Era of globalization and liberalization, role of state in agricultural marketing and input supply is reduced In this process, the

processor or company provides farmers with credit, extension services and other inputs, sometimes it provides the crop collection facilities, repaid through deductions from sales to the processing plants, sometimes. It allocates risk between producer and contractor; the former takes the risks of production and the latter the risk of marketing. The World Bank (1989) has identify that contract farming creates a dynamic partnerships between private capital and small holders, which will lead to technology transfer, innovation and market growth. It provides for a vertical coordination between growers of an agricultural product and processors of the product. The contractual agreement varies from crop to crop ( perishable commodities, cotton, tobacco ) MODELS o The Centralized Model o The Nucleus Estate Model o The Multipartite Model o The Informal Model o The Intermediary Model Contract farming varies depending on the nature and type of contracting agency, technology, nature of crop produce and the local or a national context.

(Ref. Bharat Ramaswami, Shamika Ravi, S.D.Chopra (2003))Three type of risk (production, price and input) which the farmer faces in daily life
Production and price risk are two major risks in agriculture that confronts farmer faces in daily life Contract farming is an alternative risk management system, which reduces the risk in agriculture through sharing between farmer and industries Pari Bauman (2000), FAO (2001), Word Bank (1989). Additional source of capital, part of the risk of adverse price movement to the buyer (hill & insurgent, 1987 ) In context of India, the technology need to be transferred by having a contract with the farmers at pre-defined prices. ( farmer gets access to production services and credit as well as knowledge of new technology. Cost efficient inputs, such as extension advice, mechanized services, seeds, fertilizers, and credit guaranteed and profitable markets for their output

Disadvantages Contract farming may subjugate the peasantry to increased control and exploitation by capital leading to a peculiar from of proleterionization Leads to self-exploitation of the farmers and the companies gain indirect control of land Low bargaining power of the farmers Land degradation, more cultivation and after 4-5 year, they are leaving the place.