It will help increase income for farmers, particularly the small and marginal ones, as they will get better access to good quality inputs and better farm practices, executives said. Farmers with less than two hectares of land account for 86.2% of all farmers in India, but own just 47.3% of the crop area.
“A deeper engagement between the farmers and food processors or retailers helps in guiding the farmers align the crop varieties, quality, farm management practices etc with what the market wants,” said S Sivakumar, head, Agri & Tech, ITC Limited.
He added, the new legal framework will lay foundation to transform Indian agriculture leading to better incomes for the farmers and more able supply chains for the businesses.
It will reduce the marketing risk for farmers due to pre-agreed prices and market assurance, said Sukhpal Singh, chairperson, Centre for Management in Agriculture, IIM-Ahmedabad. He said currently there was a fear that farmer's interest may be compromised as they are smaller entities and can’t afford to bear buyer reneging from contract.
Besides, long-term contracts with farmers will justify the higher investments made by companies on technology and farms, said Ashok Sharma, president – agriculture sector & MD and CEO –Mahindra Agri Solutions Ltd, (MASL), the agri-business initiative of the Mahindra Group.
The contracts will have terms relating to traceability and that is possible only with contract farming, which will also boost exports, said Ajay S Shriram, chairman & sr MD, DCM Shriram Ltd. He added, “this will provide a predictable income stream to the farmer.”
For wholesale retailers and companies direct contract with thousands of farmers will ensure better control on the quality of the end products, said Arvind Mediratta, managing director of Metro Cash & Carry India.
“Farmers will not have to deal with middlemen. The companies will implement best practices on usage of seeds and farming techniques with a focus on technology to bring in efficiencies,” he added. The company currently procures 2000 tonnes of fruits and vegetables per month with approximately 60% of those being vegetables.
Contract farming is allowed in most states like Gujarat, Maharashtra, Karnataka, Tamil Nadu, Haryana, Uttarakhand, Madhya Pradesh and West Bengal under the amended APMC Act and companies and agencies have to seek permission or license in each state separately, said Singh.
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2 Comments on this Story
Akash kumar197 days ago
this is the best way to less the loss of any farmer.good idea
AG243 days ago
It depends on the terms of the contract, and how the government intends to regulate them, if at all.