Question

Which of the following statement(s) are true regarding contract farming ?

• A. Farmers use chemical fertilizers intensively.
• B. The companies provide financial support to cultivate certain crops.
• C. The companies buy the seeds at pre-determined prices.
• D. Farmers have no risk in this type of farming.

Answer 1

Answer: (A), (B), (C)

The correct options are
A Farmers use chemical fertilizers intensively.
B The companies provide financial support to cultivate certain crops.
C The companies buy the seeds at pre-determined prices.

The contractors provide farmers with financial support to cultivate certain crops. To achieve high yield, they use fertilizers extensively. The crop is bought at pre-determined prices if the yield is of good quality. In this form of farming, the farmers have to bear the risk of poor harvest.