8.2. Contract Farming and risk management Contract farming is used as a risk management instrument. Contract farming is suitable for certain commodities and market situations, as discussed earlier. Facilitation of contract farming, requires support in terms of changes in legislation such as APMC Act, offering effective mechanism to resolve conflict such as registration of contract at APMC level and having an arbitration body for resolving conflict and providing quality checking facilities. Proper design of the contract,
can make contract farming more attractive. While designing flexible forms of contracts,
combining them with insurance, futures and credit options, may make them more attractive to many farming situations. Education and training on contract farming, should be provided extensively to companies and other government agencies.
Government should encourage contract farming for these situations, through appropriate legislation and facilitation, through a demand driven approach.
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