Contract Farming - Economy UPSC notes

Contract Farming – Meaning & Example 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. Key Features of Contract Farming: ✅ 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. Example of Contract Farming: 🔹 PepsiCo & Potato Farming in India PepsiCo India engages in contract farming with potato farmers in Punjab, Uttar Pradesh, and West Bengal. It provides seeds, agronomic advice, and assured prices to farmers. The harvested potatoes are used to manufacture Lay’s chips . Thus, contract farming benefits both farmers (assured income) and companies (stea…