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K.S Ashok Kumar

K.S Ashok Kumar, Founder & Director, MAA Integrators.

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How Contract Farming can Help the Hapless Farmers in India

Around 70% of the total population in India directly or indirectly depends on agriculture to earn their livelihood. While India is a predominantly agriculture economy, the condition of farmers in the country is alarming. Around 80 percent of those involved in the agricultural sector comprise of small and marginal farmers.

India still remains a rural economy, with agriculture and allied sectors employing nearly fifty percent of the country’s workforce. Needless to say, growth in agriculture will ensure socio-economic growth as well. Unfortunately though, the cases of farmer suicide in India have increased alarmingly over the past couple of years. There are several reasons that force them to take such a drastic step. Factors like drought, lack of irrigation, and the inability to recover the production cost due to the low market price, can be attributed to such an untoward incident.

The main problem facing the rural economy is to tackle the current situation of increasing farmer suicides. Though the government plays a very vital role in promoting the rural economy, by curbing various challenges; there are other ways like contract farming, which help thousands of hapless farmers in India. The concept of contract farming is not something new and has been in existence since 1960s.

In contract farming, a company or a buyer and a group of farmers come to an agreement to undertake a farming enterprise. Usually farmers involved in contract farming will get everything; starting from seeds, fertilizers, and most importantly the credit. This way, the produce can be tailor made as per the requirements of the buyer. Contract Farming ensures that the farmers land is secured to retain ownership over their land, enforcing the right of the farmers.

The size of land holding per individual in India is 1.14 hectares and, to exacerbate the situation, it is declining. The issue with having divided land possessions is the trouble in actualizing new-age advances and scientific farming methods. This prompts the discernment that small scale agriculturists won't have the capacity to effectively add to enhancing efficiency, security and occupations in our country. But with Contract Farming even little and landless producers are finding new roads, contributing to India’s Agro-market economy.

An efficient management practices ensure sustenance security and profit for farmers, to produce in a commercial way than depending on the monopoly crop life cycle.

Following are the advantages of contract farming:

Inputs and production services are sponsored

In contract farming, inputs and production services are often supplied by the contract company. They may also get extensive training course for ensuring that proper husbandry practices are followed in order to achieve the maximum projected yields. 

No capital needed

Perhaps this is the main advantage of contract farming. Farmers don’t need to shell out their own money to start the cultivation process. For poor farmers it is very difficult to come up with financial aid that for the farming. In contract farming, the buyer or the contract company will provide the farmer with necessary capital. 

Adaption for new technology

Contract farming often enables the farmer to use new technology for farming. Usually, farmers don’t have enough money to afford advanced agricultural machinery, but in contract farming, the farmers get the access to the same. 

Minimum wage ensured 

A fair contract would ensure the farmers would get at least a minimum wage even if the produce does not meet the expectations of the buyer. This is helpful for the poor farmers as it guarantees them, a steady income source. Since they get the credit from the buyers, chances of them getting into a debt trap is almost negligible.

More opportunities

Contract farming gives farmers access to more opportunities. Especially for small farmers, contract farming can open new markets that would not be available to them otherwise. 

Contract farming, with its wide presence across several Indian states, has proved to be quite successful in Punjab too, where agricultural sector is the largest contributor to the GSDP (Gross State Domestic Product). 

Bangalore-based MAA Integrators, led by Mr. Ashok Kumar, has successfully implanted contracting farming, helping numerous farmers in the process. 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house



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