Contract farming, which helps farmers reduce the risks of production and marketing, thrives in several states with governments making suitable legal provisions.

Contract farming is now practiced in various parts of the country for crops like sugarcane, cotton, tea, coffee and such crops, Minister of State for Agriculture Kanti Lal Bhuria told parliament today.

It is a system in which farmers grow selected crops under a buy-back agreement with an agency engaged in trading or processing. Such farming is reportedly beneficial to the farmers as it reduces the risk of marketing and production.

In 17 States and Union Territories, provisions have been made in the concerned Agricultural Produce Marketing Regulation Acts for providing a legal framework for contract farming. Besides, in seven states there are no regulatory laws preventing such by-back arrangements. In other States too various forms of contract farming exist.

The exact extent of land covered under contract farming in the country is not known. 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.

Ministry of Agriculture formulated the Act in 2003 and circulated to State governments for considering suitable amendments in their concerned Act by adopting those provisions.

The Model Act circulated by the Ministry is suggestive in nature, and, since Agriculture is a State subject, it is for the State governments to decide on the implementation of the contract farming arrangements in their state, the minister said.