Contract farming can be defined as agricultural production carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products. Typically, the farmer agrees to provide agreed quantities of a specific agricultural product.
Why Contract farming
- To reduce the load on the central & state level procurement system.
- To increase private sector investment in agriculture.
- To bring about a market focus in terms of crop selection by Indian farmers.
- To generate a steady source of income at the individual farmer level.
- To promote processing & value addition.
- To generate gainful employment in rural communities, particularly for landless agricultural labor.
- To flatten as far as possible, any seasonality associated with such employment.
- To reduce migration from rural to urban areas.
- To promote rural self-reliance in general by pooling locally available resources & expertise to meet new challenges