The Hindu : Tamil Nadu / Chennai News : Contract farming `a viable solution'

Online edition of India's National Newspaper
Saturday, Apr 29, 2006

Tamil Nadu

Tamil Nadu - Chennai

Contract farming `a viable solution'

Staff Reporter

`Will answer imperfections in agricultural credit and insurance markets'

CHENNAI: "Contract farming can be a viable solution to imperfections in agricultural credit and insurance markets in an environment of pervasive risk, information asymmetry and high transaction costs," said C. Ramasamy, Vice-Chancellor, Tamil Nadu Agricultural University.

Competitiveness

Presiding over the inaugural of a national seminar on contract farming and crop insurance organised by the TNAU along with the Michigan State University, U.S., the Vice-Chancellor said the changing global environment required relevant policies, production technologies and institutions that could improve the competitiveness of the farm sector.

Some of the critical issues facing contract farming were its role in improving the livelihood security in rural areas, role of the State in promoting contract farming, and minimising the transaction costs while dealing with small farmers.

Dr. Ramasamy called for introducing suitable amendments in the Agricultural Produce Market Committee (APMC) Act requiring the registration of contract provisions as one of the ways for minimising contract disputes.

"The firms should come out with innovative pricing policies to attract more farmers towards contract farming," he said.

About 100 delegates from several corporate and farming community participated in the seminar, which was inaugurated by Radha Singh, Secretary in the Union Agriculture and Cooperation Ministry.

They discussed the provisions of the APMC and ways to make it effective in the context of emerging contract farming arrangements.

SBI advance

The chief general manager of the State Bank of India, P. Chaudhury, said the SBI had provided advance to contract farming to the extent of Rs.1,100 crore in the current year.

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