Contract farming - linking
farmers to market
Safeer pasha.
M., Lecturer in
Commerce & Management, Brindavan College
Marketing of
agriculture commodities in India is one the major problem faced by the farmers.
Moreover, farmers need both forward and backward integration in
agriculture. Contract farming is a mechanism where a farmer, the producer of the agriculture produce is
going to have an agreement with a company which is in the business of either
direct consumption of produce for further processing or which is working on
behalf of other company. The process includes an agreement where the producer
will have to produce desired produce with desired quality for the contract
farming company. The agreement also include the supply of some of the inputs
required for the production of agriculture produce such as provision of quality
seeds, pesticides, financial assistance, technical assistance etc. The
responsibility on both the parties is pre agreed where the producer has to
produce the required produce for company and in turn the company will take the
responsibility of marketing the produce. In other words in contract farming
there is an agreement between the farmers and processing/or marketing firm,
service centers for agricultural marketing firm for the production and supply
of specified agricultural products under
a forward agreement, at a pre determined price and quality. The agreement provides purchaser to provide a
degree of production support through agricultural inputs and technical guidance
for the cultivation of crops. On part of the farmers the responsibility is to
produce specified agricultural produce with specified quality and quantity
standards which are fixed by the purchaser. Contract farming can also be called
as an agreement where the producer sells his produce to the known buyer under
the forward contract agreement. The buyer may be an agribusiness firm, a local
processing unit or a multinational company. The contract is thereby a
commitment by a seller/farmer to supply an agriculture commodity of a
particular quality, at a particular time, in requisite amount and at a pre
agreed price to the buyer. The system of contract should be seen as a
partnership between agribusiness enterprise and farmers. The success of the
contract requires a long term relationship between both the parties of the
contract.
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