Contract Farming is agriculture / farm production carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products.
Typically, the farmer [the agri land owner] agrees to provide established quantities of a specific agricultural product, meeting the quality standards and delivery schedule set by the purchaser.
In some cases the buyer also commits to support production through, for example, supplying farm inputs, land preparation, providing technical advice and arranging transport of produce to the buyer’s premises.
The process of Contract Farming in India Rural Economy linked to urban economy is a new concept.
Today there are three main types of Contract Farming:
A)Contract that stipulates only sale & purchase conditions.
B)Contracts wherein some of the inputs are supplied by the contracting firm and produced is brought at pre-agreed prices.
C)Total contracts under which the contracting firm supplies and manages all the inputs on the farm and the farmer/land owner becomes just a supplier of land and labour.