Improved production efficiency, commercial culture development, increased revenue and employment are all possible through contract farming as it provides credit, technology, inputs, information, extension services, and risk mitigation to farmers. In addition, the provision of an assured market through contract farming is seen as an extremely useful benefit. Let us now examine the impact of contract farming on the livestock sector.
In the 1960s, contract farming emerged in India’s seed production sector throughout states; by the 1990s, it had spread to other farm goods in places like Punjab and Haryana, where companies like Pepsi Foods were cultivating tomatoes, chilies, and potatoes under contract. Currently, private domestic and international enterprises for internal processing or export mostly dominate contract farming in India. The practice is ubiquitous across crops and livestock, states, and agencies (public, private, and multinational). The government of Arunachal Pradesh has recently extended an invitation to large corporations like Reliance, Adani, and Patanjali to begin contract farming and a buy-back policy in the state.
The farmers in our country have to contend with a number of issues, including the use of antiquated equipment and management techniques, weak negotiating positions with input suppliers and produce markets, a lack of infrastructure and market information, a dearth of management expertise, a subpar packaging of goods, and a shortage of funds to raise high-quality livestock.
Contract farming can be viewed as a way to entice the private sector to deploy some of its considerable resources to solve these issues. Improved production efficiency, commercial culture development, increased revenue and employment are all possible through contract farming as it provides credit, technology, inputs, information, extension services, and risk mitigation to farmers. In addition, the provision of an assured market through contract farming is seen as an extremely useful benefit.
Uplifts small farmers
Small farmers who are highly vulnerable to risk can especially gain from contract farming since it allows them to buy milking animals, boost output, and ride the wave of market-driven expansion. Farmers’ revenues will increase to their full potential, and their exposure to production-related risks, transfer price risks, and output hazards will be minimised with the use of contracts.
Elaborating further on this concept of contract farming, Narendra Pasuparthy, Chief Farmer, CEO & Founder, Nandu’s said, “Although contract farming in India has been prevalent for several decades, a legal framework on farming agreements came into force only in 2020. In the livestock sector, this has paved the way for greater investments, creation of new markets, and better financial security for the farmers. At Nandu’s, we envisage a promising future for this collaborative approach. Since our inception in 2016, Nandu’s has been making conscious efforts to build a steady source of livelihood for the farmer community. Currently, we have 300 farmers who work exclusively with Nandu’s. Integration farming contracts ensure that our farmers are exposed to zero risk – despite the unpredictable market conditions and other factors affecting production efficiency.”
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