Recently, the Ministry of Agriculture released a draft Model Contract Farming Act, 2018.  The draft Model Act seeks to create a regulatory and policy framework for contract farming.  Based on this draft Model Act, legislatures of states can enact a law on contract farming as contracts fall under the Concurrent List of the Constitution.  In this context, we discuss contract farming, issues related to it, and progress so far.

What is contract farming?

Under contract farming, agricultural production (including livestock and poultry) can be carried out based on a pre-harvest agreement between buyers (such as food processing units and exporters), and producers (farmers or farmer organisations).  The producer can sell the agricultural produce at a specific price in the future to the buyer as per the agreement.  Under contract farming, the producer can reduce the risk of fluctuating market price and demand.  The buyer can reduce the risk of non-availability of quality produce.

Under the draft Model Act, the producer can get support from the buyer for improving production through inputs (such as technology, pre-harvest and post-harvest infrastructure) as per the agreement.  However, the buyer cannot raise a permanent structure on the producer’s land.  Rights or title ownership of the producer’s land cannot be transferred to the buyer.

What is the existing regulatory structure?

Currently, contract farming requires registration with the Agricultural Produce Marketing Committee (APMC) in few states.  This means that contractual agreements are recorded with the APMCs which can also resolve disputes arising out of these contracts.  Further, market fees and levies are paid to the APMC to undertake contract farming.  The Model APMC Act, 2003 provided for contract farming and was released to the states for them to use this as reference while enacting their respective laws.  Consequently, 20 states have amended their APMC Acts to provide for contract farming, while Punjab has a separate law on contract farming.  However, only 14 states notified rules related to contract farming, as of October 2016.

What are the issues with the current structure, and how does the draft Model Act seek to address them?

Over the years, expert bodies have identified issues related to the implementation of contract farming.  These include: (i) role of APMCs which are designated as an authority for registration and dispute settlement in most states, (ii) provisions of stockholding limits on produce under contract farming, and (iii) poor publicity of contract farming among the farmers about its benefits.

Role of Agricultural Produce Marketing Committees/Marketing Boards

The NITI Aayog observed that market fees and other levies are paid to the APMC for contract framing when no services such as market facilities and infrastructure are rendered by them.  In this context, the Committee of State Ministers on Agricultural Reforms recommended that contract farming should be out of the ambit of APMCs.  Instead, an independent regulatory authority must be brought in to disengage contract farming stakeholders from the existing APMCs.

In this regard, as per the draft Model Act, contract farming will be outside the ambit of the state APMCs.  This implies that buyers need not pay market fee and commission charges to these APMCs to undertake contract farming.  Further, the draft Model Act provides for establishing a state-level Contract Farming (Promotion and Facilitation) Authority to ensure implementation of the draft Model Act.  Functions of the Authority include (i) levying and collecting facilitation fees, (ii) disposing appeals related to disputes under the draft Model Act, and (iii) publicising contract farming.  Further, the sale and purchase of contracted produce is out of the ambit of regulation of the respective state/UT Agricultural Marketing Act.

Registration and agreement recording

The Model APMC Act, 2003 released to the states provides for the registration of contract farming agreements by an APMC.  This was done to safeguard the interests of the producer and the buyerthrough legal support, including dispute resolution.  The procedures for registration and recording of agreements vary across states.  Currently, registration for contract farming has been provided with the APMC in few states, and with a state-level nodal agency in others.  Further, market fee on purchases under contract agreements is completely exempted in few states and partially exempted in others.  The Committee of State Ministers on Agricultural Reforms recommended that a instead of a APMC, district-level authorities can be set-up for registration of contract farming agreements.  Further, any registering authority should verify the details such as the financial status of the buyer.

Under the draft Model Act, every agreement should be registered with a Registering and Agreement Recording Committee, which will be set up consisting of officials from departments such as agriculture, animal husbandry, marketing, and rural development.  Such a Committee can be set up at the district, taluka or block levels.

Disputes between the producer and the buyer

The Ministry of Agriculture and Farmers Welfare observed certain risks related to upholding the contract farming agreement.  For example, producers may sell their produce to a buyer other than the one with whom they hold a contract.  On the other side, a buyer may fail to buy products at the agreed prices or in the agreed quantities, or arbitrarily downgrade produce quality.  The Committee of State Ministers on Agricultural Reforms recommended that dispute redressal mechanism should be at block, district or regional-level state authorities and not with an APMC.

