Contract Farming is a new concept implemented by PAGREXCO where a contract at the back-end is tied with farmers to provide expected produce to PAGREXCO. The expected amount of produce within the given time period is mentioned in the contract.
Contract farming alludes to shifted formal and casual understandings among makers and processors or purchasers. It might incorporate free purchasing courses of action, basic buy understandings and managed creation with input arrangement, with tied credits and hazard inclusion.
In this framework for the creation and flexibly of rural/plant produce are under forward agreements between makers/providers and purchasers. The embodiment of such a game plan is the dedication of the maker/dealer to give a rural product of a particular kind, at once and a cost, and in the amount required by a known and submitted purchaser. Agreement cultivating generally includes the accompanying fundamental components pre-concurred value, quality, amount or grounds (least/most extreme) and time . Agreements can run from oral arrangements to formal, enlisted composed agreements.
- Making New Markets
- Effectiveness and Economics of Scale
- Guaranteeing Quality Standards
- Encouraging Diffusion of Modern Technologies
- Limiting’ Transaction Costs
- Adapting to Information Asymmetries
- Value Volatility
- Sharing of Risk
To The Farmer:
- Exposure to world class mechanized agro technology.
- Obtains an assured up front price & market outlet for his produce.
- No requirement to grade fruit, as mandatory for fresh market sale.
- Bulk supplies versus small lots as again required by the fresh market.
- Crop monitoring on a regular basis, technical advice, free of cost at his doorstep.
- Supplies of healthy disease free nursery, agricultural implements, technical bulletins etc, and remunerative returns
To The trader:
- Uninterrupted & regular flow of raw material.
- Protection from fluctuation in market pricing.
- Long term planning made possible.
- Concept can be extended to other crops, builds long term commitment
- Dedicated supplier base
- Generates goodwill for the organization.