Contract farming, which is being practiced in various parts of the country for crops like sugarcane, cotton, tea, coffee, etc, enables farmers to grow selected crops under a buy-back agreement with an agency engaged in trading or processing.

Minister of state for agriculture, Kanti Lal Bhuria told the Rajya Sabha said in a written reply that by now relevant provisions have been made in the Agricultural Produce Marketing Regulation Acts in 17 states and union territories, for providing a legal framework for contract farming.

Bhuria disclosed that in seven states and union territories there was no regulatory framework preventing such buy-back arrangements, various forms of contract farming do exist in practice.

However, he said that the exact extent of land covered under contract farming in the country is unknown. However, he added, contract farming was reportedly beneficial to the farmers as it takes care of price risk and also helps in mitigating production risk.

Bhuria also said that in order to make contract farming arrangements beneficial for the farmers, as well as, the sponsoring companies under a legal framework, suitable provisions were included in the Model Agricultural Produce Market Committee (APMC) Act formulated by the ministry of agriculture in 2003 and circulated to state governments for considering suitable amendments in their concerned Act by adopting those provisions.

The act suggestive in nature, and, since agriculture is a state subject, it is for individual state governments to decide on the implementation of the contract farming arrangements in their states.