The practice of contract farming in India: making it inclusive and effective

Abstract

Agricultural marketing reforms are central to changing the agricultural/agribusiness sector. The Amended APMC Act in India, which permitted contract farming, direct purchase from farmers, and setting up of private wholesale markets, was seen as the way forward to kick start the process of modernizing markets and giving better market access and choice to primary producers. The practice of contract farming, which is one of the new institutions as a result of the policy reforms, leaves much to be desired in India's smallholder context as there is exclusion of small farmers who make up most of the farming population. In this context, this paper examines the extent and nature of small producer exclusion, reasons thereof, and various policy options to encourage more inclusive and effective contract farming so that these mechanisms could be leveraged for inclusive and market-oriented sustainable agricultural development.