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ABSTRACT

The future of contract farming in India is quite promising due to increasing consciousness about food safety and quality among the rising middle-class population and the quality demands of the export market in the developed countries. The major problems include farmers selling to a buyer other than the one with whom they hold a contract, or using inputs supplied by the company for purposes, on another side, a company sometimes fails to buy products at the agreed prices or in the agreed quantities or arbitrarily downgrades produce quality. The existence of an adequate legal framework is thus crucial for the successful implementation and long-term sustainability of contract farming operations. It is becoming an increasingly important aspect of agri-business, whether the products are purchased by government agencies, multinationals companies, smaller companies, farmer cooperatives or individual entrepreneurs. Therefore, before introducing new cropping practices, sponsors should also consider social attitudes and have to judge how a replacement crop could also be introduced. Currently, contract farming requires registration with the agricultural produce marketing committee (APMC) in a few states. It is also working on the promotion of  FPOs to mobilize small and marginal farmers to opt for the regulatory measure of the act. The Ministry of Food Processing Industries of Government of India has launched a scheme entitled `Grant under Backward Linkages` to promote contract farming. Under this scheme, a grant of 10 per cent of the value of raw material purchased from the contract farmers (subject to a maximum of Rs.10 lakhs per annum) is provided to food processing units up to three years. Contract farming is involved mostly in cash crops which may lead to a shift in the area from food crops which, beyond a limit may endanger food security, biodiversity and crop cycle of the country is a major weakness of contract farming. The government is increasingly looking towards the corporate sector to augment rural incomes and employment through agro-processing. In this context, policy makers see the contract farming/marketing as an important avenue to ensure greater private sector participation in agriculture.

Key words: Contract Farming, Model act

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Problem and Prospect of contract Farming in India_compressed.pdf