Question

In which of the following situation does a farmer stand to lose money because of contract farming?

• A. The company buys the product at a pre-fixed price.
• B. They have to sell the product at market price.
• C. They have to sell the product at a pre-fixed price which is more than the market price.
• D. They have to sell the product at a pre fixed price which is less than the market price.

Answer 1

The correct option is D They have to sell the product at a pre fixed price which is less than the market price.

In case of contact farming the farmers are not always at a gain because they may have to sell the product at a pre fixed price which can be less than the market price.