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How does contract growing work?

What is Contract Growing? Production contracts are increasingly common in the agricultural business. Rather than market and sell their own products, farmers often sign contracts that commit them to raise and deliver products for one specific company.

Is contract farming done in India?

Yes, under these contracts the farmers were exploited. However, the scenario changed after independence. In the 1950s first time contract based seed production started. The concept got recognition when a FMCG company called PepsiCo came to India and set up a tomato processing plant in Hoshiarpur, Punjab.

Is contract farming profitable in India?

The contract farming is more beneficial for large farmers in terms of production so the small earn less profit in comparison to large farmers. Basically In India there are no strict rules and regulations regarding the fulfillment of the contract, which results in the failure of the contract.

What is contract farming in India?

Contract farming can be defined as 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. Typically, the farmer agrees to provide agreed quantities of a specific agricultural product.

Is contract farming compulsory in India?

Regulated under the Indian Contract Act, 1872. The Model APMC (Agricultural Produce Market Committee) Act, 2003 provides specific provisions for contract farming, like compulsory registration of contract farming sponsors and dispute settlement.

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