Bengaluru, Jan 10 (IANS): About 1,100 farmers in Karnataka signed an agreement to sell their paddy directly to Reliance Retail, arm of Reliance Industries Ltd (RIL), above the minimum support price (MSP) through an agro-based company at Sindhanur in the state's northern region, an official said on Sunday.

"On behalf of 1,100 farmers, who are our company's shareholders, an agreement has been signed on January 6 to sell about 1,000 tonne of their paddy (Sona Masoori rice variety) to Reliance Retail at Rs 1,950 per quintal (100 kg), which is Rs 100 above the MSP of Rs 1,850 per quintal," Swasthya Farmers Producing Company (SFPC) Managing Director V. Mallikarjun told IANS on phone.

Sindhanur in Raichur district is 420km from Bengaluru in the southern state.

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"The agreement has been signed under the recently amended Karnataka Agricultural Marketing Committee (KAPMC) Act, 2020, which allows farmers to directly sell their produce even outside APMC yards to anyone and above MSP," asserted Mallikarjun.

With the consent of state Governor Vajubhai Vala, Karnataka on January 1 notified the KAPMC Act, which restricts powers of the APMCs and omits penal provisions to help farmer sell their produce directly even outside the APMC yards (mandis) to anyone who pays more than the MSP, fixed by the state government.

"Since the agreement was signed, the farmers have till Saturday delivered about 100 tonne to Reliance Retail, which has taken a warehouse of the state-run Food Corporation of India (FCI) on lease in the town," said Mallikarjun.

The balance 900 tonne will be delivered to Reliance Retail warehouse over the next 9-10 days at the rate of 100 tonne per day.

"Though the farmers are getting Rs 100 more per quintal than the MSP, they have to bear the cost of sacks (gunny bags), transport and loading/unloading charges of the paddy at the warehouse from their fields where they harvested recently," noted Mallikarjun.

The 2-year-old company (SFPC) has been Promoted by the state-run Nabard (National Bank for Agriculture and Rural Development), an apex development finance institution, to help farmers in not only ensuring higher food production, but also get maximum returns on their investment.

"We will credit the sale proceeds of the paddy to the farmers' bank accounts directly after Reliance Retail makes the transaction with us. A third party will assess the moisture content in the paddy, which should be 16 per cent for good quality," added Mallikarjun.

Companies can procure farm produce across the state under the Direct Purchase Centre License granted by the state Cooperation department.

Karnataka has about 160 APMCs across the state on which about 60,000 traders and middlemen depend for livelihood.

Set up in January 2019 with Rs 10-lakh authorized capital and Rs 10,000 paid-up capital, SFPC grows a variety of crops, including rice, wheat, jowhar and millets in the agricultural lands of farmers, many of whom are its shareholders.