Contract Farming Pros And Cons

This gives farmers the comfort level to be able to focus on what they are good at. Farmers will receive due to the fact there may not be anything to examine with.

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The pros and cons of contract farming Advantages for farmers 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 with spill-over effects market outlet is secured.

Contract farming pros and cons. No capital cost of machinery or depreciation charges. Pros and cons. Contract farming is helpful for farmers because they will get price assurance beforehand.

Enter corporate farming. While previously it was limited to small philanthropic initiatives from the corporate honchos now with entry of big business houses like TATA Reliance ITC and PepsiCo it has become a mainstream initiative. Unequal bargaining power between farmers and buyers.

While contract farming has essential advantages for both producers and buyers it can be difficult to maintain a balance between the standpoints of both involved parties. Guaranteed market for farmers. Uses specialists whose reward depends on their achievement.

It obligates the farmers to the contractual agreement and one is legally bound to adhere to the terms and conditions in the agreement. Cons of contract farming business plan. Environmental risks from growing only one type of crop.

Risk of indebtedness from loans provided by the buyer. Cons of contract farming from the perspective of farmers interests. On paper contract farming looks bewitchingly rosy.

He said Contract farming is extremely beneficial to the farmers and the companies he said. Contract Farming in India -Pros and Cons Agriculture sector in India is all set to experience a see change all thanks to contract farming. Easy access to inputs by farmers and assured access to commodities by contract companies.

Pros and cons of contract farming Commodity Online Special June 01 2007 1956 IST Farmers in India are all set to see a sea-change in agriculture sector soon thanks to contract farming. It also focuses on boosting production which means less imports and more exports. The disadvantage of contract farming is that it ties one down.

It aims to give farmers a guaranteed market better income reduces the need for them to move to cities and towns and introduces them to modern farming methods and tools. Creates economies of scale. It also pollutes the soil and is negligent towards animal health welfare.

CONTRACT FARMING AGREEMENTS. Possible delays in payments and late delivery of inputs. Moreover corporate farming may soon be a threat to the water bodies that will quickly dry up from excess irrigation polluting of fisheries by disposal of chemical wastes depletion of oxygen in the atmosphere and increasing threat to all those engaged in agriculture.

Essential commodities bill 2020 can help in stabilising the prices. Some companies provide seeds fertilisers and other requirements too which will reduce the burden of input costs for farmers. Contract agencies have the very last say on excellent and may reject sub-standard commodities to allocate a decrease grade.

For investors and contractors contract farming overcomes land constraints and is more politically acceptable. While the Government - by way of Parliamentary Mandate wants to protect the farmers - as land owners - irrespective of consequences and breach of contract terms by them the Government under the pressure of Industrial Lobby also want to please them by legislating the Contract Farming Laws. However investments in training and know-how farmer discontent and disputes extra-contractual marketing by the farmers and diversion by farmers of inputs supplied to them all are risks to be supported by the.

Pros and cons of contract farming 1. An effective contract farming relationship requires trust and flexibility along with strong incentives for the contractor which also rewards the farmer via a share of greater profits. One advantage for farmers is that engaging in contract farming can open up new markets for the smallholder producers which would otherwise be not available to them.

Quality is controlled by the investor and crop risks are shared with the farmers. The farmers get the assurance that their crop will be bought by the company and the company especially food processors have an accurate idea about the quantity of raw material they can source depending on their requirements. There is fundamental flaw in Contract Farming as an avenue for future farming.

OPERATOR ADVANTAGES Reduced capital costs Reduced risk of a bad season. Loss of flexibility to sell to alternative buyers when prices increase. The best thing with contract farming is that there is always a sure and ready market for a farmers produceFarmers are well protected against the risk of potential lossesRegardless of market fluctuations farmers will sell produce at a prior agreed rate.

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