- A Farming Agreement under the Act is a written agreement between the farmer/Farmer Producer Organisation (FPO) and sponsor (the person purchasing the farming produce) in respect of any farming produce. Under the Act verbal agreements are not recognized.
- When a sharecropper is involved in the agreement, he may be made responsible for receiving and using any inputs from the sponsor, for cultivation of produce of the appropriate quality, and for production by using good standard practices. The obligation to deliver the contracted quantities may appropriately rest with the Farmer. No clause in the agreement can be in derogation of rights of such sharecropper.
- The Farmer must follow the production methods (e.g. for production of organic produce or under any certification scheme) and standards (social, labour, environmental or cultural standards) for cultivation of crop as outlined in the farming agreement.
- If the sponsor accepts delivery of the Produce, it shall be considered as per law that he has inspected the Produce and shall have no right to retract acceptance on the ground that it does not meet specifications that could have been ascertained through inspection.
- The farming produce should be packaged by the farmer as per the commodity-specific requirements before delivery to the sponsor as provided for in the agreement.
- The produce must be purchased at a price provided for in the farming agreement. The price may be linked to market price and in such case, a minimum guaranteed price must be specified. Similarly, the method of determining payment above the minimum guaranteed price and a clear price reference must be provided in the agreement.
- The place and mode of delivery of the produce should be specified in the farming agreement clearly. The sale of farming produce by the farmer to the sponsor may be at the farm gate subject to provisions in the agreement, especially where the farmer lacks any feasible transportation facilities.
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