Chandigarh: The Punjab government will come out with a law on contract farming, binding on both companies and farmers to prevent any deviation by either of the parties from the terms of agreement.

"The draft of the Contract Farming legislation is ready and it will soon be sent to the cabinet for its approval," a senior official said on . Among objectives of the new Contract Farming Act, the main intention of the law will be to stop any sort of exploitation of farmers by unscrupulous companies by not adhering to the terms of agreement, official sources said.

The company which fails to honour the agreement or does not procure crop at an agreed price will face the penal provision of the law. Similarly, farmers will also be required to honour the terms of agreement, they said.

There have been a lot of cases in the past in which various companies either refused to lift crop or pay the agreed price to farmers in the absence of any effective dispute settlement mechanism, officials said.     

Though the contract farming is being promoted to encourage farmers to diversify into new crops, Punjab has not seen much success in contract farming in the state. Area under contract farming went down from 2.38 lakh hectares in 2007-08 to 84,746 acres in 2010- 11. For 2011-12 year, an area of 50,250 acres was projected under contract farming in Punjab.

Though the companies have welcomed the move of state government to bring out the legislation on contract farming, a few of them have expressed apprehension whether the law could be enforced on growers in the wake of farmers being the major vote bank for political parties.

At present, several companies like Pepsi Foods, UB Group, state owned Markfed, Technico Agri, Pagro Foods are engaged into contract farming in the state for basmati, barley, potato seed, vegetables etc.     

Appreciating the move of state government in coming out a law on contract farming, Pagro Foods MD, N S Brar said, "The new legislation will safeguard the interest especially of small and marginal farmers."

Pagro Foods is carrying out contract farming over 3,000 acres of land in eight districts of the state and is growing vegetables including green peas.


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