Gujarat was early to amend the laws governing the marketing of agricultural produce and allow farmers to sell their output directly to private buyers. Even today, many states haven’t done so and keep the farmer tied to the official procurement hubs. Some have gone back on reforms. But Gujarat has persisted with opening up market access to farmers. This also opened up contract farming. In 2004-05, Gujarat took an unusual step. It allowed companies to buy crops from farmers a year in advance. This helped the farmers hedge against price upheavals and guaranteed a minimum price. What’s more, there is also some flexibility to allow higher payments if prices rose at the time of transaction. While it reduced market risks for the farmer, it also encouraged companies to invest in farming indirectly.
Posted on: Sun, 20 Apr 2014 06:47:27 +0000
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