Contract Farming: Conceptual Framework and Indian Panorama

This paper deals with conceptual framework of contract farming and portrays Indian scenario especially after announcement of National Agricultural Policy (2000) which encouraged private participation through contract farming. The conception of contract farming is not new in India, but it gets momentum in the era of agricultural globalization, as an alternative method of farming. The study reveals that while contract farming can be effective in introducing new technologies and providing external inputs to farmers, danger lies in firms extending technologies that bring financial benefits in the short-term but result in negative long-term health and environmental impacts. Contract farming is not appropriate for all types of crops. To have a significant poverty impact, crops produced under contract farming should be labour-intensive rather than input-intensive and should be appropriate for production on small plots of land. Since the contracting company is financially stronger than individual farmers, the terms of the contract may go against the farmers. Herein the government will have to come forward.