Industry body Federation of Indian Chamber of Commerce and Industry has urged the government to modify the Agricultural Produce Marketing Committee (Development and Regulation) Act 2003 to facilitate better marketing of agricultural products.

The apex biz chamber said that there is an urgent need to make contract farming legal.

"The government should facilitate smooth functioning of contract system, without any direct intervention in the Contract Farming Arrangement," Ficci said in a statement.

It said the Central government has asked all state governments to modify their legislations on lines of the Model APMC Act so that farmers can be benefited, and the marketing practises could be reformed and fine-tuned to the level of international standards.

But Ficci said most of the states have not introduced the required amendments and even the states who have amended the Act have not notified it, the survey said, adding that only Bihar has completely repealed the Act.

The industry body said the government should also set up an institutional arrangement to record all contractual arrangements, either with the local market committee or panchayat or government machinery.

"Contract farming should have provision for both forward and backward linkages," it said.

Releasing a survey on contract farming, Ficci said there should be a contract farmers association or cooperatives at the plant level that should improve the bargaining power of the farmers vis-a-vis the company and promote equality of partnership for smooth functioning of any contract.

"States should take steps to upgrade infrastructure, link daily markets with futures market, and rationalise tax structure, market fee and licensing system," it said.