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Contract farming is an agreement between a farmer and a buyer (company, exporter, or processor) where the farmer agrees to grow a specific crop for the buyer under predetermined conditions, such as price, quality, and quantity.
✅ Assured Market & Price: Farmers get a pre-fixed price for their produce.
✅ Input Support: The buyer may provide seeds, fertilizers, and technical guidance.
✅ Quality Standards: Farmers must meet the quality requirements of the buyer.
✅ Risk Reduction: Farmers are protected from price fluctuations in open markets.
🔹 PepsiCo & Potato Farming in India
Thus, contract farming benefits both farmers (assured income) and companies (steady raw material supply).