Create a sustainable pathway for farmers -Baldev Singh Dhillon and Kamal Vatta

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published Published on Apr 12, 2021   modified Modified on Apr 12, 2021

-The Tribune

While attracting private capital investments in production, processing and marketing of high-value agriculture, the associated adverse socio-economic implications must be avoided.

Last year, Parliament enacted the Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020. It is supposed to empower farmers to get engaged with upgraded value chain partners in a fair, transparent, mutually agreeable and remunerative manner to enhance their income by reducing marketing risks. It is assumed that the private sector will directly enter into contracts with the farmers, ensure better prices, encourage diversification to high value crops and raise farmers’ incomes substantially.

The passage of this Act has generated intensive discussions. The supporters claim that contract farming has been successfully going on since long in Punjab, and this Act will give further fillip to it. Others are of the view that these claims are exaggerated except in those cases where the government and/or the cooperatives are playing an important role. The story of contracts involving corporates is dismal, which indicates that the positive assumptions on which the Act is based will not hold good on the ground.

In a broader sense, we may say that there is contract farming for paddy and wheat. The contract is between farmers and the Food Corporation of India (FCI) on behalf of the government, and it has worked with the highest degree of effectiveness. Of the total production of around 365 lakh tonnes of paddy and wheat, almost 80 per cent is procured at the pre-determined Minimum Support Price (MSP) without any discrimination among farm-size categories. There is a similar mechanism in cotton, wherein the Cotton Corporation of India (CCI), on behalf of the government, enters the market as a buyer whenever the prices fall below the MSP. The procurement by the CCI helps to restore the prices and thereby checks to a large extent farmers’ exploitation by private players.

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The Tribune, 12 April, 2021,

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