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Contract Farming

Contract Farming. One Option For Creating A Role For The Private Sector In Agriculture Development?. What Is Contract Farming ?. ESSENTIALLY. The Farmer Is Contracted to Plant the Contractor’s Crop on His Land

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Contract Farming

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  1. Contract Farming One Option For Creating A Role For The Private Sector In Agriculture Development?

  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. 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 labour. • 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.

  4. Moving From Food Security To Market Demand THE TRADITIONAL MODEL Mfrs. Brand Marketeers Farmer Mandi Buyer Processor Distributors Retailers Consumers CONTROL ZONE

  5. Mfrs. Brand Marketeers Contract Farming Variety Evaluation Dist. Retail R&D Activity Seed Selection Processing Consumer Moving To A Value Delivery Sequence Communicate the Value Provide the Value Choose the Value SPAN OF INVOLVEMENT This is what we will be planning to adopt later on after ensuring of availability of raw material locally.

  6. Assistances: • R&D assistance • Soil Testing, Hybrid Seeds, Fertilizers, Pesticides • Evaluation of farmers economics model • Technical Assistance • Farmers Training • Crop Timing & Crop Monitoring • Soil preparation & Field selection • Seed sowing & Usage of fertilizers, Pesticides • Irrigation assistance • Harvesting technology • Commercial Assistance • Procurement, transportation logistics assistance • Prompt farmers payment system. For The Farmers

  7. The Advantages Of Contract Farming • Exposure To World Class Mechanised Agro Technology for high productivity. • 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 To The Farmer

  8. 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 Organisation.

  9. The Advantages Of Contract Farming To The Investors • Large Volume of business altogether without any marketing cost and Manpower. • Long Term business Planning Possible. • Investment can be Be Extended To Other Crops intern more business. • Builds Long Term Business association. • Dedicated team for ensuring investment return. • Generates Goodwill For The Organization and farmers.

  10. Contract Farming - Industry Related Issues • Honouring 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. Thank You

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