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Recently, the Ministry of Agriculture released a draft Model Contract Farming Act, 2018. The draft Model Act seeks to create a regulatory and policy framework for contract farming. Based on this draft Model Act, legislatures of states can enact a law on contract farming as contracts fall under the Concurrent List of the Constitution. In this context, we discuss contract farming, issues related to it, and progress so far.
What is contract farming?
Under contract farming, agricultural production (including livestock and poultry) can be carried out based on a pre-harvest agreement between buyers (such as food processing units and exporters), and producers (farmers or farmer organisations). The producer can sell the agricultural produce at a specific price in the future to the buyer as per the agreement. Under contract farming, the producer can reduce the risk of fluctuating market price and demand. The buyer can reduce the risk of non-availability of quality produce.
Under the draft Model Act, the producer can get support from the buyer for improving production through inputs (such as technology, pre-harvest and post-harvest infrastructure) as per the agreement. However, the buyer cannot raise a permanent structure on the producer’s land. Rights or title ownership of the producer’s land cannot be transferred to the buyer.
What is the existing regulatory structure?
Currently, contract farming requires registration with the Agricultural Produce Marketing Committee (APMC) in few states. This means that contractual agreements are recorded with the APMCs which can also resolve disputes arising out of these contracts. Further, market fees and levies are paid to the APMC to undertake contract farming. The Model APMC Act, 2003 provided for contract farming and was released to the states for them to use this as reference while enacting their respective laws. Consequently, 20 states have amended their APMC Acts to provide for contract farming, while Punjab has a separate law on contract farming. However, only 14 states notified rules related to contract farming, as of October 2016.
What are the issues with the current structure, and how does the draft Model Act seek to address them?
Over the years, expert bodies have identified issues related to the implementation of contract farming. These include: (i) role of APMCs which are designated as an authority for registration and dispute settlement in most states, (ii) provisions of stockholding limits on produce under contract farming, and (iii) poor publicity of contract farming among the farmers about its benefits.
Role of Agricultural Produce Marketing Committees/Marketing Boards
The NITI Aayog observed that market fees and other levies are paid to the APMC for contract framing when no services such as market facilities and infrastructure are rendered by them. In this context, the Committee of State Ministers on Agricultural Reforms recommended that contract farming should be out of the ambit of APMCs. Instead, an independent regulatory authority must be brought in to disengage contract farming stakeholders from the existing APMCs.
In this regard, as per the draft Model Act, contract farming will be outside the ambit of the state APMCs. This implies that buyers need not pay market fee and commission charges to these APMCs to undertake contract farming. Further, the draft Model Act provides for establishing a state-level Contract Farming (Promotion and Facilitation) Authority to ensure implementation of the draft Model Act. Functions of the Authority include (i) levying and collecting facilitation fees, (ii) disposing appeals related to disputes under the draft Model Act, and (iii) publicising contract farming. Further, the sale and purchase of contracted produce is out of the ambit of regulation of the respective state/UT Agricultural Marketing Act.
Registration and agreement recording
The Model APMC Act, 2003 released to the states provides for the registration of contract farming agreements by an APMC. This was done to safeguard the interests of the producer and the buyerthrough legal support, including dispute resolution. The procedures for registration and recording of agreements vary across states. Currently, registration for contract farming has been provided with the APMC in few states, and with a state-level nodal agency in others. Further, market fee on purchases under contract agreements is completely exempted in few states and partially exempted in others. The Committee of State Ministers on Agricultural Reforms recommended that a instead of a APMC, district-level authorities can be set-up for registration of contract farming agreements. Further, any registering authority should verify the details such as the financial status of the buyer.
Under the draft Model Act, every agreement should be registered with a Registering and Agreement Recording Committee, which will be set up consisting of officials from departments such as agriculture, animal husbandry, marketing, and rural development. Such a Committee can be set up at the district, taluka or block levels.
Disputes between the producer and the buyer
The Ministry of Agriculture and Farmers Welfare observed certain risks related to upholding the contract farming agreement. For example, producers may sell their produce to a buyer other than the one with whom they hold a contract. On the other side, a buyer may fail to buy products at the agreed prices or in the agreed quantities, or arbitrarily downgrade produce quality. The Committee of State Ministers on Agricultural Reforms recommended that dispute redressal mechanism should be at block, district or regional-level state authorities and not with an APMC.
Under the draft Model Act, in case of disputes between a producer and a buyer, they can: (i) reach a mutually acceptable solution through negotiation or conciliation, (ii) refer the dispute to a dispute settlement officer designated by the state government, and (iii) appeal to the Contract Farming (Promotion and Facilitation) Authority (to be established in each state) in case they are not satisfied by the decision of the dispute settlement officer.
Stockholdings limits on contracted produce
Stockholding limits are imposed through control orders as per the Essential Commodities Act, 1955. Such provisions of stockholding limits can be restrictive and discourage buyers to enter into contracts. It was recommended that the buyers can be exempted from stock limits up to six months of their requirement in the interest of trade. Under the draft Model Act, limits of stockholding of agricultural produce will not be applicable on produce purchased under contract farming.
Other recommendations
While contract farming seeks to provide alternative marketing channels and better price realisation to farmers, several other marketing reforms have been suggested by experts in this regard. These include: (i) allowing direct sale of produce by farmers, (ii) removing fruits and vegetables out of the ambit of APMCs, and (iii) setting-up of farmer-consumer markets, (iv) electronic trading, and (v) joining electronic National Agricultural Market for the sale of produce.
