Contract Farming: A Boon to Farmers

Abstract

Farming is an age-old means of livelihood for millions of India’s small and marginal farmers. Contract farming has been in existence for many years as a means of organizing the commercial agricultural production of both large– scale and small–scale farmers. In an age of market liberalization, globalization and expanding agri-business, there is a danger that small-scale farmers will find difficulty in fully participating in the market economy. In the era of globalization, the concept of ‘Contract farming’ is an effective way to co-ordinate and promotes production and marketing in agriculture. “Contract farming can be defined as an agreement between farmers and processing or marketing firms for the production and supply of agricultural products under forward agreements frequently at predetermined prices.” Sustained income growth and urbanization are causing rapid changes in the “food consumption, production and marketing” in India. Over the last two decades, there has been a rapid increase in per capita consumption of highvalue foods like fruits, vegetables, milk, meat, egg and fish, while consumption of food grains remained almost unchanged. Many big companies are coming in the field of agriculture and veterinary related business due to high demand. This has led to development of contract farming in India.