Contract Contract Farming for Farming for

Medicinal Medicinal PlantsPlants

Present scenario of Present scenario of medicinal plantsmedicinal plants

Increasing popularity of Increasing popularity of medicinal plants medicinal plants

Unequal demand and supply ratio Unequal demand and supply ratio

Illegal harvesting of medicinal Illegal harvesting of medicinal plants from forestsplants from forests

Present scenario of Present scenario of medicinal plants- medicinal plants-

contd…..contd…..• In order to overcome this shortage In order to overcome this shortage

of supply and cater to the ever of supply and cater to the ever increasing demand, commercial increasing demand, commercial cultivation is most essential. .cultivation is most essential. .

• The superlative solution for the The superlative solution for the commercial cultivation of medicinal commercial cultivation of medicinal plants is contract farming. plants is contract farming.

What is Contract What is Contract farming?farming?

An Agreement between farmers and An Agreement between farmers and

processing and/or marketing firms for processing and/or marketing firms for

the production and supply of the production and supply of agricultural agricultural

products under forward agreements, products under forward agreements,

frequently at predetermined prices.frequently at predetermined prices.

Areas covered under Areas covered under contract farmingcontract farming

Market provisionMarket provision

Resource provisionResource provision

Management Management specificationsspecifications

Benefits to the FarmerBenefits to the Farmer Assured markets & returnsAssured markets & returns Risk elimination due to price Risk elimination due to price

fluctuationfluctuation Timely transportTimely transport Reduces exploitation from Reduces exploitation from

middlemenmiddlemen Reduces lending from private Reduces lending from private

money lendersmoney lenders Adequate input supplyAdequate input supply Employment generationEmployment generation

Benefits to the CompanyBenefits to the Company

Uninterrupted & Regular Flow Uninterrupted & Regular Flow of Raw Materialof Raw Material

Protection From Fluctuation In Protection From Fluctuation In Market Pricing.Market Pricing.

Long Term Planning Made Long Term Planning Made Possible.Possible.

Builds Long Term CommitmentBuilds Long Term Commitment Dedicated Supplier BaseDedicated Supplier Base Generates Goodwill For the Generates Goodwill For the

OrganizationOrganization

Contract concept Contract concept

A new concept ???A new concept ???

THE GOI HAD RUN THE GOI HAD RUN THE LARGEST THE LARGEST

CONTRACT FARMING CONTRACT FARMING MODELMODEL

THE GREEN REVOLUTION

And And today there is a need today there is a need

for such a revolution in for such a revolution in medicinal plants medicinal plants through contract through contract

farmingfarming

The first step towards The first step towards Contract farming of Contract farming of

medicinal plantsmedicinal plants

Reliance Life Science (RLS)

Dabur India Ltd.

Shortfalls in Contract Shortfalls in Contract farmingfarming

Small size of farmer landholdingsSmall size of farmer landholdings

Need to contract with a larger Need to contract with a larger numbernumber

Lack of a comprehensive crop Lack of a comprehensive crop insurance scheme to protect against insurance scheme to protect against natural calamities natural calamities

Key preconditions for Key preconditions for successsuccess

Government Support :-Government Support :- Suitable laws of contract and an Suitable laws of contract and an

efficient legal systemefficient legal system Awareness of unintended Awareness of unintended

consequences of regulation and consequences of regulation and avoid tendency to over-regulateavoid tendency to over-regulate

Provision of research and Provision of research and extensionextension

Take steps to bring together Take steps to bring together agribusiness and suitable farmersagribusiness and suitable farmers

Key preconditions for Key preconditions for successsuccess

Focus Agriculture Universities towards Focus Agriculture Universities towards developing crop and region specific developing crop and region specific agendas.agendas.

Introduce insurance policies to provide Introduce insurance policies to provide comprehensive coverage of the crops comprehensive coverage of the crops including loss of profit to the farmers.including loss of profit to the farmers.

Make it obligatory for Agricultural Make it obligatory for Agricultural Students to work on contract farming Students to work on contract farming programmes as a part of their programmes as a part of their curriculumcurriculum

Key preconditions for Key preconditions for Success- Contd..Success- Contd..

• Making purchase interference by a third Making purchase interference by a third party in a contract farming, a cognizable party in a contract farming, a cognizable offence. offence.

• Form a Registered Contract Farming Form a Registered Contract Farming Programme Programme

• Abolish all fees, taxes and duties on Abolish all fees, taxes and duties on procurement effected. procurement effected.

• Exempt taxes and duties on import of Exempt taxes and duties on import of agri equipments.agri equipments.

• Eliminate formalities in import of Eliminate formalities in import of varieties / hybrids.varieties / hybrids.

To sum up…..To sum up…..

Collaborative efforts of farmers, Collaborative efforts of farmers, companies companies

and the government in contract and the government in contract farming of farming of

medicinal plants will add to the over-allmedicinal plants will add to the over-all

socio-economic developments of socio-economic developments of nations. nations.