Explained: The draft Model Contract Farming Act, 2018

Sai Priya Kodidala - January 8, 2018

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.

Legislation

The Personal Data Protection Bill, 2019: How it differs from the draft Bill

Anurag Vaishnav - December 27, 2019

The Personal Data Protection Bill, 2019 was recently introduced in Parliament. The Bill has been referred to a Joint Parliamentary Committee for detailed examination, and the Committee is expected to submit its report by the last week of Budget Session, 2020. The Bill seeks to provide for the protection of personal data of individuals (known as data principals), and creates a framework for processing such personal data by other entities (known as data fiduciaries). It provides the data principal with certain rights with respect to their data, such as seeking correction, completion or transfer of their data to other fiduciaries. Similarly, it sets out certain obligations, and other transparency and accountability measures to be undertaken by the data fiduciary, such as instituting grievance redressal mechanisms to address complaints of individuals. Processing of personal data is exempted from the provisions of the Bill in certain cases, such as security of state, public order, or for prevention, investigation, or prosecution of any offence. The Bill also establishes a Data Protection Authority to ensure compliance with the provisions of the Bill and provide for further regulations.

As per the Statement of Objects and Reasons of the 2019 Bill, the provisions of the Bill are based on the recommendations of the report of the Expert Committee (Chair: Justice B. N. Srikrishna) which examined issues related to protection of personal data and proposed a Draft Personal Data Protection Bill, 2018.

In a previous blog, we provided a brief background to the 2019 Bill, explained why a Bill was brought for personal data protection and what are some of the key provisions of the Bill. In this blog, we look at how the 2019 Bill differs from the 2018 Draft Bill.

Table 1: Comparison of the provisions of the 2018 Draft Bill with the 2019 Bill

Provision	Draft Personal Data Protection Bill, 2018	Personal Data Protection Bill, 2019
Definition of personal data	Personal data pertains to characteristics, traits or attributes of identity, which can be used to identify an individual.	The Bill retains the definition and adds that such characteristics or traits will also include any inference drawn from such data for the purpose of profiling.
Sensitive personal data	Sensitive personal data includes personal data related to health, sex life, sexual orientation, financial data, passwords, among others. The Data Protection Authority can categorise any other personal data as sensitive personal data.	The Bill removes passwords from the category of sensitive personal data. The power to further categorise personal data as sensitive personal data will lie with the central government (in consultation with Data Protection Authority and the sector regulator concerned).
Rights of individual (data principal)	The data principal has certain rights with respect to their data such as obtaining confirmation on whether their data has been processed, seeking correction, transfer, or restriction on continuing disclosure of their data.	The Bill provides the right to erasure of personal data which is no longer necessary for the purpose for which it was processed, as an additional right for the data principal.
Non-consensual processing of personal data	Personal data may be processed without obtaining the consent of the individual on certain grounds. These include: (i) any function of Parliament or state legislature, (ii) if required by the State for providing benefits to the individual, and (iii) for reasonable purposes specified by the Authority, such as fraud detection, debt recovery, and whistle blowing.	The Bill removes the provision on any function of Parliament or state legislature as a ground for non-consensual processing of personal data. The Bill adds ‘operation of search engines’ as a reasonable purpose for which non-consensual processing of personal data may be allowed by the Authority.
Social media intermediaries	The draft Bill did not contain this term.	The Bill defines a social media intermediary as an intermediary which enables online interaction between users and allows for sharing of information. All social media intermediaries which are classified as significant data fiduciaries (fiduciaries with users above a notified threshold whose actions can impact electoral democracy or public order) must provide a voluntary user verification mechanism for all users in India.
Exemptions for the government for processing of personal data	The State is exempted from the provisions of the Bill while processing personal data in the interest of national security. However, such processing must be permitted by a law and must be proportionate to the interests being achieved. Further, such processing must be done in a fair and reasonable manner.	The government can exempt any of its agencies from any or all provisions of the Act, for processing of personal data in certain cases. These include: (i) in interest of security of state, public order, sovereignty and integrity of India and friendly relations with foreign states, and (ii) for preventing incitement to commission of any cognisable offence relating to the above matters.
Exemptions for manual processing by small entities	Transparency and accountability measures and certain other obligations will not apply to small entities. These are fiduciaries which: (i) have annual turnover below Rs 20 lakh (or such lower amount as prescribed), and (ii) did not process data of more than 100 individuals in any one day in the last year.	The Bill retains the exemption for small entities. However, it does away with the prescribed limits and allows the Authority to classify fiduciaries as small entities based on the annual turnover of fiduciary and the volume of data processed by such fiduciary.
Transfer of personal data outside country	One serving copy of all personal data should be stored in India.	The Bill removes the provision for mandatory storage of all personal data in the country. It provides that sensitive personal data must continue to be stored in India. Such data can be transferred outside India if explicitly consented by the individual, and subject to certain additional conditions.
Composition of Data Protection Authority of India	The chairperson and members of the Authority will be appointed by the central government on the recommendations of a selection committee. The selection committee will be comprised of: (i) Chief Justice of India or a Judge of Supreme Court as the chairperson, (ii) Cabinet Secretary, and (iii) an expert in field of data protection, information technology and related subjects.	The Bill provides that the selection committee will be comprised of: (i) Cabinet Secretary as the chairperson, (ii) Secretary, Department of Legal Affairs, and (iii) Secretary, Ministry of Electronics and Information Technology.
Offences and penalties	Under the Bill, offences such as: (i) obtaining, disclosing, transferring, or selling personal data in contravention of the Act, and (ii) re-identification and processing of de-identified personal data (data from which identifiers have been removed) without consent, are punishable with imprisonment.	Under the Bill, re-identification and processing of de-identified personal without consent is the only offence punishable with imprisonment.
Non-personal and anonymised personal data	No provision of the Bill would apply to non-personal data used by government for formulation of policies for digital economy, growth or security.	The Bill retains the provision and further provides that the government can direct data fiduciaries to provide it any: (i) non-personal data and (ii) anonymised personal data (where it is not possible to identify data principal) for better targeting of services and formulation of evidence-based policy.

Sources: The Draft Personal Data Protection Bill, 2018; The Personal Data Protection Bill, 2019; PRS.

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Explained: The draft Model Contract Farming Act, 2018

The Personal Data Protection Bill, 2019: How it differs from the draft Bill

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