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Punjab Agro Industries Corporation Limited

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Contract Farming

Objective:
Deleterious effects of monoculture of Wheat & Paddy called for diversification of Agriculture. The Govt. of Punjab has thus focused on diversification through Contract Farming of alternate crops that are remunerative, less water intensive and more ecofriendly.

Punjab Agro Foodgrains Corporation has been designated as the Nodal Agency for promoting/coordinating the activity of Diversification of Agriculture in the State of Punjab.  PAFC provides/ arranges high yielding varieties of seeds from reputed Companies provide technical supervision, follow-up on Agronomic Practices and assured buyback at Govt. of India MSP/agreed price or market related prices depending upon the crop.  What is Contract Farming?

  • Contract Farming is an agreement between Farmers and Sponsors (Government Bodies/Corporates /Processors/Individual Entrepreneurs) to co-ordinate and promote production and marketing of agricultural produce.
  • The Farmers produce quantity and quality as per sponsors requirements and the Sponsors provide support in terms of Agri-inputs, credit, improved farm practices, markets and fixed/market linked price for procurement and marketing of produce.
  • Contract Farming is essentially demand/market driven unlike traditional farming that first produces a commodity and then looks for its market.

For a single crop commodity, a simple Centralized Model with a single sponsor could suffice, whereas for Multicrop Multiyear contract Farming like the one adopted by the PAFC, a Multipartite Model involving a variety of organizations,  frequently including statutory bodies,  is followed. The quality specifications of crops are mentioned in the contracts signed with the farmers which are decided by Govt. of India or in consultations with buyers/processors and specified contracted price for buyback of the produce so that the farmer’s interest is taken care.

ACHIEVEMENTS
In the first phase Punjab Agro has identified crops like Maize, Sunflower, Hyola (Hybrid Rapeseed), Basmati, Durum wheat, Barley, Moong and Guar for contract cultivation. PAFC is also the procurement agency for NAFED for its contracted crops of oil seeds & pulses at MSP announced by Govt. of India. PAFC is also the procurement agency for coarse grains viz. Barley, Maize etc., on behalf of FCI at MSP. The season wise crops promoted under contract farming were: -

RABI CROPS:

  • Hyola (Hybrid Rapeseed Mustard)
  • Barley
  • Spring  Maize
KHARIF CROPS:
  • Maize
  • Basmati Paddy

Punjab Agro Foodgrains Corporation started the programme with an area of 9029.36 hectare during Rabi 2002, in Hyola, Sunflower, Malting Barley and Maize.  During 2003-04 an area of 75676.34 hectare, during 2004-05 an area of 99148.14 hectare, during 2005-06 an area of 87412.24 hectare and during 2006-07 an area of 102385.63 hectare has been brought under the identified Rabi and Kharif crops.  The area under the programme has been going up. Substantial jump in Minimum Support Price (MSP) of Wheat and Paddy may have its adverse impact on the trend witnessed so far.

EQUIPMENT/MACHINERY DEVELOPED FOR CONTRACT FARMING
In order to promote mechanization of crops promoted under contract farming, new equipments e.g. Soil Chisler, Maize Planter, Dehusker-thresher, Knap-sack sprayer 13’ Boom for Maize Crop and Paddy Pre-cleaner, Moisture meter for Paddy Crop have been developed/purchased.  Similarly, PAFC have also developed certain equipments like Hyola Rapeseed Direct Planter, Hand Pulled Nursery Seeder, Bare Root transplanter and Hyola Sweather(Tractor Operated) for Hybrid Rapeseed Mustard (Hyola) Crop.

TAX CONCESSIONS
The state government encouraged Contract Farming in a big way and on its directions Punjab State Agriculture Marketing Board reduced taxes and levies on Contract Farming :

Market fee from 2.0 % to 0.25 %.
Rural Development fee from 2.0 % to 0.25 %.

The above said concession was applicable upto 30-09-2010.


ASSURED BUYBACK/MARKETING
With introduction of new crops most critical aspect is to win faith/confidence of the farmer, which is being done by assuring him of guaranteed buy back of his produce.  The farmer is given the option for fixed price/market related price contract for buy back. With our intervention in market of assured buy back the non-contracted farmers have also started getting better prices than prevailing in past many years. Our presence in market gives an upper hand over other interested buyers for the crops grown under Contract Farming other than wheat and paddy. 

PAFC has not experienced any hindrances in marketing the contracted crops as Barley is purchased by PAFC in association with UB.

 

Area of different crops under Contract Farming Scheme in Punjab  (Area in acres)
 
Year/District Hyola Sunflower Durum
Wheat
Malting
Barley
Moong Basmati
pure
Maize Other crops (If any) Total
Guar Castor

Mentha/ Vegetables

Potato Seed
2011-12
--
--
--
11961
--
--
--
--
--
--
--
11961
2012-13
--
--
--
14852
--
--
--
--
--
--
--
14852
2013-14
--
--
--
6980
--
--
--
--
--
--
--
6980
2014-15
--
--
--
5885
--
--
--
--
--
--
--
5885
2015-16
--
--
--
2388
--
--
--
--
--
--
--
2388
2016-17
--
--
--
2067
--
--
--
--
--
--
--
2067

*PAFC has since 2011-12 only undetaken contract farming of Barley. <br><br>

 
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