Contract farming - problems and procpects

Abstract

Agriculture as an occupation touches the lives of each and every one of us. Human communities, no matter how sophisticated, cannot ignore the importance of the most traditional form of occupation. It was when the nomads started settling and growing their own food, the human society changed forever. However, in the modern times, many of us tend to forget this fundamental connection. Statistics reveal that 70% of the Indian population depends on agricultural income for their livelihood, while more than 60% of the working population is employed in farming. Despite the same, only about 24% of the country’s GDP is contributed by the agricultural sector and thus, there appears to be a huge gap in the potential that the sector has to offer and the actual results of the same. Disturbing reports of farmer suicides as a result of impoverished living conditions in Andhra-Pradesh and other states are not unheard of. We have further seen that our education system too does not do enough justice to educating us about the realities of the agricultural sector. In this context, we as 2nd Year students of the Post Graduate Programme in Management, decided to pursue a study topic in this area that would consolidate the current understanding on the subject and synthesize the theory and practice in the Indian context. While reviewing the literature on the subject, we learnt that contract farming is fast emerging as one of the most prominent issues in agriculture in the wake of the era of globalisation and privatization, which has intensified the role of the sector with many private companies entering into an agreement with primary producers for supplying raw materials to them. On the subject, this is our attempt to study the current system of contract farming in India, the existing practices and their implications on the lives of the farmers and at the end, come up with some recommendations for a better utilization and implementation of this arrangement.