Indian state to legalise contract farming

Uttarakhand, a state located in northern India is likely to pass the Agriculture Produce Marketing Committee (APMC) Act, which allows companies to get into contract farming in the state and set up primary wholesale markets.

Agriculture Minister Trivendra Singh Rawat on Friday (May 28) said Chief Minister Ramesh Pokhriyal Nishank has agreed to give the final nod to the proposal at the next Cabinet meeting.

The move follows the green signal being given by a sub-committee of the state Cabinet, which approved the draft bill for the APMC Act. A four-member expert team of agriculturists, which toured states like Andhra Pradesh and Karnataka to study the impact of the APMC Act there, also gave its approval.

The APMC Act contains provisions for setting up private mandis (primary wholesale markets), enabling contract farming and constitution of a regulatory authority to ensure a level playing field between government-controlled and private mandis.

Private mandis would mean cutting out extra cess such as the mandi cess and other charges, reducing final costs for consumers and buyers and allowing better gains for farmers, top officials here said.

Both Reliance and Indian Tobacco Company Limited (ITC) have shown interest in contract farming in the state. "We have also given permission for contract farming in the draft bill," said Rawat.

In effect, the new APMC Act would mean direct purchase of commodities by trading and corporate houses from farmers at market-defined prices, either through individual purchase contracts or from farmer consumer markets.