The Contract Farming Act of India: How Useful Is It?

The Act is known as The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020. The Contract Farming (CF) Model involves linking farmers with a known buyer through a forward contract in which the former agrees to supply the latter with a certain amount of agricultural produce against a certain remuneration within a pre-agreed time frame. There are some concerns about the CF Act like lack of an official agency to facilitate the CF system, avoid payment delay, prevent fraud during product inspection, relief for the farmer in case of force majeure conditions, ensure guaranteed purchase by firms, and no reneging of contract, etc. No doubt, the framework envisaged in the CF Act will have to evolve for providing solutions to these practical difficulties, but the framework is a viable one to encourage CF practice in India.

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