Introduction

Contract farming is rapidly growing among farmers. On one hand, It is opening the windows for the agricultural market, to directly agree on corporates, government agencies, and private parties to buy crops from the farmers, under the established condition for the production or quantities. which is pre-determined by the parties?

Under Agreement, Farmers agree to provide the Specific qualities of products and time of delivery has fixed by the purchaser. On the other hand, the buyer promises to purchase and in some cases the pre-determined price. It converts farmers into price-takers. 

Nowadays, Technology and commercialisation of the agricultural sector have been smoothly changing the mood of the market. Because of this, demand for supplies is increasing, more supermarts, investors are coming in agriculture sectors. however, an underdeveloped supply chain and the shortage of cold storage are the biggest hurdles of this sector.

Benefits of Contract Farming

1. To increase the income of farmers.

2. To make agriculture market-friendly for farmers so they can easily sell their crops to everyone on a contract basis.

3. It insulates farmers from the price risks, and also develop new skills for farming.

4. It will decrease migration from rural to urban.

5. It also opens the market at his doorstep, save the travel cost and marketing cost.

6. To Increase Modern Farming.

7. It also creates employment in rural areas, especially for landless farmers.

8. To make farmers self-dependent.

9. To reduce the burden of the governments.

10. To increase the number of private investors in contract farming.

Problems with Contract Farming

1. Contract agreements between buyers and farmers are mostly in verbal form or some cases written, however, we know in India there is no absolute legal protection available, like other countries, and a decision often goes biased in favour of corporates or big farmers. Due to this, small farmers suffered exploitation

2. Farmers faces quality backlash by the firm, reduce the margin, cost cut and even face market failure.

3. Farmers are not getting benefits like buyers.

4. When farmers entered into a contract agreement so they often grew a cash crop that is more profitable to them and mostly neglects the quality of food crops.