PROSPECTS AND CHALLENGES OF CONTRACT

FARMING FOR POTATO IN INDIA

Submitted by DEVIKA R, MBA(ABM),1805204018

 Objectives of Seminar
2

 To give brief overview of Contract Farming and

potato production in India.
 To know the need, merits and demerits of Contract
Farming in Indian context.
 To identify the challenges of Contract Farming in
India.
 To study prominent case study of Contract Farming
for Potato (PEPSICO) in India.

Prospects and Challenges of Contract Farming for Potato in India

Prospects and Challenges of Contract Farming for Potato in India 3

PROSPECTS
 POTATO
4
 Potato Scenario
5

Prospects and Challenges of Contract Farming for Potato in India Source : NHB,2017
 Contd.,
6

Prospects and Challenges of Contract Farming for Potato in India Source : NHB,2017
 Sowing and harvesting time of
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Potato

Prospects and Challenges of Contract Farming for Potato in India Source : NHB,2017
 AGRIFOOD CHAIN IN INDIA
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Prospects and Challenges of Contract Farming for Potato in India Source : FAO,2017
 What is contract farming ?
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 Objectives of Contract Farming
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 Advantages
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For farmers
 Easier access to Inputs, Services and Credit

 Improved production and management skills

 Secure market

 Stable income

For buyers
 Consistent supply of raw materials

 Quality products

 Reduced input and labour costs

Prospects and Challenges of Contract Farming for Potato in India Source : FAO,2017
 News article
12

Prospects and Challenges of Contract Farming for Potato in India Source : Indian Express,2017
Prospects and Challenges of Contract Farming for Potato in India 13

CHALLENGES
 Disadvantages
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For farmers
 Loss of flexibility

 Delays in payments and late delivery of inputs

 Risk of indebtedness from loans

 Environmental risks

 Unequal bargaining

For buyers
 High transaction costs

 Potential misuse of inputs for another purpose

 Loss of flexibility

 Reputational risks

Prospects and Challenges of Contract Farming for Potato in India Source : FAO,2017
 Challenges faced by Firms
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 Hot potato_ Gujarat farmers sued for copy-farming

- Times of India.html

Prospects and Challenges of Contract Farming for Potato in India

 Preconditions for Success
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PHYSICAL & SOCIAL ENVIRONMENTS

 Suitable for the particular product to be produced

 Communication

 Land availability and tenure – unrestricted access to

the land they farm

 Input availability – assured sources of inputs

 Social considerations – cultural attitudes and

practices, full understanding of local practices

Prospects and Challenges of Contract Farming for Potato in India Source : FAO,2001
 A PROFITABLE MARKET
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The sponsor
 Identify a market - planned production & profit

The farmer
 Find potential returns & risks

Prospects and Challenges of Contract Farming for Potato in India Source : FAO,2001
 GOVERNMENT SUPPORT
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The enabling and regulatory role

 Suitable laws of contract - efficient legal system

 Provide services such as research & extension

The developmental role

 Take steps to bring together

agribusiness and suitable farmers

Prospects and Challenges of Contract Farming for Potato in India Source : FAO,2001
 19

 Pre agreed price

 Registering/agreement
recording committee
 Services all along the chain
 Contracted produce-insured
 No permanent structure
 No right/title of land
 FPO/FPC
 CFFG
Prospects and Challenges of Contract Farming for Potato in India Source : Economic Times, 2018
CASE STUDY

PEPSICO Potato Contract Farming

 Pepsico Agricultural Footprint
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PUNJAB
Basmati,; Direct seeding of
Rice, potato Seed

RAJASTHAN
Haryana -: Potato, Direct Seeding
Barley, Basmati

Potato
Punjab, Haryana, UP, Bihar, Gujarat,
Maharashtra, West Bengal, Chhattisgarh, M.P.
Bihar
Karnataka
Potato
West Bengal
Direct Seeding
Gujarat Potato Punjab, Haryana TN, Karnataka,
Potato
Barley
Maharashtra Rajasthan
KARNATAKA
Potato Potato, Direct seeding
Basmati Rice
Punjab
TN – Direct seeding Rajasthan

