Contract farming is a form of agricultural production which is carried out based on the contractual agreement between the farm producers and the buyers. Here the production of farm products depends on the contract for the delivery to the buyer. It is a great business in places like Punjab.
So if you are thinking about a contract farming start-up but don’t know what is contract farming, below, I have listed down a few steps to help you initiate your start-up.
Steps To Start A Contract Farming Business
1. Find The Farmers
The most important step in starting in contract farming business plan is to find the right farmers. You need to find the farmers are specialized in working on a commercial crop or if the farmer is willing to have a contract. Then later, you can start with small contract agreement and then later expand your work. If you want to learn what contact farming is, then it is the key step.
2. Be Aware Of The Prices
Define an obvious manner to translate the marketplace fee into reduced in size farm-gate prices. Also, you want to discover how manufacturing dangers may be disturbed among contractors and farmers. Later you have to praise high-satisfactory, offer a marketplace for 2nd grade, and outline a levy on-farm income to cowl schooling and certification costs. It’s an important step if you want to know what is contract farming.
3. Plan Your Services
If you are wondering what is contract farming and which is the most important step, then planning your services is.
Ensure you can deliver your services as it provides a perfect argument for default or side-selling. Link input credit with other services to motivate pay-back. Create goodwill by service provisioning additional to the contract and prevent side-selling by investing in chain coordination.
Pros and Cons of Contract Farming Business Plan
Every venture has their own advantages and disadvantages. Similarly, contract farming business plan has its own pros and cons that you need to consider before working on it. So I have listed down a few to make your contract-farming start-up easier.
Pros of contract farming Start-up
1. Contract farming start-up provides enormous possibilities for farmers to switch exact agricultural practices to different commodities outdoor settlement arrangements. Contract farming inculcates a positive degree of interest in detail.
2. Farmer gets the right of entry to modern-day manufacturing understanding from agreement corporations. To get proper first-class commodities, agreement corporations offer first-class breeds and advisory offerings from manufacturing all of the manners to marketing.
3. The contract farming start-up provides the assured marketplace for farmers. This offers farmers the consolation stage that allows them to recognize what they are capable of at farming.
4. Contract farming business plan supports agro-processing and production. Most production agencies consisting of oil processing, flour milling, sugar milling, beer brewing, red meat canning, and maize milling were anchored on prepared settlement arrangements. Besides developing employment via price addition, the producing region has been capable of pay tax to the Government, consequently constructing the countrywide sales base.
Cons of contract farming business plan
1. Contract agencies have the very last say on excellent and may reject sub-standard commodities to allocate a decrease grade. Farmers will receive due to the fact there may not be anything to examine with.
2. While settlement farming tends to assure a market, contractors maintain costs very low on the way to maximize profit.
3. Contract preparations enhance dependency syndrome. It isn’t for farmers to get out settlement preparations. Most tobacco farmers are locked in settlement preparations in approaches that make it impossible for them to be self-reliant. Cotton farmers had been inside the equal scenario for years. Ideally, after 3 farming seasons, a farmer should stand on his very own legs.
Above is a detailed note on the contract farming business plan, which can help you initiate your contract farming startup step by step. If you have any question related to contract farming then you can mention it in the comments.