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Odisha adopts contract farming system

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Odisha adopts contract farming system

What to study?

For Prelims and Mains: Meaning, features m benefits and regulation in India.

Context: The Odisha Government has promulgated an ordinance allowing investors and farmers to enter into agreement for contract farming, in view of the continuing uncertainties due to the pandemic.


  • The ordinance is aimed at facilitating both farmers and sponsors to develop mutually beneficial and efficient contract farming system.
  • It argued the new system will improve production and marketing of agricultural produce and livestock while promoting farmers’ interest.

Highlights of the ordinance:

Participants: The agreement will be entered into between the contract farming sponsor (who offers to participate in any component) or entire value chain including pre production, and the contract farming producer (farmers who agree to produce the crop or rear the livestock).

Recovery: The loans and advances given by the sponsor to the producer can be recovered from the sale proceeds of the produce. It cannot be realised by way of sale or mortgage or lease of the land in respect of which the agreement has been entered into.

No transfer of Land Rights: No title, rights, ownership or possession of land or premises or other such property will be transferred or alienated or vest in the sponsor or its successor or its agent.

Constitute Contract Farming and Services Committee: To review the performance of the contract farming and to make suggestions to the government for its promotion and efficient performance.

What is Contract farming?

The concept of Contract Farming (CF) refers to a system of farming, in which bulk purchasers including agro-processing/exporting or trading units enter into a contract with farmer(s), to purchase a specified quantity of any agricultural commodity at a pre-agreed price.

How is it regulated in India?

Regulated under the Indian Contract Act, 1872.

The Model APMC (Agricultural Produce Market Committee) Act, 2003 provides specific provisions for contract farming, like compulsory registration of contract farming sponsors and dispute settlement.

Ministry of Agriculture came out with a draft Model Contract Farming Act, 2018. The draft Model Act seeks to create a regulatory and policy framework for contract farming. Based on this draft Model Act, legislatures of states can enact a law on contract farming.


Prelims Link:

  1. What are APMCs? How they are regulated?
  2. Agriculture under Indian constitution?
  3. Overview of Model Contract farming act.
  4. What is an ordinance?

Sources: the Hindu.