Contract farming is agricultural production that is carried out in accordance with an agreement between a buyer and farmers that defines conditions behind production and marketing of a farm product or goods. In most cases, the farmer contracts to supply agreed-upon quantities of a specific agricultural commodity.
These should meet the purchaser's quality standards and be delivered at the time specified by the purchaser. In turn, the buyer agrees to purchase the produce and, in certain situations, to assist production by providing farm inputs, land preparation, and technical help. Agribusinesses can use contract farming softwares for adhering to all the verticals under contract farming.
What Are The Objectives Of Contract Farming ?
- Reducing the burden on central and state procurement systems.
- Increasing private sector agriculture investment.
- Bringing crop selection to the market by Indian farmers.
- At the individual farmer level, generating a consistent source of income.
- Processing and value addition are being promoted.
- Creating productive employment in rural areas.
- Reducing rural-to-urban migration.
- In general, encouraging rural self-sufficiency by pooling locally available resources and knowledge to face new challenges.
What Are The Advantages Of Contract Farming ?
- Contract farming strengthens market connections and lowers reliance on middlemen.
- Integrate farmers with bulk purchasers such as exporters, agro-industries, and so on. Waste will be greatly reduced because the industries will be located near farm clusters.
- Improved price realization through mitigating market and price risks for farmers. It makes technology, agricultural diversification, extension services, financing, and crop insurance more accessible.
- Farmers do not need to take their produce to the market because sponsors frequently pick it up at the farm gate.
- Lowers farmers' costs and, as a result, increases their revenue. Ensures consistent agro raw material supply to the agro-industry. Food processing will see an increase in jobs.
- Encourage the next generation to farm instead of moving to cities. Instead of being employed as farm laborers, rural women will sort and grade fruits and vegetables.
- It also provides farmers with an alternative if the procurement method is inefficient.
What Are The Different Models Of Contract Farming ?
Informal Model
This strategy is the most ephemeral and speculative of all contract farming methods, with both the promoter and the farmer in danger of default. However, this depends on the circumstances: contract dependency or long-term trusting connections may lower the danger of opportunistic behavior.
Intermediary Model
In this model, the buyer subcontracts an intermediary (collector, aggregator, or farmer organization) that contracts farmers formally or informally (a hybrid of the centralized/informal methods).
Multipartite Model
This model can evolve from the centralized or nucleus estate models, for example, as a result of the privatization of parastatals. It involves a variety of organizations, including government statutory entities, private corporations, and, on occasion, financial institutions.
Centralized Model
Buyer involvement in this model might range from modest input provision (e.g., specific kinds) to complete control over most production aspects (e.g. from land preparation to harvesting).
Nucleus Estate Model
The buyer sources from both his own estates/plantations and from contracted farmers under this scenario. The estate system necessitates considerable investments by the buyer in land, machinery, personnel, and management.
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Farmsio’s Farm Management Software – Marketplace Module acts as a platform enabling Farmer groups, Farm Producing Organisation FPO’s and allied agricultural business investors to purchase the farm inputs like Seeds, Fertilizers, Pesticides, Machinery, etc and sell their farm output effortlessly to the consumer and get benefit by reducing the farm-level food waste.
This AgriTech Digital Market Linkage module is designed to connect the producer (farmer) to the end consumer and stakeholders for hassle-free, profitable and sustainable agribusiness transactions.
The Role of Farmsio’s Farm Management Software – Market Place Module: Farmsio marketplace facilitates both purchasing of inputs and also offering produce to sale to various buyersIts supports the aggregator modules.Facilities market linkage and buyers discoveryPromotes livelihood of farmers.Marketplace modules have inbuilt inventory, dispatch and monitoring stock Farmsio Market Place Module Helps in ; Market Facilitation:Farmsio marketplace facilitates both purchasing of inputs, process it and offer the end products to sell to various buyers.
Farmer Aggregator Module:Farmsio Farm management Software supports the Farmer Aggregator Model.
Market Linkage & Buyer Discovery:FMS – Market Place Module facilities market linkage and buyers discovery 4.
Boost Farm Income: Promotes livelihood of farmers by improving physical access to market, increase information access, train the marginal farmers with knowledge, skill and information regarding the quality, ability to understand the market change for gain better strategic outcomes.
