Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
Assertion (A): Contracts that fast food chains make with farmers are argued to reduce the price risks of farmers.
Reason (R): Under these contracts, the chains assure procurement of the produce at pre-decided prices.
In the light of the above statements, choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Both (A) and (R) are true and (R) is the correct explanation of (A).
Assertion (A): Contracts that fast food chains make with farmers are argued to reduce the price risks of farmers. — True. It is argued that such contracts help in reducing the price risks of farmers.
Reason (R): Under these contracts, the chains assure procurement of the produce at pre-decided prices. — True. The chains also give farmers seeds and other inputs.
Why R explains A?
Price risk is the danger that the price of the crop falls by harvest time. Under the contract, the price is fixed before the crop is grown and the buyer is sure. So the farmer knows his income in advance, whatever happens to market prices.
NCERT (2026-27): “Emerging Alternate Marketing Channels: … Further, several national and multinational fast food chains are increasingly entering into contracts/ alliances with farmers to encourage them to cultivate farm products (vegetables, fruits, etc.) of the desired quality by providing them with not only seeds and other inputs but also assured procurement of the produce at pre-decided prices. It is argued that such arrangements will help in reducing the price risks of farmers and would also expand the markets for farm products. …” |