Contract Farming in India

Contract Farming is operational in India for the last couple of years and an increase in the number of corporates entering the field has been witnessed. This has generated a debate over the effectiveness of the agribusiness model in enhancing farm income and employment, potential impact on small farmers, degree of technology transfer to the farmers, social responsibility of the corporates in terms of adoption of environment-friendly production process, effective management of ex post-opportunistic behaviour of the corporates, etc. It is observed from the literature that barring minor exceptions, contract farming has broadly been a successful affair. A better outcome could be expected if a number of systemic reform measures are undertaken at the earliest. On one hand, the infrastructure level ought to be massively augmented and on the other, contract farming should be formalised in all states, so as to make it binding on both concerned parties.