Government plans to take out contract farming provision from model APMC Act of 2003

The BJP-led NDA government is considering to take out the provisions of contract farming from the model APMC Act of 2003 while including all sources of farmer income into the model Act as it gears up to revise the the decade old model Act which has failed to yield desired results.

Instead, the agriculture ministry in consultation with the states and government's think-tank NITI Aayog will come out with a separate Contract Farming Act, on the lines of Punjab and a fresh draft of the model APMC Act to roll out the series of reforms proposed by the Aayog for the otherwise politically sensitive agriculture sector.

The move comes after several states expressed reservations on certain provisions of the existing Act and is part of the government's initiative to double the farmer income in five years.

"We will re-look at the model APMC Act and come out with a fresh Act in three months to completely liberalise the sector in a way that it addresses concerns of all states," NITI Aayog member Ramesh Chand said after the first national consultation with states on agriculture reforms.

According to Chand, the agriculture sector needs entry of private players that co-exist with APMC mandis to induce competition in the sector, which in turn would fetch better returns to farmers.

Some states have apprehensions on the contract farming provisions while some have reservations on the proposal of single levy while states like Punjab fear revenue loss under the existing APMC Act. "We have taken the views of all states and would re-work the new model APMC Act accordingly to take all states on board," Chand said.

The original blueprint laid out by NITI Aayog and approved by the PMO had proposed liberal contract farming, direct purchase from farmers by private players, direct sale by farmers to consumers, single trader licence, single point levy of taxes and taking fruits and vegetables out of the mandi laws as part of agriculture marketing reforms that could unshackle the sector in near future.

As part of a three-pronged strategy to usher in reforms in agriculture in the short run, NITI Aayog has proposed land leasing and forestry reforms along with agriculture reforms to push the sector onto a higher growth trajectory.

The Aayog is pushing states to change their land lease law in line with the central legislation to suit their needs besides liberalizing regulations governing forestry on private land.

“States have restrictions on felling of trees as well as on marketing for which a transit permit is required. The Aayog is advocating liberalising these guidelines both at the Centre and state levels to allow forestry on private lands,” Chand added.

The agricultural growth in India has been nearly stagnant over the last two or more decades in the absence of any major reforms in the sector and bad monsoons takes it down further below as has been the case in the last two years that saw below normal monsoon.