While previously it was limited to small philanthropic initiatives from the corporate honchos, now, with entry of big business houses like TATA, Reliance, ITC and PepsiCo it has become a mainstem initiative. Besides, over the last few years, successive governments at the center have been very keen incorporatized agriculture where big businesses will have contracts with farmers to produce what they need.
Department of management studies Address for Communication: Department of management studies. An Empirical Investigation on Contract Farming and its impact on Farmers in India Abstract Contract Farming is fast evolving as a mechanism of alternative marketing in the country.
The experience of contract farming in India shows that there is considerable saving in consumption of inputs due to the introduction of improved technology and better extension services. The study is a descriptive one and the sampling method adopted was non probability purposive sampling.
Sample size was respondents and they are farmers of Thanjavur District. The mode of communication was personal interview. An examination had been made from the reliability of the data to check whether random error causing inconsistency and in turn lower reliability is at a manageable level or not, by running reliability test.
Some of the relevant findings were derived that will be useful to the present Indian Scenario. Contract Farming, Farmers, Technology, Perception An Empirical Investigation on Contract Farming and its impact on Farmers in India Introduction The entry of large businesses into agribusiness sector has led to a new arrangement in raw material production and procurement in India, known as contract farming.
This is happening as good quality, timely, and cost effective raw material is a pre-requisite for any successful agribusiness firm, whether operating in the domestic or the international market. Given the Land Ceiling Act in India, agribusiness firms cannot own and cultivate land for their raw material requirements.
Also, most of the times, it is not a Viable option Singh, Therefore, the only option for them to procure raw materials is to have contractual arrangements with the primary producers which are also suggested as an alternative to corporate farming or liberalisation of land ceiling laws Vyas, Contract farming refers to the production and supply of agricultural produce under advance contracts, the essence of such contracts being a commitment to provide an agricultural commodity of a type, at a time and a price, and in the quantity required by a known buyer.
The contracts could be of three types; i procurement contracts under which only sale and purchase conditions are specified; ii partial contracts wherein only some of the inputs are supplied by the contracting firm and produce is bought at pre-agreed prices; and iii total contracts under which the contracting firm supplies and manages all the inputs and the farmer becomes just a supplier of land and labour.
The relevance and importance of each type varies across products and over time, and these are not mutually exclusive Key and Runsten, Growth of Contract Farming in India Contract Farming is fast evolving as a mechanism of alternative marketing in the country.
Contract farming has usually allowed the farmers some form of credit to finance use of production inputs. In some cases, viz. Appache Model of contract farming for cotton in Tamil Nadu, there are arrangements for loans from commercial banks.
Contract farming has been successful in effecting crop diversification in many states. Studies of Tomato contract production in Punjab and Haryana of Cucumber in Andhra Pradesh and cotton in Tamil Nadu found that the net returns from those crops under contract being much higher than those under non contract situations though production cost in tomato was much higher than the contract system.
It will be observed that different commodities covered under contract farming in different States are both traditional ones like Basmati Rice, Wheat, Maize, Red Gram, Bengal Gram, Groundnut, Sesame, Cashew nut, coconut, onions etc.
Services provided by the sponsoring firms range from supply of inputs like fertilizers, seeds, pesticides, extension services and quality monitoring. However, one thing which is common to all existing contract farming ventures is the absence of common legally binding contractual agreements.
Almost all the ventures are working on the basis of mutual trusts. However, the increase in acreage, the participation of farmers and corporate related to farm production, marketing and the management of system make it imperative to address several regulatory and legal issues to make effective progress in the initiative.
Review of literature According to Singhcontract farming can be defined as a system for the production and supply of agriculture and horticultural produce by farmers or primary producers under advance contracts, the essence of such arrangements being a commitment to provide an agricultural commodity of a type, at a specified time, price, and in specified quantity to a known buyer.management of existing contract farming companies on how to improve their operations; second, to companies that are considering starting such ventures on the preconditions and management actions necessary for success; and, last but not least, to government officials seeking to promote new contract farming operations or monitor existing operations.
Contract farming has been used for agricultural production for decades but its popularity appears to have been increasing in recent years.
The use of contracts has become attractive to many farmers because the arrangement can offer both an assured market and access to production support. Contract Farming Ventures in India: A Few Successful Cases The Government of India’s National Agriculture Policy envisages that “Private sector participation will be promoted through contract farming and land leasing arrangements to allow accelerated technology transfer.
Feb 10, · Contract farming can work if there is a collectivisation of small farmers. For instance, 10 to 15 farmers get together, form a group, and sign a group contract. It brings down the transaction costs, the farmers are better protected, and it is essentially a win-win situation for .
Contract farming is a system which refers to production and supply of agricultural produce under a forward contract. It is a commitment to provide an agricultural product at a fixed price, time.
In India, contract farming can be traced back to the nineteenth century, when commercial crops like cotton, indigo, and tobacco were grown under contract.
In the late twentieth century, there were contracts for sugarcane and seed production.