DMPQ: What is contract farming? What are its advantages? (economy)

Contract farming is a kind of system in which bulk purchaser enters into contract with farmers. It includes agro- processing, exporting and trading units.  They purchase a specified quantity of any agricultural commodity at pre agreed price. Sponsor provides all kind of production support to the contracted farmers. This include extension service also.

 

 

Advantage:

  • This will help to provide sustainable source of livelihood. It will provide an alternative market mechanism.
  • Exposure to international markets.
  • More FDI in agro processing industries.
  • Employment generation in Food processing industries
  • Improvement in cold supply chain and hence reduction in wastages.
  • Pooling of land will help in utilising the land properly as 86% of the farmers in India are small and marginal farmers.
  • Farmers no longer have to transport their produce to the mandis and hence reduction in the cost.
  • Better access to technology, crop diversification, extension services

 

 

Government of India has recently passed Model Contract farming act, 2018 for better centre-state co operation on land lease. It will help to provide an ecosystem for the growth of contract farming.

 

 

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