Contract farming is a system in which agricultural commodities are produced and supplied mostly to processors and exporters under pre-negotiated management. Such farming helps bring producers and processors close on mutuality terms. In contract farming, the processors get assured supply of quality materials on mutually beneficial terms. The producers also get ready market and remunerative prices under the arrangement. Generally, there are two types of contracts: marketing and production. Marketing contract refers to a verbal or written agreement between a contractor and a grower. Such agreement sets a price and an outlet for a commodity prior to the harvest or before the commodity is ready to be marketed.
