Page 33 - Banking Finance May 2022

ARTICLE

The other party who are most affected are state produce at mutually agreed remunerative price framework
Governments who have been generating huge revenue in a fair and transparent manner and for matters connected
through the Mandis ,not only with regard to this they feel there with or incidental thereto".
that since agriculture and markets are state subjects, the
present Act of centre is a direct encroachment upon If we go by the status of contract farming in India it has
functions of states and against the co-operative federalism been prevalent in only some states like Punjab Haryana,
enshrined in constitution . Karnataka, Madhya Pradesh, Maharashtra, Gujarat and
Tamil Nadu. The agri-based and food industry, who are
Most affected are Punjab and Haryana, where in More than active in promoting contract farming as they require timely
85% of wheat and paddy grown in Punjab, and 75% in and adequate inputs of good quality agriculture produce.
Haryana, is bought by the government at MSP rates. These There were initial difficulties to the companies or sponsors
states are also most invested in the APMC system, with a to convince the farmers to this model and also the produce
strong Mandi network, a well-oiled system of arthiyas or was not as per the required quality and quantity, this led to
commission agents facilitating procurement, and link roads companies to think of backward linkage, where the
connecting most villagers to the notified markets and companies have started to provide necessary inputs like
allowing farmers to easily bring their produce for seeds saplings usage of modern technology regular
procurement. The Punjab government charges a 6% Mandi inspection of crops and provide advisory services on crop
tax (along with a 2.5% fee for handling central procurement) management.
and earns annual revenue of about Rs.3500 crores from
these charges. They also feel that there will be greater There are various advantages of contract
impact on the development activities as the state has been farming for the farmers such as
spending the venue generated through this mandis for 1. They get considerable production support in addition to
various development activities in the state.
the supply of basic inputs such as seed and fertilizer.
Sponsors may also provide guidance and support farmers
The expectation of every aggrieved party with this Act is
in land preparation, field cultivation and harvesting as
that Government has to give confidence to them and come
up with clear-cut guidelines that the interest of all will be well as free training and extension.
taken care. With regard to farmers assure them that MSP 2. Farmers access to some form of credit to finance
will remain and such assurance if made part of the Act, will production inputs. Arrangements can also be made with
generate lot of confidence in them. With regard to other commercial banks or government agencies through crop
section such as arthiyas or commision agents, who are loans that are guaranteed by the sponsor, i.e. where
fearing of losing their livelihood, assurance should be given the contract serves as collateral.
that they will be shown some alternative or will be made to 3. Use of new production techniques which are necessary
continue to be part of this mechanism in a better way and
State Governments who will be losing revenue from APMC/
Mandis have to be shown some avenue where the
generation of income can be substituted so that the
development of the states will not get affected.

Another act which was brought is
THE FARMERS (EMPOWERMENT AND PROTECTION)
AGREEMENT OF PRICE ASSURANCE AND FARM SERVICES
BILL 2020

The act "to provide for a national framework on farming
agreements that protects and empowers farmers to engage
with agri-business firms, processors, wholesalers, exporter
or large retailers for farm services and sale of future farming

BANKING FINANCE | MAY | 2022 | 33