Prospects and Challenges of Contract Farming for Potato in India Source : Rajiv wakhle
 News article
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 6,500 of them are

in West Bengal
working 2,600
acres
 Buying potatoes at
Rs. 6 per kilo from
the farmers

Source
Prospects and Challenges of Contract Farming for Potato in India : The Hindu, 2016
 PEPSICO PLANT
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Prospects and Challenges of Contract Farming for Potato in

India Source : Rajiv wakhle
 PepsiCo - provide a win-win market linked self
sustaining Contact Farming Model

Agri Quality based fixed buyback Program

Companies support
‘Pay for Performance’ systems to drive
quality and continuous supply
Insurance
Govt

Locally evolved
Farmer’s Organization
Farmer PepsiCo
Banks Directly with the
Farmer
Seed

Input
Companies
Advantaged
Seed
Provide technical support and extension
Storage
Services
services for chip grade farm practices.

“Partners in Progress” Model Source : Rajiv wakhle

 Controlling Losses: Brining Global Modern Cold Stores
Technology in India and Intervention in Transportation
25

Improved Transportation
Low Bruising and Damage
Reduce Losses – 1% vs 4%

Modern Cold Stores- Bulk Stores

Maintain Optimum Storage Condition
Long Storage – Losses 3% vs 9%
Source : Rajiv wakhle
 Grading : Size of potato
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Prospects and Challenges of Contract Farming for Potato in India Source : Aloy Dutta et al.,
 Potato Supply Chain
4 Months Fresh From South & West Factory

Quantity and quality issues

4 Months Fresh Rabi Crop

FEB - MAR
MAY-JULY AUG - SEPT – OCT- NOV OCT-NOV-DEC DEC- JAN- FEB- MAR

Direct to Planting FRESH SEASON Harvest to STORE

Planting Harvest Harvest to factory
factory

Channo
2800 Kms

2500 Kms/8 days

1400 Kms/5 days

Indore
Kolkata
Critical supply period:
August 600 Kms/2days
Nov.-Dec. Pune
APR-MAY-JUN-JUL-AUG
800 Kms/3 days
APRIL AUGUST
Karnataka
5 months Storage Season
 Pepsico contract farming Video
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 PepsiCo India’s 360 degree support for potato

farmers in West Bengal.mp4

Prospects and Challenges of Contract Farming for Potato in India

 Conclusion
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 India - diverse agro climatic zones - competitive

producer of a large number of crops.
 Modern contract farming is mutually advantageous.
 Contract farming provides solutions for many
problems
 Still in research stages for many crops

Prospects and Challenges of Contract Farming for Potato in India

 References
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 Meeta Punjabi,”The potato supply chain to

PepsiCo’s Frito Lay”, FAO.
 Charles Eaton, Andrew W. Shepherd,”Contract
farming partnership for growth”, FAO.
 “Legal guide on Contract Farming”, FAO.
 “Contract Frming and the Law”, FAO.
 https://www.slideshare.net/mobile/AmitBishnoi8/c
ontract-farming- in-india-by-amit-bishnoi

Prospects and Challenges of Contract Farming for Potato in India

 Contd.,
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 “Horticultural Statistics at a Glance”, Horticultural

Statistics Division, Department of Agriculture,
Cooperation & Farmers Welfare.
 Preetinder Kaur,
 Ramsundar, B. & Shubhabrata,S. 2014. Problems
and Prospects of Contract Farming In India
 Rajiv wakhle, “ Pepsico : Adding Value in Potato
Supply Chain Through World Class Bulk Potato
Stores Technology”
Prospects and Challenges of Contract Farming for Potato in India
 Questions
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Prospects and Challenges of Contract Farming for Potato in India

 Thank you
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Prospects and Challenges of Contract Farming for Potato in India