1. WELCOME

2. CONTRACT FARMING
Given BY:-
Ravi Mehta
Manpreet Singh
Yatendra Singh

3. INTRODUCTION
• Contract farming is Agricultural production
carried out according to an agreement between a
buyer and farmers, which establishes conditions
for the production and marketing of a farm
product or products.
• The farmer agrees to provide established
quantities of a specific agricultural
product, meeting the quality standards and
delivery schedule set by the purchaser. In
turn, the buyer commits to purchase the
product, often at a pre-determined price.

4. AGRICULTURE RISK MANAGEMENT :
PERSPECTIVES FROM INDIA
Types of Agriculture Risks
• Production Risk
• Price Risk
• Financial Risk
• Institutional Risk
• Technology Risk
• Personal Risk
Risk Management Strategies
• Crop Insurance
• Minimum Support Price
• Contract Farming

5. AGRICULTURE RISK MANAGEMENT :
PERSPECTIVES FROM INDIA
• Crop Insurance, Minimum Support Price are traditional
mechanisms
• Weaknesses Crop Insurance: Coverage is less than 15%
Farmers.
• Weaknesses of MSP: Only for a limited number of key crops,
whereas high value horticulture, plantation crops are not
covered
• Contract Farming, commodity markets are relatively new
approaches
• Involvement in commodity markets is very negligible because of
high level of illiteracy
• Several models of contract farming are emerging

6. CONTRACT FARMING VERSUS
TRADITIONAL FARMING
Typical Traditional Value Chains
• Lack of Information about quality of inputs, seed varieties, etc.
• Purchase of Inputs: purchased from trader on credit
• Crop Production: No technical information about new
techniques, methods to enhance productivity
• Sale of Produce: Mandi (Market) taxes, transportation cost, other costs
• No one gives him information, about where his produce was
sold, what is the specific demand in this market
• The produce is on a hot and long journey to other states, cities,
leading to HUGE wastage because of lack of post harvest
management

7. ADVANTAGES OF CONTRACT FARMING
(TO FARMER)
• Inputs can be provided (less uncertainty regarding
availability, timing, credit, etc.)
• services can be provided
(mechanization, transportation,etc.)
• technological assistance can be provided
• production and management skills enhanced
• market outlet is secured
• income stabilization is promoted
• credit access enhanced (in kind or via banks)

8. DISADVANTAGES OF CONTRACT
FARMING (TO FARMER)
• increased risk; (risk is more likely when the agribusiness
venture is introducing a new crop to the area.)
• unsuitable technology and crop incompatibility; ( new crop to
be grown under conditions rigorously controlled by the
sponsor can cause disruption to the existing farming system)
• manipulation of quotas and quality specifications;(Inefficient
management can lead to production exceeding original targets)
• corruption;(Problems occur when staff responsible for issuing
contracts and buying crops exploit their position)

9. THANK YOU