General Studies- III: Economy [15 Marks 250 Words ]
Answer Structure:
- Introduction: Definition of Contract farming
- Body: Advantages of Contarct farming
- Conclusion: Private sector participation in Agriculture
Answer
Introduction
Contract forming or contract marketing essentially is an arrangement between the farmer- producers and the agribusiness firms to produce certain pre-agreed quantity and quality of the produce at a particular price and time .
Body
Contract farming or marketing is beneficial both for the farmer producers as well as to the processing or contracting company in several ways
Advantages to the farmers
- Reduces the risk of price or production
- Ensures the price as a market is assured
- Increases the quality consciousness
- Ensures high production because of better quality seeds and pesticides
- Reduced marketing cost
- Provides financial support in cash or kind
- Ensures efficient, timely technical guide almost free of cost
Advantages to the Company
- Ensures the supply of quality agricultural produce at the right time and at a lower cost to the company
- Channelises direct private investment in agricultural activities
- Ensures that the toxicity Level is reduced as per the requirement for export or for the domestic market
Conclusion
Contract farming is emerging as an important mode of procurement of raw materials by agribusiness firms in India due to developments in the field of agricultural marketing, changes in the food habits and in agricultural technology in the new economic environment This is an important initiative for reducing transaction costs by establishing farmer processor linkages in addition to the already existing methods of linking the farmers to the consumers.
Government is increasingly looking towards the corporate sector to augment the rural incomes and employment through agri processing. In this context, policymakers see contract-farming marketing as an important avenue to ensure greater private sector participation in agriculture
(The model answer provided by us strictly follows the word limit, the above answer is compiled in 262 words.)
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(Titles : Introduction, Body and Conclusion are just for reference, aspirants should not write these titles in the answer sheet.)