Question
What is 'contract farming'?

Answer

  • In contract farming, the company identifies the crop to be grown, provides the seeds and other inputs as well as the know-how and capital. In return, the farmer is assured of a market because the company guarantees that it will purchase the produce at a predetermined fixed price.
  • While contract farming appears to provide financial security to farmers, it can also lead to greater insecurity as farmers become dependent on these companies for their livelihoods. Contract farming for export-oriented products such as flowers also means that agricultural land is diverted away from foodgrains production.
  • Thus contract farming disengages many people from the production process and makes their own indigenous knowledge of agriculture irrelevant. In addition, contract farming caters primarily to the production of elite items and because it usually requires high doses of fertilizers, it is ecologically not sustainable.

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