Identify the negative effects/disadvantages of contract farming.

A. Greater insecurity for farmers as they become dependent on MNC's

B. Agricultural land is diverted away from food production

C. Farmer is assured of a market

D. It disengages people from the production process

E. It is not ecologically sustainable

Choose the correct answer from the options given below:

A, B, D, E only

Point C is not a demerit but a merit from the view point of farmers.

In ‘contract farming’ systems, the company identifies the crop to be grown, provides the seeds and other inputs, as well as the knowhow and often also the working capital. In return, the farmer is assured of a market because the company guarantees that it will purchase the produce at a predetermined fixed price. Contract farming is very common now in the production of specialised items such as cut flowers, fruits such as grapes, figs and pomegranates, cotton, and oilseeds. While contract farming appears to provide financial security to farmers, it can also lead to greater insecurity as farmers become dependent on these companies for their livelihoods (A). Contract farming of export-oriented products such as flowers and gherkins also means that agricultural land is diverted away from food grain production (B). Contract farming has sociological significance in that it disengages many people from the production process (D) and makes their own indigenous knowledge of agriculture irrelevant. In addition, contract farming caters primarily to the production of elite items, and because it usually requires high doses of fertilisers and pesticides, it is often not ecologically sustainable.(E)