Under the draft Model Act, in case of disputes between a producer and a buyer, they can: (i) reach a mutually acceptable solution through negotiation or conciliation, (ii) refer the dispute to a dispute settlement officer designated by the state government, and (iii) appeal to the Contract Farming (Promotion and Facilitation) Authority (to be established in each state) in case they are not satisfied by the decision of the dispute settlement officer.

Stockholdings limits on contracted produce

Stockholding limits are imposed through control orders as per the Essential Commodities Act, 1955.  Such provisions of stockholding limits can be restrictive and discourage buyers to enter into contracts.  It was recommended that the buyers can be exempted from stock limits up to six months of their requirement in the interest of trade.  Under the draft Model Act, limits of stockholding of agricultural produce will not be applicable on produce purchased under contract farming.

Other recommendations

While contract farming seeks to provide alternative marketing channels and better price realisation to farmers, several other marketing reforms have been suggested by experts in this regard.  These include: (i) allowing direct sale of produce by farmers, (ii) removing fruits and vegetables out of the ambit of APMCs, and (iii) setting-up of farmer-consumer markets, (iv) electronic trading, and (v) joining electronic National Agricultural Market for the sale of produce.

Mr. Ramnath Kovind completes his tenure as President in July.  With the Election Commission of India expected to notify the election dates this week, we look at how India will elect its next President.  

As the Head of the State, the President is a key part of Parliament.  The President calls the two Houses of Parliament into session on the advice of the Council of Ministers.  A Bill passed by the Lok Sabha and Rajya Sabha does not become a law unless assented to by the President.  Further, when Parliament is not in session, the President holds the power to sign a law with immediate effect through an Ordinance.

Who elects the President?

The manner of election of the President is provided in Article 55 of the Constitution.  Members of Parliament and Members of Legislative Assemblies (MPs and MLAs) including elected representatives from the Union Territories (UTs) of Delhi and Puducherry form the electoral college, which elects the President.  At least 50 elected representatives must propose a candidate, who must then be seconded by 50 other electors to run for the President's office.  Members of Legislative Councils and the 12 nominated members of Rajya Sabha do not participate in the voting process.

The history behind having proposers and seconders 
The requirement of having a certain number of electors propose a candidate was introduced after the experience of the first five Presidential elections.  It was common then for several candidates to put themselves up for election when they did not have a remote chance of getting elected.  In the 1967 Presidential elections, 17 candidates contested, but nine of them did not win a single vote.  This repeated again in the 1969 elections, when out of 15 candidates, five did not secure any votes.

To discourage the practice, candidates had to secure at least 10 proposers and seconders each to contest the elections from the 1974 election onwards.  A compulsory security deposit of Rs 2,500 was also introduced.  The changes were brought in through an amendment to the Presidential and Vice-Presidential Act, 1952

In 1997, the Act was further amended to increase the security deposit to Rs 15,000 and the minimum number of proposers and seconders to 50 each.


How are the votes calculated?

The Presidential election uses a special voting to tally the votes.  A different voting weightage is assigned to an MP and an MLA.  The value of each MLA's vote is determined based on the population of their state and the number of MLAs.  For instance, an MLA from UP has a value of 208 while an MLA from Sikkim has 7 (see Table 1).  Due to a Constitutional Amendment passed in 2002, the population of the state as per the 1971 census is taken for the calculation.

The value of an MP's vote is the sum of all votes of MLAs across the country divided by the number of elected MPs.  

How will the numbers look in 2022?

In the 2017 Presidential elections, electors from 31 states and the UTs of Delhi and Puducherry participated. However, in 2019, with the Jammu and Kashmir (J&K) Reorganization Act, the number of states were reduced to 30. The J&K Assembly was dissolved as per the Act and a new legislature for the UT of J&K is yet to be reconstituted. UTs with legislatures were not originally part of the electoral college for the election of the President. The Constitution was amended in 1992 to specifically include the UTs of Delhi and Puducherry. Note that for MLAs from J&K to participate in future Presidential elections, a similar Constitutional amendment would be required to be passed by Parliament.

Based on the assumption that J&K is not included in the 2022 Presidential election, the total number of votes of MLAs in 2022 elections will have to be adjusted.  The 87 Jammu and Kashmir MLAs must be removed from the total number of MLAs of 4,120.  Jammu and Kashmir’s contributing vote share of 6,264 must also be reduced from the total vote share of 549,495.  Adjusting for these changes, 4,033 MLAs will participate in the 2022 elections and the combined vote share of all MLAs will add up to 543,231.