With the spread of COVID-19, along with the central government, state governments have also announced several policy decisions to contain and prevent the spread of the virus. In this blog post, we summarise some of the key measures taken by the government of West Bengal in this regard as of April 18, 2020.
As of April 18, 2020, there have been 287 confirmed cases of COVID-19 in West Bengal. Of these, 55 have been discharged and 10 have died. To manage patients, there are 66 COVID hospitals, eight testing laboratories, and 582 institutional quarantine centres in the state.
Early response: Leading up to lockdown
Between January and February, the state government's efforts were aimed at raising awareness among citizens on COVID-19. These include advisories on observing precautionary measures, and informing citizens on travel restrictions, home isolation, and screening protocols for foreign returnees.
On March 2, the state government responded to the growing number of suspected cases by issuing guidelines for preparedness by government medical colleges and hospitals. These covered admission, isolation and management of suspected COVID-19 cases. These instructions were extended to private medical colleges and hospitals on March 7. A week later, the government issued protocols for monitoring travellers at various state checkposts by joint teams of state police and paramedical staff, and for reference of symptomatic patients to isolation facilities in the district. All cases had to be reported on a daily basis to district surveillance teams. The government also announced the closure of all educational institutions in the state (government and private) till March 31.
On March 16, the government notified the West Bengal Epidemic Disease COVID-19 Regulations, 2020. These regulations specify screening and treatment protocol for COVID-19 patients, and empower the district administration to take containment measures to curb the spread of COVID-19.
The next day, the state reported its first confirmed case of COVID-19. The government proceeded to issue orders: (i) for segregating isolation wards for suspected and confirmed COVID-19 cases, (ii) specifying treatment protocols for confirmed cases, (iii) establishing medical boards in all COVID-19 hospitals with representation from different medical disciplines, and (iv) establishing fever clinics for suspected patients. Anganwadi centres and creches were also closed, with provisions to ensure supply of two kilograms of rice and potatoes to each beneficiary.
On March 21, the government ordered the closure of certain establishments to restrict non-essential social gatherings till March 31, 2020. This included closure of restaurants, clubs, amusement parks, and museums. Further, all trains entering the state and inter-state buses were banned till March 31, 2020.
Subsequently, the government announced a lockdown. In addition to steps for physical containment, the government also undertook various health and welfare measures. These are detailed below.
Measures taken post-lockdown
On March 22, a lockdown was announced in 23 areas of the state until March 27. Restrictions during the lockdown included: (i) prohibition on public gatherings of over seven people, (ii) suspension of public transport, and (iii) closure of shops, commercial establishments, offices and factories. Establishments providing essential goods and services such as health services, print media, banks, groceries, and e-commerce delivery of food and groceries, were excluded from the restrictions. Over the next few weeks, steps were taken to expand these exemptions, and to regulate the movement of goods and services.
List of essential goods and services: On March 24, the lockdown was extended till March 31 in the entire state, and the exemptions were expanded to include industries producing coal, power, steel, or fertilisers. After the centre notified a 21-day lockdown, the list of exemptions in the state was gradually expanded to include agricultural operations, fish production, tea garden operations, and operations in krishak bazars for marketing agricultural produce. At the same time, restrictions were placed on hoarding of masks and hand sanitisers.
Last week, after the central government extended the lockdown till May 3, orders were passed for resumption of government offices from April 20 onwards at a strength of 25% of workforce. Similar permission was also granted for restricted operations in jute mills, and IT/IT enabled services.
Regulating movement of goods and services: A pass system was introduced on March 25 to regulate the movement of persons supplying essential goods and services. Transportation of non-essential cargo was prohibited till March 31, 2020. However, as a one-time measure, permission was granted on March 26 to such vehicles to reach their destination. Two days later, the government ordered for the seamless movement of commodities in all district borders and interstate areas.
Health Measures
On March 26, a Committee of Experts was constituted to advise on strategies for isolation, quarantine, testing, health infrastructure, and disease prevention. The Committee has been issuing protocols on clinical management of COVID-19 cases. The government also established various monitoring committees on setting up isolation hospitals, managing critical care, and to audit the cause of deaths related to COVID-19 patients.
To respond to the increasing number of patients, the government acquired private healthcare facilities in April. Further, to expand its testing capacity, the government recommended sample pooling for COVID-19 testing yesterday.
In addition to these measures, the government also issued several guidelines, advisories and orders on containment of the virus, patient handling and protecting healthcare workers. Some of these are detailed below:
For healthcare facilities: Advisory for setting up of isolation facilities, orders for establishment of fever clinics to segregate patients with severe symptoms, separation zones for suspected cases to protect healthcare personnel, and use of hydroxychloroquine for asymptomatic healthcare workers.
For government: Guidelines for cluster containment and treatment strategies to contain COVID-19 in hi-risk spots, directions for awareness generation among rural population for containment, and arranging for counselling sessions for quarantined patients.
Welfare/Austerity Measures
Creation of relief fund: The “West Bengal State Emergency Relief Fund” was created on March 23 to mobilise additional resources to cope with the emergency. On April 2, austerity measures were announced by the government. These include prohibition on announcement of new schemes, unless required in urgent public interest.
Distribution of food: Free entitlement of wheat and rice was announced on March 26 to beneficiaries under some food subsidy schemes (including the Antyodaya Anna Yojana) until September, 2020.
Measures for workers: Directions were notified in March for provisions on shelter, food, quarantine, wage payment, and continued tenancy for workers.
Free insurance cover was announced on April 1 for treatment of certain categories of persons, including heathcare workers, and police.
For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.
