CONTRACT

FARMING
CONTRACT FARMING
 Is an agreement between farmers and the
contractor where various inputs in the form of
loans ,seeds, fertilizers , insecticides and pesticides
are given to the farmer with an undertaking that they
would directly sell their entire produce to the
contractor

Contract farming helps farmers get inputs in time

and firms involved in contracts earn profit from
agricultural produce of assured quality

 Contract farming has attained a significant place in

today's agriculture and has played a major role in
commercialization of agriculture in global context

Contract farming is one of the best mechanism

suggested to take advantages of the market
opportunities in a globalize economy and to cope up
with the resultant price volatility

 Contract farming can link the Indian farmer to the

international market by helping in the production of
 Advantages

 Farmers
 easy access to additional sources of capital / credit
 better access to quality production inputs (seeds, fertilizers..)
 free technological inputs and services
 transportation and marketing facilities
 Fixed/ assured price for their produce
 lower risks

 Contract firms
 Direct access to production sources
 Assured product availability
 Assured product quality
 Better prices ( no middlemen )
 concerns

 Contract farming is skewed towards large farmers, better productive region

 Agricultural produce declared as poor quality not purchased
 Contracts may not be honored
 Payments may be delayed & compensation not given when crop attacked by pests
 No diversity of crop
 May lead to food insecurity and ecological degradation
 Farmers sales to a different buyer (side selling )
 Downgrading of product quality by contractor
 Contractors may use their negotiation power to bring down prices
 Farmer loses his independence according to the contract

 Setbacks in practicing contract farming

 Poor contract model

 Unsuitability of crops
 Reluctance of farmers to take up contract farming

 Solutions recommended

 Legislation by the government to protect the farmers

 Introduction of a new comprehensive crop insurance scheme
 Models of contract farming
 Centralised model – generally connotes a government scheme . In this
system the government has a public enterprise purchasing produce from
farmers on its own or as part of joint venture with a private firm

 Nucleus estate model – contract firm has its own farm besides the
contract farmers

 Multipartite model – in this system the government or NGO actively

participates in the model along with a private firm

 Informal model – it includes simple and informal contracts between

individual and small companies

 Intermediary model – in this model there are intermediaries between

farmer and industry units like collectors or farmer commities
 Contents of a private contract
 Define the parties
 Specify type and quality of the produce
 State the quantity of the produce
 State clearly the responsibilities of both parties concerning production and
marketing practices
 Indicate the manner including timing of delivery and collection
 Determine the price ( specific or formula ) & other considerations ( manner
and timing of payment )
 Indicate duration of contract & the way in which it may be terminated or
renewed
 Appoint an arbitrator or otherwise how disputes are to be resolved
 Provide an assignment of the contract
 Indian institutes engaged for marketing agricultural products
under contract marketing

 Krishi Maratavahini
 Madhya Pradesh State Agricultural Marketing Board
 Karnataka State Agricultural Marketing Board
 Maharashtra State Agricultural Marketing Board, Pune
 Meghalaya State Agricultural Marketing Board
 Orissa State Agricultural Marketing Board, Bhubaneswar
 Punjab State Marketing Board
 Rajasthan State Marketing Board
 AP Agricultural Marketing Board
 Domestic & Export Market Intelligence Cell
 Tamil Nadu Agricultural University and Agri Marketing Board
 HP State Agricultural Marketing Board
 The main agricultural products of India under the process of

contract farming

 Food Grains - Rice, Wheat, Pulses, Cereals, Corn, Maize, Rice Bran Extractions, Sorghum, Soy
meal, Suji, Parmal, Lentils, Jowar, Bajra, Chick pea,

 Fruits & Nuts - Cashew Kernels, Cashew Nut, Cashews, Almonds, Roasted Dry Fruits, Peanuts,
Groundnut, Walnut Kernels, Walnuts, Indian Peanuts, HPS Groundnuts

 Fruits - Bananas, Beans, Cherry, Cucumbers, Dried Fruits, Dried Truffles, Carrots, Lemon,
Mandarins, Mango, Meslin, Shallots, Apples, Asparagus, Grapes, Oranges, Gherkins, Turnips,
Oranges, Papaya, Pineapple,

 Vegetables – Potatoes, Bitter gourd, Stripe Gourd, Pumpkin, cauliflower, Cabbage, Tomato,
Onion, Green Pepper, Drum Sticks, Lady's finger, Banana, Papaya, Spinach, Cucumber,
Mushroom, Mushroom Spawn, Radiata, Seeds, Buds, Plantation & Related Products - Basil Seed,
Cumin seeds, Dill Seed, Buds, Celery Seed, Hybrid Seeds, Sesame Seeds, Sesbania Seed,
Sunflower Seeds, Mustard Seeds, Oil Seeds, Plant Products, Plantation, Plants, Psyllium Seed,
Fennel Seed, Fenugreek Seed, Herb Seeds, Tamarind Seed, Vegetable Seeds

