of land revenue with interest.

Similarities in the three Acts

Farmers cannot approach the civil court. As per the 2013 Act, the district collector will resolve the dispute within 30 days’ time and empower the commission to seize the crop purchased by the buyer. In 2018 Act , Board, Dispute Resolution Authority and alternative measures were provided.

As per the 2020 law, party may approach the concerned sub-divisional magistrate who shall be the sub-divisional authority for deciding the disputes under farming agreements. Any party aggrieved by the order of the SDM may prefer an appeal to the appellate authority, which shall be presided over by the collector or additional collector nominated by the collector, within 30 days from the date of such order.

The three laws say that there will be no action for recovery of dues against farmers’ land. But experts said that leasing of farm land is a crucial provision.

Where the three Acts differ

In the Punjab Act, there is a jail provision for both parties, while the 2018 Act provides for setting up of a Dispute Settlement Authority, an appeal in the Board and alternative dispute resolution mechanism. The 2020 Act provides SDM as an authority to settle disputes.

In the 2018 Act, the Board shall levy and collect facilitation fee from the sponsor not exceeding 0.3 per cent on contracted produce. It is like mandi fee in APMC Act. There was no such provision in the Punjab law and Centre’s 2020 Act.

Prof Singh said that the 2018 Act was facilitating contract farming for the benefit of private agencies as against the farmer’s interest while the board is seen as a guide and umpire to popularise contract farming crops in domestic and export markets. “It is a regulatory body. How can a regulatory body engage in promotion of this mechanism,” he asked.

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