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Law On Contract Farming Proposed

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Law on contract farming proposed

Naveen S Garewal

Tribune News Service

Chandigarh, January 28

With shrinking land holdings making farming non-viable, the Punjab Government has decided to infuse new hope in agriculture by way of cooperative and contract farming. To ensure that cooperatives and companies do not take farmers for a ride, the state is contemplating bringing in legislation that will bind those undertaking contract farming by legislation.

Contract farming has been prevalent in the region, especially after the setting up of agro-processing units. At present hundreds of acres of land is under contract farming where large companies ask farmers to grow a particular produce and promise to buy it back. In many cases, the companies do not honour their commitment if the commodity becomes available at cheaper prices elsewhere.

To make contract farming popular and to facilitate optimum use of expensive equipment and implements, the Punjab Government has decided to come out with a new law on contract farming. This legislation that is still in a draft stage proposes to bind companies to honour the terms of agreement.

The proposal was mooted after reports that several multinational companies and big business houses went back on their commitments after making farmers grow potatoes or tomatoes. Similarly, many farmers entered into a lease with the Punjab Agro for citrus cultivation as a means of crop diversification, but the contracts were either terminated or the farmers suffered huge losses.

Under the proposed legislation, the state government will, from time to time, notify crops that would be protected under this new legislation. From around two lakh acres under contract farming at present, the government hopes to bring about 25 lakh acres under contract farming.

Once the draft is completed and vetted by the legal branch of the government, the Bill could be brought for passing in the Punjab Vidhan Sabha in the coming Budget Session, it is learnt.

The legislation is contemplating proposing that once a company asks a farmer to grow something for the company, it will have to buy and pay the price already agreed upon, even if the produce is available at a cheaper price elsewhere. But at the same time, if the price of the produce increases, the farmers would be at liberty to demand a higher price or sell it to someone else for a higher price.


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