Farmers Agreement on Price Assurance and Farm Services Act 2020 (it is basically Contract Farming Agreement)

▪️Salient features: 

✅ The farmers (including FPOs) can enter into farming agreements with buyers (also called Sponsors) for sale of farm produce (including dairy and livestock etc.) and provision of  

farm services (like supply of seeds, inputs, machinery, technology by buyers to farmers) 

✅Farming Agreements entered under this Ordinance between farmer (including FPOs) 

and buyer shall be exempt from the application any State Act 

✅ Minimum period of the agreement will be one crop season and maximum five years 

✅The acceptable quality and grade may be provided in the agreement to be signed between the farmer and the buyer 

✅The price to be paid to the farmer for the produce should be mentioned in the farming  

agreement, and in such case where price is subject to variation then it should have two parts. One is a guaranteed minimum price component and an additional amount linked  

to APMC prices, or any electronic trading platform or any benchmark prices. 

✅The buyer should make payment of agreed amount at the time of accepting the delivery of farming produce 

✅ Any stocking limit issued under Essential Commodities Act 1955 or any other Act shall  

not be applicable to the produce purchased under this agreement 

✅This farming agreement can be linked with insurance or credit instrument to ensure  

risk mitigation or flow of credit to the farmer or buyer 

✅ Every State may notify a ‘Registration Authority’ to provide for electronic registry of registration of farming agreements 

✅Every farming agreement shall provide for a conciliation process and formation of a  

conciliation board to resolve the disputes 

▪️Impact: 

✅ This was earlier prohibited by most of the states, so it has given freedom to farmers 

✅ Farmers cannot be forced to sign the agreement for long time (max 5 years) and will  

prevent exploitation of farmers 

✅As the prices are mentioned in the agreement, farmers will be protected of their income 

✅ Farmers will be ensured of timely payment 

✅Buyers and sellers (farmers) can sign agreement for sale of produce without any hiccups 

as the terms and conditions of the agreement are standardized by Govt. 

✅A dedicated State agency (Registration Authority) will help both farmers and buyers and no one can be denied in future of the terms and conditions signed in the agreement and will minimize disputes.

✅Timely settlement of disputes outside the courts will the farmers

#economy 

#agriculture