Published Oct 22, 2023
Contract farming is a contractual arrangement between farmers and cooperative firms, outlining agreements and prices for the production and supply of agricultural goods.
Contract farming provides a stable income source for farmers, spur rural employment, and boosts private sector investment in agriculture, reducing rural-to-urban migration.
Contract farming greatly reduces farmers' risk, with the company bearing losses due to pests or weather. Farmers receive fair market prices directly without intermediaries.
Contract farming favours larger farmers over smaller ones, with lax regulations causing contract failures and an imbalance between numerous sellers and a few corporate buyers.
Contract Farming secures markets and offers support, reducing rural unemployment, improving living standards, and boosting the nation's economic reputation.
Guaranteed markets may lead contractors to offer low prices, limiting farmers' profits. The lack of consumer feedback hinders production improvements while binding contracts.