 Spices - Black Pepper, Chilly, Cinnamon, Cloves, Coriander Powder, Cumin, Dry Ginger, Dry Red
Chilly, Cardamom, Anise, Salt, Pepper, Fenugreek, Clove, Ginger, Turmeric, Turmeric Powder,
 Tea & Coffee - Black Tea, Coffee, Coffee Beans, Darjeeling Teas, Assam Teas, Instant Coffee,
Leaf Coffee, Leaf Tea, Packaged Tea, Green Tea, CTC Teas,

 Tobacco & Tobacco Products - Betel nut Leaves, Betel nut, Bidi Leaves, Chewing Tobacco,
Arecanut, Snuff, Opium, Pan, Jute, Tobacco, Rubber etc
The acts and rules that governs the process of Contract Farming

in Indian Rural Economy

 Agricultural Produce (Grading and Marking) Act, 1937

as amended in 1986.
 Agricultural Produce Grading and Marking Act, 1937
 Schedule Appended to AP (G&M) Act 1937
 General Grading and Marking Rules, 1988
 Commodity Grading and Marking Rules
 List of commodities whose Agmark Grade Standards
have been covered under AP (G&M) Act 1937
 Manual on Standards of Paddy
 Manual on Standards of Wheat
 Manual on Standards of Maize
 Manual on Standards of Mustard and Rapeseed
 Private Sector Companies involved in Contract Farming in India

state Commodity
Name of the Campany

Appachi Cotton Company Cotton

TN, Karnataka
Zamin Uthukuli, Pollachi
Coimbatore
 

AVT Natural Products Ltd Karnataka

Marigold Caprica Chilly
72-E, Chesney Estate
Ethiraj Salai

Cargill India Pvt Ltd Madhya Pradesh Wheat, Maize and Soybean
DLF Gateway Tower
11 & 12th Floor, DLF City, Phase III
Gurgaon 122 002
Escorts Ltd Punjab Basmati
Agri Machinery Group
18/4 Mathura Road
Faridabad – 121007

The Global Green Company Pvt Ltd Karnataka, AP

(Naan) Gherkin, Babycorn, Paprika
220, Alembic Glass Complex
Whitefield Hoskote Road
Whitefield Bangalore

Hindustan Lever Ltd

Madhya Pradesh Wheat
165/166, Backbay Reclamation
Mumbai -40002

Ion Exchange EnviroFarms Ltd TN, MP, Gujarat, Organic Products of Banana,
Neeta Towers Haryana, Pineapple, Papaya, Wheat,
Pune-Mumbai Highway Maharashtra Basmati, Cotton
Dapodi
Pune - 411012

ITC - IBD Soybean

Madhya Pradesh
ITC Green Centre
Ist Floor, Sector 32
10, Industrial Area
Gurgaon 122001
Ken Agritech Pvt Ltd Gherkin
Karnataka
Factory & Field Operations
#131/1A, Anchatageri
Karwar Road Hubli (Karnataka)
Marico Ltd Maharashtra, MP, Safflower
Rang Sharda, 5th Floor Gujrat, Karnataka,

Chattisgarh, Rajasthan
Bandra (W) Mumbai- 400050

Mahindra Shubhlabh Services Ltd Maharashtra, Punjab Many crops

Mahindra Towers, 3rd Floor
Worli
Mumbai
Nestle India Ltd Punjab milk
Nestle House
Gurgaon - 122 002
Nijjer Agro Foods Pvt Ltd Punjab Tomato and Chilly
Maharbhan Pura
P O Jandiala Guru
Dist Amritsar 143115

 
Pepsi Foods Pvt Ltd Punjab, TN Chillies, Groundnut, seaweed,
3B, DLF Corporate Park Tomato and Basmati Rice
S Block, Qutub Enclave, Phase III
Gurgaon 122 002

Rallis India Punjab, UP, MP, Maharashtra,

Appejay House, 7th Floor Basmati, Wheat, Fruits, Vegetables
3 Dinshaw Vaccha Road, Karnataka, TN
Churchgate
Mumbai 400020
Suguna Poultry Farm Ltd TN,  AP Broiler
Corp Off: 5th Floor
Coimbatore -641018
 

United Breweries Punjab

UB House Barley
1/1, Vittal Mallaya Road
Bangalore 560001

CG Herbals Chattisgarh Patchouli, Veiver, Aromatic Crops

S12-Greenparadise, Orissa
Vishalnagar, Telibandha for essential Oil

Raipur-492006

Sanjeevani Orchards Pvt. Ltd. Madhya Pradesh

Pomegranate