Revisiting the deliberation on the three Farm Laws | Part 3

Singhu Border, January 2021

26 May 2021, would mark the completion of six months since the farmers’ have been staging protest demonstrations on the borders of Delhi. In these six months, they have undergone change of seasons, loss of their loved ones, braved extreme weather conditions, and a change of crops on their fields- yet, the cause they are fighting for remains unchanged, the three farm laws continue to remain. Farmers continue to resist and demand for their repeal with the same high spirits they started off with.

In this piece, I attempt to address the concept of Contract Farming and understanding what the new law would mean for the farmers.

Firstly, starting off with the basic yet the most essential question: what is contract farming? Amidst the wide range of definitions available for the concept, the most widely accepted definition is : “Contract farming is agricultural production carried out according to an agreement between farmers and a buyer, which places conditions on the production and marketing of the commodity”. (Source: Food and Agriculture Organisation)

As is understood by the very name of the concept, a contract or agreement acts as a mediator between the producer, i.e, the farmer and the buyer, which is mostly the corporates. Of the three farm laws, the second- The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, talks about contract farming. There also exist different models of Contract Farming, which are adopted by different companies around the world from time to time. [Since this isn’t the focus of my article, I won’t be talking about these models in detail, read more here.]

What this form of agreement entails is that companies reach out to multiple farmers and supply them with the inputs required in cultivation, logistical help; in return of which, the farmers are to produce the company’s required and preferred crop. The companies also tend to quote a price for the crop in the very beginning- thus, giving the farmers assurance to receive the fruits of their labor.

However, things on the ground are never as simple as they seem to be in theory. And this is where comes the misery that contract farming brings to farmers- all of which is established based on the experiences of the average Indian farmer. It is a relatively well-known fact that Contract farming takes away the independence of the farmer to cultivate whatever they wish to- farmers end up becoming slaves to the corporates. It requires the farmer to take a greater risk- especially when s/he is required to cultivate crops which they haven’t cultivated prior to that contract.

Most farmers tend to opt for contract farming in the view of it appearing to guarantee a stable and assured income. However, this hope often ends up being crushed due to the ill-natured and profit-making intentions of the companies. The farmers are well aware of the manipulative nature of the corporations and that is precisely why they are hesitant from getting into agreements with them. This is evident from the past cases as well. In Punjab, when contract farming was introduced in 2002, most of the times the regulatory agency-Punjab Agro Foodgrains Corporation (PAFC), ended up buying the produce of the farmers since the companies never ended up fulfilling the agreement’ thus, simply deceiving the farmers.

It is imperative for us to realise that the current opposition to the laws doesn’t come without any reason. The farmers have already suffered a lot at the hands of the corporates, even when the big companies did not have legal protection. Now, with these laws- which practically extend government’s support to the corporates, the farmers fear that there will be no end to the corporate’s exploitation. And in view of the cases available to us, we know that the farmers’ fears are justified.

By introducing contract farming in 2002–03, Punjab became the first state to introduce such a legislation. However, the unsuccessful nature of the scheme led the government to discontinue it after ten years. The stark reality is that the concept seems all very appealing in theory, but they have only led to miseries for the farmers.

Companies mostly don’t end up paying the farmers as was promised at the time of agreement- citing reasons of the produce not meeting the required quality. This ultimately leads to the corporates making several cuts in originally guaranteed price. One thing that the merciless corporates fail to recognise is that agriculture is a profession dependent on nature, the farmer is practically surrendered to the changes in nature and can hardly do anything in front of it.

In the United States, only 8.1% of the total farms make use of contracts or undertake contract farming. This is an important statistic in view of the fact that we, as Indians, love to draw comparisons of ‘revolutionary’ policies in our country to those in America. Such statistics simply indicate the lack of favorability of contract farming among farmers around the world. Contract farming, in turn, ends up oppressing the already meek farmer even more- since the farmers lose all their bargaining capacity in front of the corporations.

Pranaya Kumar Swain and Bhubaneswar Chandan Kumar in their study, ‘Corporate Farming vis-a-vis Contract Farming in India: A Critical Perspective’ highlight, “Most of the contracts are completely biased towards the buyer company, with the farmers becoming completely dependent on the contracting party. Crops being focused for non-local markets related to the processing company, the farmer loses his local market and is effectively tied to the contractor.” (Swain, Kumar, 2020) In addition to this, contract farming tends to unduly favour the large farmers due to the large expanse of land, ability to produce greater amount of required crops and better capacity to handle risks. Therefore, the small and medium farmers are yet again, left at the margins.

What also needs to be focused upon is the grave injustice to farmers due to this law. That is, in case of any dispute- the farmers can’t even approach a civil court for resolving the same, higher courts therefore, will remain a distant dream for them. The law has stated that for disputes arising in the agreement, the highest authority that the farmers can approach is the Sub-District Magistrate or the Appellate authority. The law takes away from the famers, even their legal right of approaching the courts.

Also, a mostly ignored question but an equally important one to be dealt with is that of what would happen to the earnings of the farm labourers with the coming in of corporate farming. Since contract farming entails the companies providing the inputs for production, it also automatically becomes more mechanised in nature. Thus machines come in to replace the work of the farm labourers. Over the last decade, the number of landless farm labourers has only increased in the country, with the current tally at 144.3 million. (Source) It is equally important to discuss all these implications as well, even though these might not seem as the direct results of the laws- it is to be kept in mind that these laws will definitely affect every tier of the sector.

All of this is to suggest that Contract farming is a tried and tested method. And this trial has not yielded benefits for a large class of farmers, especially the small and medium farmers. With the application of this law, it only extend and strengthen the legal protection to the corporates. What is needed is not a total exit of the Government or the protections provided by the government, but a reformation within the system.


In this short series of articles that talk about the three Farm Laws, I have attempted at highlighting the *major* problems in the laws. There are greater damages that these laws intend to do and for us to understand that, it is important that we are stay informed and alert. Aware and questioning citizens is what any government fears the most. If we collectively wish for the success of the Farmers Protests- strong grasp of the issue along with a undeterred determination/dedication to the cause is the only guiding torch that we have. Our people certainly have strong resolve, it is important that we do too.



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