Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 | Will farming agreement help in eliminating intermediaries? Decoded

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 received Presidential Assent on 24-09-2020.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020

What is the purpose of this Act?

This Act will provide a national framework for the farming agreements that protect and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed remunerative price framework in a fair and transparent manner.

Key Features:

Farming Agreement [SECTION 3]

A farmer may enter into a farming agreement, which may provide for the following:

(a) the terms and conditions for supply of such produce, including the time of supply, quality, grade, standards, price and such other matters; and

(b) the terms related to supply of farm services

Farmers can’t enter into a farming agreement in derogation of any rights of a share cropper.

The minimum period of the agreement: one crop season or one production cycle of livestock

Maximum period of the agreement: 5 years

To facilitate such agreement, the government may issue guidelines with model agreements.

Quality, grade and standards of farming produce [Section 4]

The terms in regard to Quality, grade and standards of farming produce will be mutually agreed and the said standards or quality, the grade shall be explicitly mentioned in the faring agreement.

Pricing Agreement [Section 5]

Pricing with regard to the purchase of farming produce shall be mentioned in the agreement.

In case the above-stated price is subject to variation, the agreement shall explicitly provide for the following:

(a) a guaranteed price to be paid for such produce;

(b) a clear price reference for any additional amount over and above the guaranteed price, including bonus or premium, to ensure the best value to the farmer and such price reference may be linked to the prevailing prices in specified APMC yard or electronic trading and transaction platform or any other suitable benchmark prices

The method of determining the stated price should be mentioned in the agreement.

Sale or purchase of farming produce [SECTION 6]

Sponsor should take the delivery of farming produce on the agreed time and delivery date.

At the time of accepting the farm produce, its the responsibility of the farmer to inspect the same as afterwards, he shall have no right to retract from acceptance of such produce.

Farming Agreement relating to seed production: Sponsor shall make payment of not less than 2/3rd of the agreed amount at the delivery time; Remaining amount after due certification but not later than 30 days of delivery.

Other cases than seed production: Payment to be made at the time of accepting the delivery of farming produce and issue a receipt slip

Exemptions with respect to farming produce [SECTION 7]

Once a farmer enters into a farming agreement, he shall be exempted from the State Act with regard to regulation of sale and purchase of farming produce.

Essential Commodities Act will also not be applicable, if the farm produce is purchased under the farming agreement.

Sponsor prohibited from acquiring ownership rights or making permanent modifications on farmer’s land or premises [SECTION 8]

Farming Agreement shall not be entered for the following purpose:

  • any transfer, including sale, lease and mortgage of the land or premises of the farmer
  • raising any permanent structure or making any modification on the land or premises of the farmer, unless the Sponsor agrees to remove such structure or to restore the land to its original condition, at his cost, on the conclusion of the agreement or expiry of the agreement period,

Linkage of farming agreement with insurance or credit [SECTION 9]

Farming Agreement is to be linked with insurance or credit instrument under any Central or State Government Scheme.

Alteration of Termination of farming agreement [SECTION 11]

At any time, the farming agreement can be either altered or terminated with mutual consent of the parties.

Registration Authority [SECTION 12]

State Government may notify a registration authority to provide for an electronic registry for that State that provides facilitative framework for registration of farming agreements.

Dispute Settlement [SECTION 13]

Farming Agreement should provide for a conciliation process and formation of the board of conciliation.

Mechanism for Dispute Resolution [SECTION 14]

Where, the farming agreement does not provide for conciliation process or the parties to the farming agreement fail to settle their dispute under that section within a period of thirty days, then, any such party may approach the concerned Sub-Divisional Magistrate who shall be the Sub-Divisional Authority for deciding the disputes under farming agreements.

Section 14 lays down the process of dispute resolution, please read the Act to understand the detailed process.

Other than the above stated Key Features, the Act consists of a total of 25 Sections which may be read in detail in the following copy of the Act:

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