- To form a national framework for farming agreements to protect farmers in dealing with buyers, companies, retailers, wholesalers etc; To build a mutually remunerative price framework
- Dealing in a fair and transparent manner
- The definition of electronic trading and transaction platform: Same definition in the FPTCPF Bill, so whether platform be set up in this Act or the other is not clear. Secondly, it is defined in a manner to suggest that the platform is dedicated for trading in farm produce. What if the farmers were to sign up with say Amazon or Flipkart. Whether they will amount to a platform as per definition or whether they will have to create a separate platform for signing up farmers for trading in farm produce is not clear.
- Important points on the farming agreements:
- Written agreement: Would have been better to prescribe written agreement in the language or script which the farmer who is supposed to be a party to it can read or understands if its read out to him;
- Third Party: Third parties may be an aggregator or farm service provider as per Section 10;
- Types of agreements: i. agreement to buy output of a produce more like an option agreement, ii. agreement to provide farm services and bear risk of output and pay for the output, more like an underwriting agreement iii. and others
- Probably the first time ‘force majeure’ has been defined in a statute. Includes terms like ‘bad weather’ craves rethinking. Epidemic has been included.
- Farming services has not been defined.
- Terms governing Farming Agreements
- Agreements will provide for terms of supply, pricing, standards and other terms;
- Legal compliances for farming services on Sponsor;
- Rights of a share cropper or a tiller not to be derogated;
- Term of the agreement: One season/one production cycle of a livestock up to a maximum of five years or such other maximum period as has to be mutually decided between farmer and Sponsor and set out in the agreement;
- Government will prescribe model agreements;
- Mutually agreed quality, grade, standards to be prescribed, will be assessed at the time of cultivation and delivery by independent assayers;
- Pricing: i. to be set out as a fixed price, or ii. where there is a variation, delivery to be taken at farm gate. Seed production, 2/3rds on account payment and balance 30 days from delivery. In case of others, at the time of delivery and issue receipts slips.
- State Acts for regulation of sale purchase do not apply to Farm Agreements under this Act. Therefore, Sponsor not bound by MSP and Farmer not bound by Essential Commodities Act or control orders. Choice with farmer, whether to sell at MSP or to Sponsor.
- Dispute resolution – Conciliation as per terms of the agreement consisting of reps of parties, needs to be fair and balanced. Settlement to be binding. Disputes to be referred to Sub-Divisional Magistrate. Where agreement not as per terms of the Act – no order for recovery of amount shall be passed against the farmer. Penalties – non payment of dues by Sponsor – 1.5 times of amount due. For farmers – actual amount due. Appeals to Collector or Additional Collector nominated by the Collector.
- Jurisdiction of civil courts ousted.
- Act to have overriding effect on other laws. Farming agreements under any other law prior to the Act shall continue to be in effect for the balance term of such agreements.