Contract Farming At Glance

Contract farming has been in existence for many years as a means of organizing the commercial animal production of both large scale and small scale farmers. In an age of market liberalization, globalization and expanding animal production business, there is a danger that small scale farmers will find difficulty in fully participating in the market economy. The era of globalization, the concept of ‘Contract farming’ is an effective way to co-ordinate and promotes production and marketing in animal production. Contract Farming can be defined as an agreement between farmers and processing or marketing firms for the production and supply of animal products under forward agreements, frequently at predetermined prices. Contract farming is essentially an agreement between unequal parties, companies, government bodies or individual entrepreneurs on the one hand and economically weaker farmers on the other. The main feature of Contract farming is that the buyer/contractor supplies all the material inputs and technical advice required for animal production to the producer. This approach is widely used for poultry, pigs, dairy products and even prawn and fish.