Contract farming is one type of farming which can be described as a contract or an agreement between a farmer and a buyer. Due to this agreement or contract between two people, there would be terms and conditions involved in production as well as marketing. In this type of farming, the farmer will come to an agreement with the buyer that he would produce the quantities of particular agricultural products which he has agreed. So, the farmer will need to produce the promised quantity of the crop at the specified time, which would be set by the buyer. At the same time, the buyer also needs to provide the farmer with the necessary inputs required for the farm like preparation of land, technical aspects etc. He should also make sure that he would be buying the products. Contract farming is looking towards the benefits both for the farm-producers as well as to the agro-processing firms. Producer/farmer • Makes small scale farming competitive - small farmers can access technology, credit, marketing channels and information while lowering transaction costs • Assured market for their produce at their doorsteps, reducing marketing and transaction costs • It reduces the risk of production, price and marketing costs. • Contract farming can open up new markets which would otherwise be unavailable to small farmers. • It also ensures higher production of better quality, financial support in cash and /or kind and technical guidance to the farmers. • In case of agri-processing level, it ensures consistent supply of agricultural produce with quality, at right time and lesser cost. • There would be a continuous flow of the raw material and this happens without any sort of interruption.

Contract farming is one type of farming which can be described as a contract or an agreement between a farmer and a buyer. Due to this agreement or contract between two people, there would be terms and conditions involved in production as well as marketing. In this type of farming, the farmer will come to an agreement with the buyer that he would produce the quantities of particular agricultural products which he has agreed. So, the farmer will need to produce the promised quantity of the crop at the specified time, which would be set by the buyer. At the same time, the buyer also needs to provide the farmer with the necessary inputs required for the farm like preparation of land, technical aspects etc. He should also make sure that he would be buying the products. Contract farming is looking towards the benefits both for the farm-producers as well as to the agro-processing firms. Producer/farmer • Makes small scale farming competitive - small farmers can access technology, credit, marketing channels and information while lowering transaction costs • Assured market for their produce at their doorsteps, reducing marketing and transaction costs • It reduces the risk of production, price and marketing costs. • Contract farming can open up new markets which would otherwise be unavailable to small farmers. • It also ensures higher production of better quality, financial support in cash and /or kind and technical guidance to the farmers. • In case of agri-processing level, it ensures consistent supply of agricultural produce with quality, at right time and lesser cost. • There would be a continuous flow of the raw material and this happens without any sort of interruption.