By S&S Co. Advocates & Solicitors · Published 24 September 2026 · Informational content, not legal advice — see our disclaimer
No Dedicated Central Statute Currently Governs Contract Farming
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, which had created a specific central legal framework for contract farming, was repealed by Parliament in 2021 along with the other two farm laws. As a result, there is currently no dedicated central contract-farming statute in force in India — a point that surprises many businesses assuming the 2020 framework still applies.
In its absence, a contract farming arrangement today is governed primarily by the ordinary principles of the Indian Contract Act, 1872, together with whatever state-specific provisions the relevant state has separately enacted — several states had amended their APMC Acts to permit and register contract farming even before the 2020 central law existed, and those state provisions remain in force independently of the repeal.
The 2018 Model Act — A Template, Not a Law
The Ministry of Agriculture's Model Agriculture Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018 remains available as a non-binding template that states may draw on. It recommends registering contracts with a Registering and Agreement Recording Committee, keeping contract farming transactions outside ordinary APMC market-fee obligations, and a tiered local dispute-resolution mechanism running through a Sub-Divisional Authority and an Appellate Authority.
None of this has the force of law, however, unless a particular state has actually adopted it. Businesses should not assume the Model Act's dispute-resolution or registration mechanism applies to their transaction without first confirming whether their state has enacted it.
Checking What Actually Applies in Your State
Because the legal landscape varies significantly from state to state, an agribusiness should first confirm whether the state or states where the farming will actually occur have their own contract-farming registration or dispute-resolution provisions — whether through amendments to the state's APMC Act or through separate standalone legislation — before assuming any particular procedure governs the arrangement. A framework that applies in one state may simply not exist in another, leaving the parties to rely on ordinary contract law alone.
Drafting Points That Matter Regardless of Jurisdiction
Whatever the state-specific framework, certain drafting fundamentals matter in every contract farming agreement: a clear pricing or price-assurance formula, including how quality specifications and grading disputes will be resolved; clear delivery and quality-acceptance terms; a force majeure provision addressing crop failure and similar events outside either party's control; and an express dispute-resolution clause — arbitration or a clearly named local forum — since, absent a dedicated statutory forum, disputes will otherwise default to ordinary civil litigation.
Sponsors should also take care that the agreement does not purport to transfer, encumber, or create any interest in the farmer's land itself. This protection was a central feature of the now-repealed 2020 Act, and remains sound drafting practice today regardless of which legal framework technically applies in a given state — both to protect the farmer and to avoid the agreement being challenged as an improper attempt to acquire an interest in agricultural land through the back door of a supply contract.
Frequently Asked Questions
Is there a central law governing contract farming in India today?
No. The Farmers (Empowerment and Protection) Agreement Act, 2020 was repealed in 2021 along with the other farm laws, so contract farming is currently governed by the ordinary Indian Contract Act, 1872, together with whatever state-specific provisions individual states have separately enacted.
Is the 2018 Model Contract Farming Act legally binding?
No. It remains a non-binding template that states may choose to adopt. Its registration and dispute-resolution mechanisms only have legal force in a state that has actually enacted them.
What should an agribusiness check before entering a contract farming arrangement?
Whether the specific state where the farming will occur has its own contract-farming registration or dispute-resolution provisions, via APMC Act amendments or standalone legislation, since this varies considerably from state to state.
What drafting point protects farmers from losing an interest in their land?
The agreement should not purport to transfer, encumber, or create any interest in the farmer's land — a protection central to the repealed 2020 Act that remains good drafting practice under any current framework.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 (repealed 2021) — for historical context only.
- Model Agriculture Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act, 2018 (Ministry of Agriculture template).
- Indian Contract Act, 1872, and the relevant state's APMC Act as amended, for the framework currently in force.