29 Oct 2024        13:48:11 pm

Geography

Contract Farming

Tags : Contract Farming

Topic: Agriculture 

Why in the news?

• Disappointed by the hollow promises by a company that encouraged them to cultivate figs on a contractual basis, hundreds of farmers in Rajasthan are now destroying their orchards. 
• It is alleged that a company raised crores by selling fig plants but refused to buy the produce during harvest
• Dismayed by false promises in contract farming, cultivators resort to destroying their fig orchards

Source: Down To Earth

About Contract Farming:

• It can be defined as agricultural production carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products. The farmer agrees to provide agreed quantities of a specific agricultural product.
• Under contract farming, farmers can be given seeds, credit, fertilizers, machinery and technical advice so that their product is tailor-made for the requirements of the companies.
• There would be no middlemen involved and farmers would get a predetermined sale price from the companies.
• The farmer does not have to make trips to the mandis nor worry about getting seeds and credit for farming operations.
• By entering into a contract, the farmer reduces the risk of fluctuating market demand and prices for his produce and the companies reduce the risk of non-availability of raw materials.
• Objectives of Contract Farming:
  • To promote a steady source of earnings at the individual farmer level.
  • To expand private sector investment in agricultural business.
  • To inspire financially rewarding employment opportunities in rural communities, especially for landless agricultural labour.
  • To bring down the burden of central and state-level procurement systems.
  • To minimize migration from rural to urban areas.
  • To create a market focus on crop selection by Indian farmers.
  • To promote value addition and processing.
  • To bring down as far as feasible, any seasonality associated with such employment.
  • To encourage rural self-reliance by pooling locally available resources and expertise to meet new challenges.

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