Contract Farming PPT
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1. Contract FarmingOne Option For Creating A Role For The Private Sector In Agriculture Development?
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2. What Is Contract Farming ?
ESSENTIALLY
The Farmer Is Contracted to Plant the Contractor’s Crop on His Land
Harvest and Deliver to the Contractor, a Quantum of Produce, Based Upon Anticipated Yield and Contracted Acreage
This Is at a Pre Agreed Price
Towards These Ends, the Contractor May or May Not Supply the Farmer With Selected Inputs
3. ELEMENTS OF CONTRACT FARMING
PRE – AGREED PRICE
QUALITY
QUANTITY
TIME
4. What Else Did It Do?
Mono-culture,over fertilization & excessive water usage
Soil degradation..
Singular focus on supported crops discourages diversification.
Subsidized exports to liquidate stock creates a further distance between the international market & domestic reality.
To succeed in this context contract farming needs to go well beyond its simple definition
5. 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.
6. Moving From Food Security To Market Demand
7. Moving To A Value Delivery Sequence
8. The Advantages Of Contract Farming
To The Farmer
Exposure To World Class Mechanized Agro Technology.
Obtains An Assured Up Front Price & Market Outlet For His Produce.
No Requirement To Grade Fruit, As Mandatory For Fresh Market Sale.
Bulk Supplies Versus Small Lots As Again Reqd By The Fresh Market.
Crop Monitoring On A Regular Basis. Technical Advice, Free Of Cost At His Doorstep.
Supplies Of
Healthy Disease Free Nursery
Agricultural Implements
Technical Bulletins Etc
Remunerative Returns
9. The Advantages Of Contract Farming
To The Company:
Uninterrupted & Regular Flow Of Raw Material.
Protection From Fluctuation In Market Pricing.
Long Term Planning Made Possible.
Concept Can Be Extended To Other Crops.
Builds Long Term Commitment
Dedicated Supplier Base
Generates Goodwill For The Organization.
10. Contract Farming - Industry Related Issues
Honoring Contracts - there is no credible enforcement mechanism in place.
Small size of land holdings.
Need to contract with a larger number of farmers, thereby increasing risk.
Lack of a comprehensive crop insurance scheme
11. Some Suggestions To Promote Contract Farming
Contract farming organizations are allowed to take out realistic & deregulated crop insurance policies.
Facilitate import of varieties / hybrids for contract farmers. Growth will be led by productivity enhancement & market focus.
Research system synergy with both farmers & private sector
12. In Conclusion
India, given the diverse agro climatic zones, can be a competitive producer of a large number of crops.
Need to convert our factor price advantage into sustainable competitive advantage.
Contract farming offers one possible solution.
13. Thank You.
