Does Contract Farming really help Farmer's in 2021 | UPSC

Does Contract Farming really help Farmer’s in 2021 | UPSC


Is contract farming in India really worth it?

      WHY IN NEWS:

It is a novel idea; but in a country where the ruling class openly favours corporates, it could prove disastrous for farmers



In the hope of making quick money from their farmlands, farmers will be keen on giving their land on a contract basis.


  • Contract farming can be defined as agricultural production carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products.

Does Contract Farming really help Farmer's in 2021 | UPSC

  • India’s agriculture sector makes a significant contribution to its Gross Domestic Product and provides livelihood for many millions of people.
  • Agriculture is not only a means of trade and a source of livelihood, but is fundamentally associated with our culture.

Today though, farmers are distancing themselves from farming activities because of decreasing incomes and are looking at alternative opportunities

  • These new developments will set into motion an exodus from villages to cities.
  • Contract farming will prove to be disastrous for the lives of millions of people in India who are associated with the agriculture sector.


  • CORPORATE ENTRY : Contract farming will give corporates an entry into the agriculture sector.
  • LAND ACQUISITIONS : Corporates will proceed to aggressively capture new lands, thereby rendering many farmers penniless.

Recently, a provision made in Gujarat allows non-farmers to be given the status of a ‘farmer’, resulting in the possible misuse of this law.

  • LAND PRESERVATION : But a corporate that only intends to maximise profits and is engaged in contract farming, would least likely be interested in the preservation of land and soil.
  • SUSTAINABLE DEVELOPMENT : Sustainable development is not on the corporate agenda.
  • FOREIGN VARIETIES : Contract farming could entail foreign varieties being grown in India’s fields.
  • NUTRITION CONTENT : For millions, locally grown varieties of crops have provided nutrition and sustenance for centuries.

If such varieties are gone, the population will suffer from malnutrition, as is the case in many places today

  • MECHANISED FARMING : Farms cannot operate without labour. However, mechanised farming will receive enhanced importance in contract farming, resulting in a decrease in the numbers of farm labourers.
  • SMALL SIZED FARMS : The deployment of machinery in small-sized farms is uneconomic. But it would be the obvious option for a contractual farming agency possessing larger lands.
  • RURAL UNEMPLOYMENT : Increasing rural unemployment would be the consequence.
  • CONTRACTUAL COMPANIES COME ONLY FOR PROFIT : Farming becomes a business, not a way of life or a baseline that maintains the welfare and dignity of the family.
  • SOIL FERTILITY : Corporates neither look after the farmers’ interests nor are interested in increasing the fertility of the soil.

We have reliable scientific evidence that shows chemical fertiliser-based farming is harmful to health and causes tremendous damage to farmland 

  • PROBLEMS FACED BY GROWERS : Undue quality cut on produce by firms, delayed deliveries at the factory, delayed payments, low price and pest attack on the contract crop which raised the cost of production.
  • LACK OF ENFORCEABILITY OF CONTRACT : Contracting agreements are often verbal or informal in nature, and even written contracts often do not provide the legal protection in India that may be observed in other countries .
  • MARKET MONOPOLYSingle Buyer – Multiple Sellers (Monopsony) .
  • ADVERSE GENDER EFFECTS : Women have less access to contract farming than men.


  • In India, agriculture and animal husbandry are complementary activities.
  • Our economy, especially, the rural economy, is dependent upon both, agriculture and animal husbandry.

Pastoralists do not have their own farms for grazing their flocks and herds 

  • They usually take their animals to the grazing lands of the village, vacant lands or farms owned by farmers.
  • Arrangements exist in many places where cattle graze in farms and fertilise them with their dung.
  • However, if farmers were to entrust their lands to somebody on a contract basis, livestocks will have no place to feed on.

      IASbhai WINDUP: 

  • The agricultural practice of cultivating more than one food grain in a single farm for retaining fertility of the land has been followed through generations.
  • This development runs contrary to the attempts to maintain or switch to conventional or organic farming or cattle-based farming.
  • Feeding India is a national and political obligation.

However, it is important to protect the quality of soil, traditional farming techniques and the social and economic fragility of communities operating on the margins of society

  • Contract farming is a novel idea but its short term gains are far less than longer-term demerits.
     SOURCES:  DownToEarth  | Does Contract Farming really help Farmer’s in 2021 | UPSC



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