The development of agro-technologies to increase production marked the beginning of the “green revolution” and helped make India food security. The advantages of high-quality seed and timely irrigation and fertilization using modern technology were observed in the increased productivity and quality of production. Farmers have to contend with markets that are volatile in the process of selling their products. This is why the government started buying agri-commodities widely cultivated at the Minimum Support Price (MSP). Other crops that are not covered by MSP can be risky and undesirable. Hence, a lack of diversification of crops in agriculture resulted in the overproduction of some commodities and underproduction of some Agri-commodities. The low returns on farming forced farmers to find alternative methods to contract farming in india.
Table of Contents
What is contract farming?
Contract farming isn’t completely new to our nation. The popularity in the case of Milk Cooperatives and Sugar Cooperatives illustrates the extent and scope of contract agricultural practices in India. It is a formal contract that is signed between the producers (farmers) as well as buyers (generally exporters or processors). The term “contract farming” can be described as an arrangement between contracting firms and farmers to supply and produce agricultural goods under advance agreements, often with predefined prices. The basis is a promise by the farmer to supply the specific product in the quantities and to meet quality standards established by the purchaser, as well as an obligation on the part of the firm to help the farmer’s work and purchase the product.
Contracting farming permits firms to take part in and exercise control over production without operating or owning the farms. The arrangement can be different for the crops as well as by contracting companies. Market support contracts are agreements made before harvest, mostly between farmers and companies, according to a set of conditions that govern the purchase and sale of the crops. The contract specifies the price as well as quality and price; the second) resources support contracts are agreements between firms and farmers as part of the agreements for marketing. The firm will provide certain inputs, including technical assistance and preparation of the land and credit, among others. Furthermore, contracts for management of production obligate the farmer to comply with certain input management guidelines and agronomic practices, harvesting guidelines, typically with the exchange of contracts for marketing or resource supply.
The New Face of Traditional Farming
Farmers lack a basic understanding of the various practices for the cultivation of crops and have insufficient funds to produce a good crop. They have no bargaining power with suppliers of inputs and markets for produce and lack post-harvest management knowledge, insufficient facilities and information about markets. Many firms offer credit inputs, farm machinery, inputs and a range of technical, managerial and extension services that guarantee that they will purchase products and have the option of rejecting the production of substandard quality. Farmers may also use the contract as collateral for arranging credit with financial institutions to finance inputs. Transferring skills is another benefit that contract farmers can take advantage of.
The transfer of skills could include effective use of farm resources performing field-related activities by a set timetable and improved methods for applying fertilizers and chemicals as well as a thorough understanding about the value of high-quality, of the requirements of the export market and good records keeping. Contract farming in india allows small farmers to participate in the growing of high-value crops such as flowers, vegetables, fruit, etc. and gain from market-driven expansion at a minimum cost to market, transportation, and post-harvest handling and transport risks. Contract farming reduces yield uncertainty and eliminates price uncertainty. Contract farming does not require significant investments from farmers’ funds; in fact, it decreases the expense associated with purchasing inputs since they are provided by contracting companies.
Protect Your Farm
One of the main issues organic agriculture is currently confronting across India is the lack of a supply chain distribution system. There must be an effective strong distribution system, and state governments, with the assistance of the central government, are working on the problem. There is little understanding among farmers of the current trends in the agriculture sector. Contract farming is a great way to increase the sustainability of organic farming.
Farmers also face problems regarding organic certification. Organically certified products that are not certified are not a great return for the farmer. One reason for this is that organic farmers are spread out, and obtaining certification is costly. Some farmers have created local communities of farmers to sell their produce collectively. However, these types of communities are extremely rare in India. There are advantages for the farmer who decides to grow organically. It reduces the risk of suicides among farmers by reducing the need for inputs to farming like pesticides and fertilizers. Additionally, it assists in providing nutritious food options to the community. In addition, it assists in reducing the effects of climate change by reducing the emissions of greenhouse gases.
