Tamil Nadu Becomes First State To Enact Law On Contract Farming

Tamil Nadu has become the first state in the country to enact a law on contract farming. The law came into effect after President Ram Nath Kovind’s approval of the Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act.

Contract farming enables agricultural production to be carried out based on a pre-harvest agreement between buyers and producers (farmers and farmer organisations). This implies that the farmers would be paid a pre-determined price according to the signed agreement.

Owing to production uncertainties and market unpredictability, agriculture has always been a risky affair. This law can protect the farmers during bumper harvest or fluctuating market prices, read a press release from the Tamil Nadu government.

However, the law does not cover any produce banned by the central government, the sate government or the Indian Council of Agricultural Research, the press release read.

The law is valid not just for agriculture, but also for dairy farmers and preservation factories. This will also allow the businessman and preservation factories to directly approach the farmers for their necessary produces.

For facilitation of the agreement, it has to be registered with the designated officials from the Department of Agricultural Marketing. To ensure proper implementation, the Tamil Nadu State Contract Farming and Services (Promotion and Facilitation) Authority will also be set up which will help settle any disputes between the buyers and producers.

How Does the Law Benefit Farmers?

This law comes as a boon to the farmers as they gain numerous benefits through contract farming. According to Tamil Nadu Agricultural University, Coimbatore, contract farming can ensure a steady source of income for the farmers. Moreover, it can give farmers the access to advanced agro-technology, healthy and disease-free nursery, and agricultural implements. It can generate employment in rural communities and also increase private sector investment in agriculture.

The law can help make contract farming more transparent, easier, and successful, says a report by the Financial Express. It will be particularly beneficial for marginal farmers, as they will receive the fair price agreed upon if the buyers or food processing companies violate the agreement.

What Does the Law Mean for Traders?

The law offers many perks to the traders as well. The traders get a dedicated supplier base and an uninterrupted and regular flow of raw material. They will also be protected from fluctuating market prices. Through their support and assistance, they can also establish a long-term relationship with the farmers.

Also Read: Darshan Singh, A Farmer Who Is Using Youtube To Answer Agriculture Queries