This Act gives flexibility to farmers to engage in contract farming with agri-business firms and large retailers at mutually agreed upon prices in a fair and transparent manner.
Section 2 enlists key terms of the Act such as “APMC Yard”, “company”, “electronic trading and transaction platform”, “farm services”, “farming agreement”, “trade and commerce agreement”, “production agreement” etc. and defines them in the context of this Act.
Section 3(1) states that a farmer can enter into a written agreement for a farming produce and such an agreement will relate to terms and conditions for supply of that farm produce and terms related to supply of farm services.
Section 3(2) states that such farming agreements cannot be entered in contravention of any rights related to share-cropping.
Section 3(3) states that minimum period of such a farming contract would be for a period of one cropping session and the maximum period will be five years. If any crop requires a longer contract period, it has to be mutually agreed upon by the farmer and the trader and explicitly mentioned in the contract.
Section 3(4) states that Central Government may issue model guidelines and model farming agreements to help farmers in entering into agreements.
Section 4(1) states that parties entering into a farming contract may agree upon mutually agreed qualities and standards of farming produce.
Section 4(4) states that such mutually accepted qualities may be monitored and certified during third party quality checkers.
Section 5 states that the price of the farm produce that the farmer is supposed to receive has to be clearly mentioned in the agreement.
Section 6(1) states that it is the responsibility of the sponsor to collect the produce from the farmer within the agreed time and ensure that all preparations for such a delivery is made within the proper time.
Section 6(2) states that the sponsor can inspect the quality of the produce before taking delivery, but if he fails to do so, it will be assumed that quality check has already been done by the sponsor, and he cannot claim for a quality check post-delivery.
Section 6(3) states that if an agreement relates to seed production, the sponsor has to make at least two-thirds of the payment during the time of delivery and the remaining amount after due certification, but not later than thirty days.
Section 7 states that any farming contract under this Act will be exempted from application of any respective state Acts related to regulating the purchase and sales of produce. Further, any stock limit obligations will not be applicable to contract farming produce.
Section 8 states that sponsors cannot enter into farming agreements for purchase, sale and mortgage of assets of farmers. Further, sponsors cannot raise any permanent structures on the lands of farmers unless and until they guarantee to remove any such structure at the end of the agreement and return the land to its original condition.
Section 9 states that farmers’ agreements can be linked with insurance schemes and credit instruments so that risk of farmers can be reduced.
Section 10 states that aggregators like Farmer Producer Organization can also become a part of farming agreements.
Section 11 states that with mutual consent, parties to an agreement may alter or terminate an agreement, after entering into the agreement.
Section 12 states that State Governments can set up a Registration Authority to provide for electronic registration of farming agreements.
Section 13(1) states that farming agreements will have a conciliation board having representatives of both parties to settle disputes arising out of an agreement.
Section 13(3) states that in case a settlement is reached, a memorandum of settlement will be drawn accordingly and signed by the parties. Such a settlement will be binding on both the parties.
Section 14(1) states that in case parties fail to reach a settlement through conciliation boards, they may approach the sub-divisional magistrate for settlement of the disputes.
Section 14(3) states that any order regarding settlement given by the sub-divisional magistrate shall have the same effect as that of a civil court decree and be enforceable in the same manner.
Section 14(4) and 14(5) states that parties unhappy with the settlement given by the sub-divisional magistrate may reach out to the collector, who has to dispose off the case within 30 days.
Section 16 states that Central Government may issue directions to state governments from time to time, for the effective implementation of this Act.
Section 18 states that no central government, state governments, or public servants can be prosecuted for attempting to implement the provisions of this Act.
Section 24 states that Central government may introduce new provisions to remove any difficulties which may arise while implementing this Act.