Contract Farming and Farmer Producer Companies in India: Role in Farmer Livelihoods, Impact and Policy Issues

Paper Abstract: Contract Farming (CF) and Farmer Producer Companies (FPCs) have emerged as two institutional innovations in linking small producers effectively with modern and profitable markets. But, the practice of CF has been problematic as borne out by many studies of the nature and impact of CF on smallholders in developing country smallholder context, including India. It is for this reason that the FAO now designs and promotes responsible contracts and contract practice. In India, the Union Government has designed a model CF Act in 2018 for the states to adapt it. At the same time, the Indian Government has been promoting FPCs including through a recent large fund scheme to set up 10,000 new FPCs over the five year period and by 2024.  
In the above context, this paper assesses the impact of CF and FPCs on smallholder livelihoods.It examines the major provisions of the model CF Act of 2018 in the light of farmer level experience of CF across crops and regions in India. Similarly, an assessment of the performance and impact on FPCs on member and non-member producers is carried out with the help of 32 case studies of such entities across crop and produce sectors in India. Based on these assessments, the paper makes suggestions for CF regulation and policy and towards better design and implementation of FPC policy for small producer inclusion and their livelihood improvement.