He continued, “We were fortunate to introduce contract culture through PepsiCo. The only goal was to increase farmers` incomes and get local jobs for young people at the processing plant. It worked as expected at first, people were hired, and farmers` incomes went up. The Contract Cultivation Act provides a framework for farmers to enter into direct contracts with those who wish to purchase agricultural products. So far, a farmer in most of the country has not been able to sell his products directly to consumers or food processors. Jakhar added that Tomar should be “cornered” to Rajya Sabha for commenting on the contract culture law. “Our Rajya Sabha members should have been more active and he should have been hoisted by his own firecracker for the BJP after first bringing this law to Punjab and then trampling on the contents of it,” he said. In Indian government terminology, contract farming means that a private company gets a farmer to cultivate his own land, according to a report on Gaon Connection. The company tells the farmer what he needs to grow and at what price he will buy the harvest after harvest. It provides the seeds, fertilizers and all the technologies needed for cultivation. If the crop is lost, the company bears the burden.

If there is a dispute between the seller and the buyer, it must be decided by the local subdivision judge. In April this year, the Punjab Assembly passed the Punjab Contract Farming Act. The new law provides a legal framework to govern the contract between the buyer and the farmer through a legally enforceable agreement. In addition, the state government will now control the purchase, sale, storage and processing of agricultural products. Unlike other states that have amended the Agricultural Products Market Committee (AMCPA) Act to support contract farming, Punjab preferred to introduce a new law. Jyotika Sood talks to Sukhpal Singh about the law and its implications. Singh is Chairman of the Centre for Management in Agriculture at the Indian Institute of Management, Ahmedabad, and has been conducting research in the field of contract farming in the country for over 16 years. He has also worked for international agencies such as FAO, ILO and World Bank. We also spoke to officials who were instrumental in introducing contract farming in Punjab to understand the different aspects, pros and cons.

Pandey was replaced at Punjab Agro Industries Corporation by Gokul Patnaik. He said: “Contract farming is extremely beneficial for farmers and businesses,” he said. “Farmers have peace of mind that their crops are bought by the company, and the company, especially food processors, have a clear idea of how much raw material they can source when needed. For example, the PepsiCo plant needed 600 tons of tomatoes a day. The amount had to be accurate as weight differences were an issue. The most important thing is the trust between the farmer and the company, because they depend on each other. The CFPP had started contract farming in 2002 with 22,312 acres (9,033 hectares) of land and had managed to increase the area under FC by 10 times over the few years to 2.50 lakh acres (more than one lakh hectare), then this area was reduced to only 11,971 acres (4846 hectares) in 2011-12 at the time of the program`s closure. While this is the first time parliament has passed contract farming laws, it is not India`s first approach to contract farming. The governments of Punjab and Gujarat have already experimented with contract farming, and their experience can help us assess the potential impact of the new law in other parts of the country. “Agreement means the contractual cultivation agreement between the buyer who proposes to purchase the product and the producer who agrees to produce the crop under which the production and marketing of an agricultural product is carried out in accordance with the conditions set out in the agreement,” states clause 2 B of the Bill (now the Act). In fact, it was Captain Amarinder Singh who, during his first term as Prime Minister of Punjab in 2002, introduced contract cultivation to wean farmers off the wheat-rice cycle. .