Contract farming is a system where agricultural products are produced and sold under a contract between the farmer, the supplier and the producer. This arrangement can serve as a catalyst for the modernization of agricultural operations in India as industries dependent on agricultural products require adequate and timely inputs for good agricultural produce. Apart from this, the National Agricultural Policy of the Government of India is also promoting non-government participation to meet the growing need.
Benefits of contract farming
There are many areas in the current aspects of Indian agriculture where contract farming can be beneficial, especially in the cultivation of medicinal plants. Therefore implementing contract farming can provide many benefits to both the farmer and the agriculture-based company. Some of these benefits are described in detail below:
Producer/Farmer
- Low marketing, transaction costs and assured market for their produce. Apart from this, the risk of production and pricing also reduces.
- Opening new markets which were rare for small farmers. Also, farmers get financial assistance and technical guidance for better-quality production.
- Ensures consistent adequate supply of quality agricultural products at the right time and at low cost.
Industries
- Utilization of infrastructure to their capacity and compliance with consumer’s food safety concerns.
- Direct private investment can be made in the agricultural system. Negotiation-based pricing between producers and companies.
- Both parties enter into a contract for production under previously determined terms and conditions.
List of Contract Farming Companies in India
Some Indian companies that do contract farming are mentioned below:
- Dabur Contract Farming
- Patanjali Contract Farming
- Pacific Herbs Agro Farms Pvt Ltd
- PepsiCo
- Agronik Herbal Pvt Ltd
Medicinal crops and contract farming
Indian farmers are facing challenges due to rising costs of farming and alternatives to traditional crops. So they are moving towards other crops which can provide more profits. Apart from this, these crops can be easily grown in low-nutrient and barren lands. Apart from this, due to the increasing interest of Western consumers in the medicines of the eastern region, the demand for trade in these medicinal crops is increasing.
Potential of Medicinal Crops
Medicinal plants contain potential biomolecules and are used for the development of many therapeutic drugs. Additionally, herbal medicines are considered safer, more physically compatible, and cost-effective. With the passage of time, the demand for medicinal plants is increasing significantly to meet human needs and business purposes. India has a vast store of medicinal plants and deep medicinal knowledge.
Apart from this, aromatic plants and herbs, from which herbal medicines and body care products are made, also contribute significantly to the high earnings of the farm. Herbs like Shankhapushpi, Atish, Kuth, Karanj, and Kutki do not have much importance for the urban consumer but these plants are a big source of income for the farmers who produce them.
Policy Initiatives by NABARD
To create marketing opportunities for farmers to increase the production of medicinal and other commercial crops, the National Bank of Agriculture and Rural Development (NABARD) has launched a special refinance package for contractor farming systems. Provides.
Various actions taken by NABARD in this direction are as follows:
- Financial Interventions Disruption
- Special refinance package for financing farmers for contract farming in AEZs (Agriculture Export Zones).
- 100% refinance for payments made by CBs, SCBs, RRBs and select SCARDBs (State Cooperative Agriculture and Rural Development Banks).
- Term facility for payment (3 years).
- Identification of finance on a larger scale for medicinal plants under contract farming.
- Extension of refinance scheme to outside AEZs for financing producers for contract farming in AEZs in addition to coverage of medicinal plants.
- Extension of refinance scheme for contract farming under the automatic refinance facility.
Future Possibility
There is more potential in the medicinal crop sector. A proper commercialization system can be beneficial to the industry and farmers by opening up domestic and global markets and providing higher prices. Apart from this there are about 162 species that come under medicinal crops. Therefore cultivation of medicinal plants can be highly beneficial economically and economically especially for small-scale farmers.
Along with plants, the demand for its collection, processing and transportation is also increasing. This in turn is creating new employment opportunities.
India has a rich variety of medicinal crops to develop the ‘Herbal Industry’. Such high diversity can be helpful in other scientific research to work out their medical efficacy and apply them to treat various diseases.
Moreover, India is already known globally as a low-cost manufacturer of superior-quality generic medicines. Therefore this factor can be used as a tool for marketing Indian herbal products.
Abbreviation
The existing worldwide interest in plant-based medicines of Indian origin
should be harnessed by developing a clear policy through promoting contract farming, exploration and development and increasing exports.
To advance the medicinal crop sector, coordinated efforts are required at each given stage (such as discovery, production, collection, storage, processing and marketing).
Keeping the facts in mind, whether you want to opt for contract farming or grow medicinal plants as a farmer then yes, you are taking the right decision.