The Food Processing Industry in India suffers from long and fragmented supply chain. Can contract farming provide plausible solution to this problem? Discuss.

Published: November 20, 2017

Contract farming can be defined as agricultural production carried out according to an agreement between a buyer and farmer thus establishing conditions for the production and marketing of farm products. Fragmented Supply chain is a prime bottleneck of the Food processing Industry.
Contract farming can address the long and fragmented supply chain by

  • Assured Supply resulting in a better control over the factors of production.
  • The contract farming can aid the food process industry to encourage, incentivise and support farmers to enhance the quality of the crops. Thus assuring an enhanced quality of the input.
  • Elimination of canalisation and cartelisation due to APMC act will aid in decreasing the cost of raw materials.
  • Aid Food processing industries in better supply chain management due to contract farming.
  • Contract farming will also enable the food processing industries to invest in the warehouses, cold storages and design the logistics in long term.

There are various legislative bottlenecks to facilitate contract farming in India. Dismantling them will be beneficial to both the food processing Industry and farmers.

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