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1. CONTRACT FARMING
Presented By
RAJANI KANTH.M
RMBA/2014-08.

2. Historical background
 For the first time it was introduced in Taiwan in 1895 by Japanese government
 In India it was introduced by Pepsi company for the cultivation of vegetables
particularly tomato and potato in Rajasthan in 1927.
 In Karnataka contract farming was started with the cultivation of gherkin in
20th century

3. Meaning of Contract Farming:
• It is an agreement between
farmers & processing and
marketing firms for the production
and supply of agricultural products
under certain agreement,
frequently at predetermined
prices.

4. OBJECTIVE OF CONTRACT FARMING
To achieve consistent quality
To achieve regular supply
To improve quality of produce
To stabilize the agro-raw
produce
 price is not affected by market
prices

5. Contract farming – triangular benefit :

6. Need for contract farming in India:
• Production and marketing are very critical in India.
• Over come inadequate linkages with market.
• Lack of capital, poor infrastructure, technology transfer, etc…
• To avoid post harvest losses.
• Unfavorable conditions for procurement.
• To avoid migrations.

7. TYPES OF CONTRACTS :
1. Marketing contract
 Only purchase at predetermined price.
 No input supply.
2. Partial contract
 Provides only some inputs at predetermined price.
 Purchase of produce.
3. Total contract
 All the inputs at predetermined price.
 Purchase of produce.

8. The advantages of contract farming
1. Provision of inputs and production services.
2. Access to credit
3. Introduction of appropriate technology
4. Skill transfer
5. Guaranteed and fixed pricing structures and
6. Access to reliable markets.

9. Benefits to the Farmer:
 Assured markets & returns
 Risk elimination due to price fluctuation
 Timely transport
 Reduces exploitation from middlemen
 Reduces lending from private money lenders
 Adequate input supply
 Employment generation

10. Benefits to the Company:
 Uninterrupted & Regular Flow of Raw Material
 Protection From Fluctuation In Market Pricing.
 Long Term Planning Made Possible.
 Builds Long Term Commitment
 Dedicated Supplier Base
 Generates Goodwill For the Organization

11. IMPACT CONTRACT FARMING
PRODUCTIVITY OF RICE AND WHEAT

12. Models of contract farming in India :
Three models of contract farming
1. Bipartite Agreement model
2. Tri-partite Agreement model
3. Quad-partite Agreement model

13. Bipartite Agreement model:

14. Tri-Partite Agreement Model:

15. Quad-Partite Agreement Model :

16. Status of contract farming in India :
• Nearly Five lakh hectares is under contract farming India
• More than 600 national and multinational companies are in
contract farming

17. State wise under contract farming:

18. PARTIAL LIST OF COMPANIES ESTABLISHED
CONTRACT FARMING IN INDIA :
• HUL
• ITC
• SUGUNA POULTRY
• VENKATESHWARA HATCHERIES
• PEPSICO
• RALLIS
• NESTLE

19. CONCLUSION:
• India, given the diverse agro climatic zones, can be a competitive producer
of a large number of crops.
• There is a Need to convert our factor price advantage into sustainable
competitive advantage.