Contract farming is a kind of system in which bulk purchaser enters into contract with farmers. It includes agro- processing, exporting and trading units. They purchase a specified quantity of any agricultural commodity at pre agreed price. Sponsor provides all kind of production support to the contracted farmers. This include extension service also.
- This will help to provide sustainable source of livelihood. It will provide an alternative market mechanism.
- Exposure to international markets.
- More FDI in agro processing industries.
- Employment generation in Food processing industries
- Improvement in cold supply chain and hence reduction in wastages.
- Pooling of land will help in utilising the land properly as 86% of the farmers in India are small and marginal farmers.
- Farmers no longer have to transport their produce to the mandis and hence reduction in the cost.
- Better access to technology, crop diversification, extension services
Government of India has recently passed Model Contract farming act, 2018 for better centre-state co operation on land lease. It will help to provide an ecosystem for the growth of contract farming.