A draft of Agriculture Enterprises Promotion Act will, among others, introduce formal contract system in commercial farming and operation of big farms. The draft will also incorporate farm related works such as operation of cold storages as well as marketing and distribution of agriculture produces.[break]
“We are giving finishing touches to the crucial bill, which will be instrumental for launching farm commercialization campaign. However, it won´t be possible to get it endorsed immediately in the absence of parliament,” a highly place source at the Ministry of Agriculture Development (MoAD), told Republica.
As per the draft act, the government, local bodies and different institutions can provide necessary land for contract farming to any individual or groups interested to develop farms.
The bill also envisages establishment of different types of agriculture markets -- wholesale, retail and farmer markets -- where farmers can sell their produces directly to consumers. Similarly, collection centers, where wholesalers buy agro-produces directly from farmers, and Haat bazaar promoted by local bodies to distribute farm goods have also been planned. It also envisages formation of Agriculture Enterprises Promotion Committee under agriculture secretary to oversee promotional activities for farm commercialization.
As per the bill, the government will assist operation of supporting industries -- cold storage and chilling Vat, packaging industries and slaughter houses - providing them 50 percent discount in electricity charge for the first five years and 25 percent exemption for additional five years.
Similarly, it envisages providing 50 percent waiver on customs duty, excise duty and VAT on imports of necessary equipment by firms promoting farms.
In a bid to encourage use of innovative technology in the farm, the government will offer 50 percent subsidy on total cost of the new technology. Similarly, provision of insurance of goods produced under contract farming and loan against the deposit of contract documents from banks and financial institutions (BFIs) under the Priority Sector Credit scheme have also been proposed in the draft bill.
The government will also establish special production areas (growth centers) to promote production of commercial crops, organic farming and exportable goods.
Likewise, the bill envisages formation of Agriculture Enterprises Promotion Fund to ensure availability of resources for the sustainability of commercialization drive in the farm sector.
The MoAD prepared the draft in association with the Agro Enterprise Center (AEC) at the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
“At a time when we are importing huge amount of farm goods in the absence of massive commercialization of farm sector, the contract farming system will drive up the agriculture production in our country,” Pradip Maharjan, CEO of AIC, who is also a member of the drafting committee, told Republica.
As per the conservative estimate, around 20 percent of land in Tarai belt of mid and far-western region is lying unused.
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