State dithers on enacting law on contract farming

Ruchika M Khanna

Tribune News Service

Chandigarh, December 15

Even as Tamil Nadu has become the first state to enact a law on contract farming, Punjab is still waiting for the right “ecosystem to evolve” before it can come up with a similar law.

Last year, the President had given assent to the Agriculture Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act. Since agriculture comes in the concurrent list, Tamil Nadu is the only state to have enacted a law on contract farming, which is expected to sustain farm production and promote agro-processing industry.

Punjab Director of Agriculture Sutantar Kumar Airi told The Tribune that though as of now the state was not thinking of enacting a similar law, a kind of informal contract farming was already going on here. “The sugarcane cultivation in Punjab is based on an informal contract between the growers and sugar mills, as the latter bind the area under cane cultivation,” he said. Airi said unless the agro industry was well established and developed in the state, contract farming would not be a viable option.

“As of now, the agro industry is not well established, but we are trying to bring in more poultry feed, oil seed processing and maize processing units, which can then help create an ecosystem to enact a law on contract farming,” he added.

Farm experts opine that if Punjab were to enact a law, it would safeguard the interests of farmers when there is a bumper crop or during major fluctuation in market prices. In such a scenario, farmers will be paid a predetermined price arrived at the time of signing of agreements with buyers.

“In Punjab, basmati growers, maize and cotton cultivators and potato growers could be the major beneficiaries, if a contract farming law is enacted,” says BS Sidhu, a noted agro economist.

Farmers, too, feel that a law, which safeguards their interests, could help them deal with price fluctuation and at the same time help in crop diversification, as contract farming would open vistas for establishing markets for the produce other than wheat and paddy.

“However, the law should be such that it safeguards the farmers as much as it takes into consideration the interests of the corporates. Punjab farmers went in for informal contract farming of potato and tomato with a multinational food major, some 20 years ago. But the company later refused to accept tomato. Even in case of potato, they would refuse to accept it whenever there was a glut in production. If the government learns from that experience, and then frames the law, it could be a win-win situation for both farmers and agro industry,” says Balbir Singh Rajewal, president of Bhartiya Kisan Union (Rajewal).