Sourcing plans of FMCG companies may be affected

Last year, when the laws were announced, several food-focused firms said it would ease procurement and increase productivity, as well as reduce wastage and increase farmers’ income.

Peeruj Khambata, chairman of the beverage company Rasna Pvt Ltd. Ltd. said, “What really affects the food processing industry are the contract farming laws. In fact, many states have state-specific contract farming laws that are quite effective.”

He said companies can continue with contract farming as before. However, a good reform measure was politicised, and its repeal sends a wrong signal, said Khambata, former president of the All India Food Processors Association.

“The biggest benefit of the new agriculture laws was not the food processors, but the farmers – which means that if a farmer wants to go to a private player or a private market, the laws have given them a choice. Obviously we agriculture Would have been happy with the enactment of the laws as it would have been converted into a central act. It would have definitely helped us.”

India’s food processing sector, one of the world’s largest, is worth more than 2.6 trillion. The sector is expected to achieve a total output of $535 billion by 2025-26, according to estimates by the national investment and promotion and facilitation agency Invest India.

An executive at a large food and beverage firm said the withdrawal of agricultural laws is a “negative” for the industry. Even before the law came into force, farmers had contract manufacturing, and this will continue or increase. However, its benefits will be largely realized by a certain pool of farmers; Marginal farmers will be defeated, he said. Agri-sourcing has always been a challenge, and the agriculture laws were intended to make it easier, the executive said on condition of anonymity.

Spokesmen for ITC Ltd and Reliance Retail did not respond to emails seeking comment by press time, while a Hindustan Unilever spokesperson declined to comment.

Reliance Industries Ltd had said in January that it had nothing to do with agricultural laws and had no plans to acquire the land for contract farming, as alleged by the protesting farmers. “Reliance Retail has never entered into long-term purchase contracts or solicited farmers (to buy produce from its suppliers) at less than remunerative prices to gain undue advantage over farmers, and will never do so.”

According to analysts, the laws would have provided barrier-free inter-state trade and commerce outside the physical market complex, which are usually regulated by the state government’s Agricultural Produce Market Committees (APMCs).

Under agricultural laws, basic food items such as cereals, pulses, oilseeds, edible oils, onions and potatoes were to be removed from the list of essential commodities, apart from allowing farmers to work with processors, wholesalers, aggregators, large retailers and exporters. Had to help connect. On a level playing field.

A top executive of a retail conglomerate said the repeal of the law could hit the industry’s ambition of doubling revenue within a decade.

Another executive at a consumer goods firm said the repeal is neither “negative” nor “positive”. He said that all the corporates have made their own models in one way or the other to work with the farming community.