The Tamil Nadu Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Bill, 2019, that has come into effect is seen as a major step towards making agriculture an entrepreneurial enterprise. The legislation, the first by a state, facilitates a foolproof mechanism to ensure farmers and those who own livestock get a fair deal.
Till now, farmers growing sugarcane and herbs and those who reared poultry have been getting into contractual agreements with private firms, but they had no safety cover. This Act is aimed at insulating marginal farmers and livestock owners from weather and market fluctuations, by ensuring a pre-determined pricing arrangement with farm-based industries. The corporate approach to farming is also intended to add quality to the produce.
But a section of experts argue that the contractual system helps farmers owning large tracts of land. In India, fragmentation has led to most farmers owning smaller tracts, making them vulnerable to market pressures. There is also the possibility of contractual firms exploiting marginal farmers with lower pre-fixed pricing. The Act provides for a regulatory body that will have the powers of a civil court in specified areas. But the ambit of its power is not clear. It must ensure private enterprises do not exploit the farmers’ vulnerability.
Farmers, too, may take advantage of contracting firms’ lack of understanding of agricultural techniques. They may also be tempted to leak the technical know-how provided by the contracting firm. The recent incident of a multinational company suing potato farmers in Gujarat for allegedly growing a variety of the tuber for which the firm claimed Plant Variety Protection (PVP) rights is a case in point.
This legislation may be seen as the government slowly distancing itself from addressing market dynamics in the agricultural sector by linking farmers directly with private players. Though agriculture can be made into a capitalist enterprise in which more people may want to invest in, the government should also be the fall-back cushion for farmers in this buyer-seller ecosystem.