Organization Centre for Management in Agriculture, Indian Institute of Management, Ahmedabad

Year 2005

This paper addresses some merits and demerits of contract farming by exploring the basic economic rationale of contract farming and the existing practices and their implications. The nature and the practice of the ‘contract’ are central to the issue of contract farming. The paper argues that it is of utmost importance to cogently draft the contract with apposite pricing clauses to protect the benefits of the primary producers and farmers. The need to have a comprehensive statutory protection from ill effects of contract farming for the farmers also need not be overemphasised. The paper also points out the need to strengthen the agricultural co-operatives, the Non Governmental Organisations (NGOs) and the civil society so as to enable them play a prominent role in protecting the interests of farmers in contract farming.