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What is Life-changing contract farming? Advantages and challenges in India 2020

 

History of Farmer’s in India:

Hello, dear friends, in this article I will tell you about  “What is Life-changing contract farming? Advantages and challenges in India 2020”.

Agriculture is the main source of income of most people in India. estimated 61.5% of the 1300 million Indian population is rural and hooked into agriculture.

The number of farming households is 159.6 million.
Agriculture plays a big role in India’s economy.agriculture is the backbone of India.

MAN-ON-WATER

But due to the change in the weather with time, and lack of technical knowledge and financial support many farmers had to abandon their crops and concentrate on other options. India’s weather has changed so much for many years.

when farmers need rain to irrigate their crops, it does not rain and when they do not need rain, it rains so much that all their crops are destroyed.

And the groundwater is going down day by day and there is not much money on the farmers to make them boring again and again to irrigate their fields.

man-hand-fruit-papaya

Due to this natural disaster, all their crops are destroyed, which causes them financially and mentally.

Because the farmers are not financially strong enough to face this disaster, and they have left farming and started looking for other options in the city.

But now contract farming can be a good option for them. So that they will not have to leave their village and go towards the city.

What is contract farming?

We can say that contract farming is the future of the Indian farmer.
Contract farming is an agreement between farmers and cooperative farms.

In which the agriculture product carried out according to an agreement between a buyer and a farmer.

what-is-contract-farming?

Which settle the condition for the product and marketing of farm products.
We can say that the farmer has to provide an agreed quantity of a specific product.

The farmer has to maintain the quality of the product according to the given contract at the delivery time.

The buyer commits to provide the technical advice if the farmer needs, and the buyer commits to buy the product. he can not deny purchasing the product from the framer.

Business models of contract farming:

There are 5 types of business models available:

  1. Intermediary model
  2. Centralized model
  3. Informal model
  4. Multi parties model
  5. Nucleus estate model.

1. Intermediary model OF contract farming:

a-person-s-hand-touching-wheat-grass

In this model, the buyers arrange the contractor to an intermediate with farmer organization or collector who formally contracts farmers.

This intermediary provides fixed services and purchases with the crop.

This model works very well when it well designed and incentive structures are sufficient. This model can provide a big benefit to the farmers.

2. Centralized model OF contract farming:

 

man-wearing-black-crew-neck-short-sleeved-t-shirt

In this model the power in the hand of buyers. They control the most production aspects from land preparation to harvesting.

In this model, all groups of farmers like small, medium, or large farmers can contact the buyers.

The relation between farmers and buyers are strictly organized in a centralized model.

In this model production and harvesting process is done in a very controlled way.
In some time directly managed by the buyers.

The centralized model deals with tobacco, cotton, sugar cane, tea, coffee, vegetables, tree crops, poultry, and dairy.

3. Informal model OF contract farming:

This model is a very risky model for both buyers and farmers. but sometimes it depends on the situation.

If you maintain a long relationship then the chance of risk is very low.
The informal model deals with products like fresh vegetables, fruit, staple crops.

4. Multi parties model OF contract farming:

 

rice-terraces

This model involves various organizations like government bodies, private companies, and financial institutions.

some organizations like cooperatives may organize and provide some services like credits, marketing, extension, and processing.

These schemes provide a balanced share for producers.

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5.Nucleus estate model OF contract farming:

 

ginger-bread-hay-themed-under-blue-cloudy-sky-during-day

In this model, the buyers have more power than farmers. this model demands a big investment by the buyers into the land, staff, management, and the machine.

In this model the supplies are guarantees. This model also uses some time for research, piloting, and demonstration purposes.
This model deals with all kinds of products.

Advantages:

person-holding-green-leaf

Producer or farmer:

Contract farming provides benefits both the farm-product and agro-processing firms.

The main advantage of contract farming is that they make small scale farming more comparative. the small farmers can access the latest technology, credit.

Small farmer gets the latest information about farming which reduces the cost of growing crops and increases the profit.

Now they no need to worry to sell there product.they also get a fair price of there product. The contract farming opens the opportunity for the small farmers.

Contract farming provides a new market place for small farmers, where they can sell their product at a good price. With the latest technology, they get higher production and better quality.

Small farmers get financial support and technical guidance.

Agri-farmer:

They utilize their infrastructure and manpower at the highest level.

They maintain food safety and quality for the consumers. they make direct private investment in agriculture activities.

In agri-based firms the price fix after the negotiation between the firms and the producers. The farmer gets the assured price under terms and conditions.

Farmers get all kinds of information and technical help if he faces the problem.

So we can say that these schemes are good for the farmers.they can get a good amount of fair money which they deserve.

Challenges Of this policy 

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Some time the Contract agreement is often verbal which provides no legal policy. Some time even in writing contracts often do not provide the legal protection of there product.

There a single buyer and multiple sellers, so the buyer have an advantage over them.

Suitable product’s for Contract Farming

 

abundance-agriculture-bananas-batch

In contract farming, there are various agricultural products are suitable for practices like basmati rice, dairy processing, medicinal plants, edible oils, durum wheat, poultry, potato for making chips and wafers, tomato pulp, exotic vegetables, organic dyes, flowers, baby corn cultivation, onions, mandarin oranges, mushrooms, etc.

Top 5 contract farming companies in India

  1. INDIA PLANTATION
  2. Big India Farms (BIF)
  3. Farms and Farmers Foundation (FnF) 
  4. InI Farms
  5. SIMRAN Group 

Top 5 Agribusiness Companies in the World

  1. Country: Germany.BASF. Revenue (2018): US$6.8 billion.
  2. Country: Norway Yara International. 
  3. Country: Switzerland. Syngenta AG. 
  4. Country: USA. Deere & Company. 
  5. Country: The Netherlands. CNH Industrial NV. 

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SUNIL YADAV
I was born into a farmer's family in a village near Banaras. I completed my studies in mechanical engineering and I am the first engineer in my village. Since childhood, I have been more attracted to nature and wanted to do something that would keep me connected to farms and farmers. I love to do research and collect the latest information about agriculture, horticulture and then I write articles about them. If my farmer brothers benefit even a little from the articles I write, I will consider myself very lucky.

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