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what is contract farming

what is contract farming插图

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A contract farming agreement is not a partnership; it is a joint venture between two parties. The Farmer is engaging the services of the Contractor and this trading position is preserved insofar as tax,VAT,etc. are concerned. Both parties retain their individual identity as farm businesses in their own right.

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  • What is a contract farming agreement?

  • A contract farming agreement is not a partnership; it is a joint venture between two parties. The Farmer is engaging the services of the Contractor and this trading position is preserved insofar as tax, VAT, etc. are concerned. Both parties retain their individual identity as farm businesses in their own right.

  • What are the advantages of contract farming?

  • Contract farming will help in the increase of the inputs in terms of production as they will be given by the buyers or the contractors. The farmer will get all the credit for the farming which he has done in the form of cash.

  • What are the conditions involved in contract farming?

  • The conditions will generally involve the price of the crop, quantity, quality, time of production for delivery. In this type of contract farming, the buyers or the firms will provide the inputs for production to the farmers along with the marketing. In this type of contract farming, production and marketing will be taken care of by the buyers.

  • Which is the best model of contract farming?

  • This is the best model of contract farming as it involves less risk for both buyer and farmer. The intermediary model is mostly followed in Asia, where the subcontracts occur between the farmer and the intermediaries. These intermediaries are collectors of crops which would be generally from the community of farmers.

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