The agriculture ministry (1) is set with its detailed operational plan and guidelines to implement the new system that allows farmers and farmer producer organizations (FPOs) to enter into supply contracts with corporate entities (sponsor) directly.
This comes after one month since Narendra Modi promulgated The Farmer Agreement (Empowerment and Protection) on Price Assurance and Farm Services Ordinance 2020.
This will help limit a farmer’s liability, as per the guidelines (in case of breach of contract), to the extent of advance given or cost of farm services provided to farmers by the sponsor.
Guidelines protecting & empowering farmers
The guidelines have been designed to empower and protect the farmers in India. In case a sponsor fails to take delivery of the pre-decided produce within a given timeframe according to the agreement, the farmer will hold the right to sell off his produce to a third party.
The farmer may then claim the difference between the conformed price with the sponsor and the price received by the farmer on selling the produce.
Additionally, a penalty of up to 150% of such a claim can be imposed by the sub-divisional authority authorized to look into disputes.
The guideline has provided flexibility in the pricing agreement between the contracting parties that include the farmer and the sponsor. While the produce must be bought at a pre-decided price in the farming agreement, the parties can link it to the market price, provided, a cap on the minimum price guaranteed is specified. Overall, multiple other facets have been planned to be introduced that would help protect and empower farmers.