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The most common method of corporate involvement in agriculture in India is contract farming.

It is basically an agreement between a farmer and a corporate entity which who agrees to buy a particular agricultural product at a pre-determined price. The corporate entitites were either processing the product or needed it as an input in some other product. The former was generally the case in products like tea, tobacco, etc, while the latter generally in the field of pharmaceutical, and mor recently ayurvedic product.

 

More recently, particularly after the WTO regime, the product is packaged and marketing for export as special products like Basmati Rice,. In the last few years, we have seen a proliferation of large retail chains - like Spencers, Big bazaar, and now Reliance Fresh.

 

Traditionally, most of the contract was done through intermediaries, who would double up as money lenders, and traders for the supply of inputs. The company would also use the trader-intermediaries to provide technical advice.

 

Dpending on the product and the situation, the contract would stipulate varying conditions of

a) terms and conditions like price, grading for sale-purchase of crop or livestock

b) supply of seeds by the buyer

c) land preparation and technical advice

d) production methods and specifications, including inputs, cultivation practices, harvesting

 

Contract Farming is therefore billed as an ideal synergy and partnership between farmers and agribusiness. It is also seen as the ideal method of transfering technical skills and therefore modernising agriculture.

It is also seen to be ideal for small farmers, who have a low risk appetite, and apparently are no longer competitive in the global market place, and who cannot access the market.

 

Price determination:

Enforcement of contract poor, if market price goes above contract price.. resulting in strong arm tactics by internediaries..

 

Some problems:

Women tend to bear the brunt of contract work, particularly grading,

Use of child labour

Tendency to monoculture, exploitation and degradation of land

Aleination from livelihood based work,

 

Albour conditions..