1

Calling Attention Motion No.38 regarding Contract and Integrated farming

This

Calling

Attention

Motion

raises

the

issue

of

implementation of contract farming and participation of Multinational

and major National Companies which may lead to exploitation of the
farmer. He may not get adequate returns as promised in the contract. It
has also been apprehended that no legal protection is available to the
farmer in a situation where the sponsor of contract farming exploits
him. Therefore, it has been demanded that adequate legal safeguards
should be provided so that the farmer is saved from financial ruin and
he should get a fixed remuneration for his crop.
In this regard it is submitted that The Haryana Agricultural
Produce Markets Act, 1961 was amended in 2006. As a result Section
8A to provide for Procedure and form of contract farming agreement
was inserted in this Act. Besides this, Rule 16A was also inserted in
2007 in The Haryana Agricultural Produce Markets (General) Rules,
1962 regarding Registration of contract farming. The interests of the
farmers are fully protected under these amendments. They were
carried out in pursuance of the decision taken by the Government of
India who circulated a draft Model Act of 2003 for adoption by various
State Governments. More than a dozen State Governments have
already amended their Agricultural Produce Markets Acts accordingly.
Haryana has also partly adopted the recommendations made under
The Model Act, 2003. One such amendment relates to provision of
contract farming.
The following protective measures have been expressly
provided under The amended Haryana State Agricultural Produce
Markets Act to safeguard the interests of the farmers vis--vis the
contract farming sponsors:8A. Procedure and form of contract farming agreement.

......

(2) Notwithstanding anything contained in contract farming agreement, no title,

rights, ownership or possession of the land shall be transferred or
alienated or vested in the contract farming sponsor or his successor or
his agent as a consequence arising out of the contract farming
agreement.
(3)

The contract farming sponsor shall be the buyer of the agricultural produce
covered under the contract farming agreement. The business premises of the
sponsor shall be deemed to be the market yard for the purpose of sale and
purchase of agricultural produce covered under contract farming agreement of
that sponsor.

(4)

Disputes arising out of the contract farming agreement may be referred to any
authority prescribed in this behalf for settlement. The prescribed authority
shall resoirve the dispute in the summary manner within thirty days after
giving the parties a reasonable opportunity of being heard in the manner
prescribed.

(5)

The party aggrieved by the decision of the prescribed authority under subsection (4) may prefer an appeal to an appellate authority as may be
prescribed, within thirty days from the date of decision. The appellate authority
shall dispose of the appeal within thirty days after giving the parties reasonable
opportunity of being heard and the decision of the appellate authority shall be
final.

(7)

Disputes relating to and arising out of contract farming agreement shall not be
called in question in any civil court.

It is clear that the title, rights and ownership of the land of

the farmer can never be transferred or alienated or vested in the
contract farming sponsor under any circumstances. The farmer will
actually not have to bring his produce in the mandi but his produce
can be lifted directly from the field by the sponsors of contract farming.
If there are any disputes then they will be referred to the prescribed
authority which is the Zonal Administrator concerned. There is a clear
provision of appeal before a senior official of the Board. The jurisdiction
of the Civil Court is barred. Therefore, the interests of the farmers will

be watched by the officers of the Board who are the prescribed as well
as the Appellate Authority under this law. The Civil Court will not have
any power to intervene.
Rule 16A of The Haryana Agricultural Produce Markets
(General) Rules, 1962 provides Procedure for Registration of Contract
Farming. Its relevant provisions which protect the interests of the
farmers are quoted below:-

16A. Registration of contract farming Section 8-A.

......

(6) The contract farming agreement between the contract farming sponsor and
contract farming producer shall be in Form C-I and it shall be got registered with the
District Marketing Enforcement Officer concerned in the presence of both the parties.
The agreed rate/contract rate shall not be less than minimum support price of
the proceeding year. The buyer shall deposit an amount up to 15% of the total
price of the agricultural produce as per agreed rate or minimum support price (if
the rate is not agreed upon) or bank guarantee for the sum with the
committee in which the land is situated as security. Where there is no minimum
support price and no agreed rate, the amount of security shall be calculated at
the rate of 15% of the prevailing market rate at the time of agreement. The
security shall be released within a period of thirty days after the date of
satisfactory performance of the agreement.
(7) In case both the parties want to change any of the terms and conditions of the
contract farming agreement, the same shall be effected by the District Marketing
Enforcement Officer concerned in the presence of both the parties from time to time
as per requirement.
(11) A Contract farming sponsor shall submit annual accounts in Form F I
before 30th June every year, to the concerned Market Committee in respect of all
transactions undertaken by him during the previous financial year.
(12) If the contract farming sponsor has purchased the produce with an intention to
export or processing, then he shall inform to the concerned Market Committee, the
same in Form G-I. The contract farming sponsor shall submit a declaration that he is
exporting or processing the produce within a period of 90 days from the date of
purchase.
(13) If any dispute arises between the parties in respect of any provisions of
contract farming agreement, either of the party may submit an application to the
Zonal Administrator concerned to resolve the dispute. Every such application shall
bear the court fee stamp of ten rupees. The Zonal Administrator shall resolve the
dispute in a summary manner within a period of thirty days after giving the parties
a reasonable opportunity of being heard.

It is clear that the sponsors of the contract farming that the

produce of the farmer has to be purchased at least at the minimum
support price if any MSP is prescribed by the Government. Even if no
price is written in the contract farming agreement still the sponsor of
contract farming will have to deposit a default money/security @ 15%
prevailing market rate at the time of agreement. This security will not
be released until 30 days after the agreement has expired and has been
satisfactorily performed. The officers of the Market Committee i.e. the

E.O.-cum-Secretary, Market Committee and the District Marketing

Enforcement

officer

shall

have

to

certify

such

satisfactorily

performance of the agreement between the parties. The provision of

15% security or default money would bind the sponsor to purchase the
produce of the farmer at the pre-agreed price. It would also increase
the bargaining capacity of the farmer. Moreover, any terms and
conditions of the agreement that shall be registered with the Secretary
of the concerned Committee can be changed only by the DMEO. So the
sponsors of contract farming has no power to unilaterally back out
from the agreement or change the terms and conditions of the
contract. He will also have to submit annual accounts to the concerned
Market Committees.
All these legal provisions are adequate to protect the
interests of the farmers. In any case the present situation is that the
Government of India/FCI are able to implement the Minimum Support
Price (MSP) regime primarily in case of two commodities only i.e. wheat
and coarse paddy whereas the Government of India has declared MSP
for more than 23 crops. Contract farming ensures that the farmer has
more choices and he can be sure of future returns/remuneration for
whatever he grows and contracts. His marketing concerns are also
taken over by the sponsors of contract farming. This would be even
more useful in case of cash crops like gwar, mustard, barley, maize etc.
which have a lot of industrial uses.
Seven commodity companies/firms have been registered as
contract farming sponsors with different Market Committees during
the last 7 years. But only 3 following companies are right now engaged
in contract farming in Barley, Potato, Basmati and Wheat:1. M/s United Breweries Limited, Patiala for growing Barley
2. M/s Pepsico India Holding India Pvt. Limited Gurgoan for
3.

growing Potato
M/s Boortmart India Holdings Pvt. Limited for growing Barley