The Working Group set up by the Planning Commission has recommended promotion of contract farming, Parliament was informed on Tuesday.
The group of the sub committee of the National Development Council on agriculture headed by Chief Minister of Punjab looked into the issues relating to marketing reforms, contract farming and agro-processing sector, Minister of State for Agriculture Arun Yadav said in a written reply in Lok Sabha.
It submitted its report in May 2007, he added.
Yadav said that the likely benefits of contract farming are assured market, extension and input services to the producer, while ensuring assured supply of desired quality produce to contract farming sponsors.
Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Maharashtra, Orissa and Punjab are the states where crops are covered under contract farming, the minister added.
Contract farming involves cultivating and harvesting for and on behalf of business establishments or government and forwarding the produce at a pre-determined price.
In return, the contracted farmers are offered high price against their farm produce.
On the issue of regulation and intermediation mechanism for monitoring, Yadav said that the Model Agricultural Produce Marketing (Development and Regulation) (APMC) Act, 2003 was circulated by the agriculture ministry to the states/Union Territories for its adoption.
The model APMC Act provides for registration, recording and dispute settlement mechanism for contract farming, he said.