Contract
Farming
Contract farming refers to a system of farming in
which corporate firm and a farmer or a group of farmers participate in the
production and selling of the agricultural products, thereby a corporate firm
gets assured source of product of good quality and the farmer gets assured
price for his products. The main purpose of contract farming is allocation of RISK
between the farmer and a corporate firm.
It
benefits both the partners in the business;
Farmer
·
Gets assured
price so that he escapes from price fluctuations and middle man, thereby gets
maximum remunerations.
·
Farmers gets
quality inputs and modern technology
Corporate
firm
·
Assured product
supply irrespective of fluctuations in the market
·
Gets the desired
quantity and quality of the product
·
Saved from
middle man, so the cost of product do not go up therefore, he gets maximum
profit for his investment
How
is it implemented?
There
are few things involved in it, they are
Selection of suitable farmer who is experienced in
the cultivation of a product by the corporate firm is the first and foremost
step in the contract farming practice. Farmer also should be a innovative
adopter of new technologies and other aspects of modern agriculture
Selection of the product for which the corporate is
interested
Selections of a location, which is decided by the
existing climatic conditions, labour availability and the location of factory
from the land, selected.
Supply of necessary inputs and technology for
cultivation of required crop and monitoring by the corporate firm
Purchase of the final product and fulfillment of the
contract
Constraints:
·
Breach of
contracts and corporate dictates against the innocent and illiterate farmers
·
Higher
illiteracy among most of the farmers
·
Land
fragmentation and dominance of small and medium farmers in the country
·
Market
fluctuations and poor price fixation
Solution
·
All the constraints
have to be perceived in advance and the safeguards have to be incorporated in
the contract signed between the farmer and corporate firm
·
Government
should come forward to encourage the contract farming and provide safeguards to
the farmers from exploitation
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