Table 1: The value of votes of elected MLAs of different states at the 2017 Presidential Election

Name of State

Number of Assembly seats

Population (1971 Census)

Value of vote of each MLA

Total value of votes for the state (B x D)

A

B

C

D

E

Andhra Pradesh

175

2,78,00,586

159

27,825

Arunachal Pradesh

60

4,67,511

8

480

Assam

126

1,46,25,152

116

14,616

Bihar

243

4,21,26,236

173

42,039

Chhattisgarh

90

1,16,37,494

129

11,610

Goa

40

7,95,120

20

800

Gujarat

182

2,66,97,475

147

26,754

Haryana

90

1,00,36,808

112

10,080

Himachal Pradesh

68

34,60,434

51

3,468

Jammu and Kashmir

87

63,00,000

72

6,264

Jharkhand

81

1,42,27,133

176

14,256

Karnataka

224

2,92,99,014

131

29,344

Kerala

140

2,13,47,375

152

21,280

Madhya Pradesh

230

3,00,16,625

131

30,130

Maharashtra

288

5,04,12,235

175

50,400

Manipur

60

10,72,753

18

1,080

Meghalaya

60

10,11,699

17

1,020

Mizoram

40

3,32,390

8

320

Nagaland

60

5,16,449

9

540

Odisha

147

2,19,44,615

149

21,903

Punjab

117

1,35,51,060

116

13,572

Rajasthan

200

2,57,65,806

129

25,800

Sikkim

32

2,09,843

7

224

Tamil Nadu

234

4,11,99,168

176

41,184

Telangana

119

1,57,02,122

132

15,708

Tripura

60

15,56,342

26

1,560

Uttarakhand

70

44,91,239

64

4,480

Uttar Pradesh

403

8,38,49,905

208

83,824

West Bengal

294

4,43,12,011

151

44,394

NCT of Delhi

70

40,65,698

58

4,060

Puducherry

30

4,71,707

16

480

Total

4,120

54,93,02,005

 

5,49,495

Source: Election Commission of India (2017); PRS.

The value of an MP’s vote correspondingly will change from 708 in 2017 to 700 in 2022. 

Value of one MP's vote =   Total value of all votes of MLAs      =   543231     =    700 
                                              Total number of elected MPs                 776

Note that the value of an MP’s vote is rounded off to the closest whole number. This brings the combined value of the votes of all MPs to 543,200 (700 x 776). 

What is the number of votes required to win?

The voting for the Presidential elections is done through the system of single transferable vote. In this system, electors rank the candidates in the order of their preference. The winning candidate must secure more than half of the total value of valid votes to win the election. This is known as the quota. 

Assuming that each elector casts his vote and that each vote is valid:

Quota = Total value of MP’s votes + Total value of MLA’s votes + 1                                                        
                                                        2

= 543200 + 543231 +1     =   1086431 +1     =    543,216 
                2                                   2

The anti-defection law which disallows MPs from crossing the party line does not apply to the Presidential election. This means that the MPs and MLAs can keep their ballot secret.  

The counting of votes takes place in rounds. In Round 1, only the first preference marked on each ballot is counted. If any of the candidates secures the quota at this stage, he or she is declared the winner. If no candidate secures the quota in the first round, then another round of counting takes place. In this round, the votes cast to the candidate who secures the least number of votes in Round 1 are transferred. This means that these votes are now added to the second preference candidate marked on each ballot. This process is repeated till only one candidate remains. Note that it is not compulsory for an elector to mark his preference for all candidates. If no second preference is marked, then the ballots are treated as exhausted ballots in Round 2 and are not counted further.  

The fifth Presidential election which elected Mr. VV Giri is the only instance when a candidate did not secure the quota in the first round.  The second preference votes were then evaluated and Mr. Giri secured 4,20,077 of the 8,36,337 votes and was declared the President.

The only President of India to win unopposed 
India’s sixth President, Mr. Neelam Sanjiva Reddy who served from 1977 to 1982 was the only President to be elected unopposed.  37 candidates had filed their nominations for the 1977 elections, however on scrutiny, the nomination papers of 36 candidates were rejected by the Returning Officer and Mr. Reddy was the only candidate standing.