Page 22 - Putting Farmers First
P. 22
IMPACT OF CONTRACT
FARMING LAW
Contract farming acts as a form of price assurance.
Typically, in contract farming, the agreement is
made between the farmer and buyer even before
the crop is sown. Farmer already knows what MSP
he can get for his crop. So, the farmer will negotiate
a price above the MSP.
The MSP will actually begin to act as a starting price
of negotiation for the farmers, empowering them.
The price in the agreement is only the minimum
price the farmer can get. If the contractor makes a
better profit than expected, farmers will be entitled
to get a bonus over and above the minimum price
they had bargained for.
This means, even if there is a loss for the contractor
while reselling/value addition, the farmer still
gets an assured price. But if there’s a profit above
expectations, the farmer will also get a share of it.
15 | Putting Farmers First
