Potential benefits of contract farming and organic agriculture

The existing literature on contract farming identifies several major areas where contract farming can provide benefits. From the point of view of farmers, contract farming can provide access to markets, credit, technology and inputs that they would otherwise be excluded from. Moreover, contract farming can lead to improvements in income while reducing some of the risks they face from production and price fluctuations. From the point of view of purchasers, contract farming provides greater control over volume and quality consistency; to a certain extent, it can also lower certain transaction and production costs that purchasers face. Table 1 summarizes the main potential benefits. Table 1 [ PDF 78.5KB | 1 pages ]

Contract farming likewise affords potential benefits to governments. While the development of market linkages for farmers is traditionally viewed as a public sector responsibility, the establishment of the necessary agro-services for a large number of small, unorganized farmers requires a considerable amount of public sector resources. On the other hand, contract farming provides market linkages in ways, which do not burden the public sector.

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