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1.“Contract marketing” is a system of marketing in which the commodity is marketed by farmers under a pre-agreed buy-back contract with an agency engaged in trading or processing.
2. In contract marketing, a producer will produce and deliver to the contractor, a quantum of required quality of produce, based upon anticipated yield and contracted acreage, at a pre-agreed price.
3. In this agreement, agency contributes input supply and renders technical guidance. The company also bears the entire cost of transaction and marketing.
4. By entering in to contract, farmer’s risk of price reduces and the agency reduces the risk of non-availability of raw material. The inputs and extension services provided by the agency include improved seed, credit, fertilizers, pesticides, farm machinery, technical guidance, extension, marketing of produce etc.
5. In present scenario, contract marketing is one of the ways by which producers, especially small farmers, can participate in the production of good quality paddy/rice to get higher return.
6. Contract marketing enables producers to adopt new technologies to ensure maximum value addition and access to new global markets. It also ensures efficient post harvest handling and meeting specific needs of customers.