Daily Answer Writing And Mentorship Program


Q: Should contract farming and land leasing be promoted in India considering the small land holdings? Critically Evaluate the advantages and                      disadvantages. (15 Marks, 250 Words)

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  • Contract farming: An agreement between farmers and companies where farmers produce a specific crop for the company under predetermined terms, receiving input and support in exchange for selling the produce.
  • Land leasing: Renting agricultural land to another party for a specified period, where the tenant pays rent or a share of the produce and is responsible for farming operations.

Data and Facts:


  • As per Agriculture Census, the average size of operational holdings has decreased from 2.28 hectares in 1970-71 to 1.84 hectares in 1980-81, to 1.41 hectares in 1995-96 and to 1.08 hectares in 2015-16.
  • As per NABARD All India Rural Financial Inclusion Survey (2016-17), All-India, 12% households leased-in agricultural lands. The incidence of tenancy is under-reported as tenancy in most states is not permissible legally.
  • As per 70th round of NSSO Report (2013), the share of small and marginal farmers in the total leased-in land is 52%.


How contract farming and land leasing are regulated in India:

  • Indian Contract Act, 1872.
  • The Model APMC (Agricultural Produce Market Committee) Act, 2003.
  • Model Contract Farming Act, 2018.
  • Model Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act, 2018.
  • Model Land leasing Act 2016



  • Access to technology and expertise for small farmers, leading to increased productivity and efficiency.
  • Improved market connections and higher income potential for small farmers through assured buy-back agreements.
  • Facilitates economies of scale, enabling small farmers to benefit from shared resources and reduced production costs.
  • Diversification of agricultural practices and crops, enhancing resilience and mitigating risks.
  • Potential for attracting private investment and promoting modernization of agriculture.



  • Risk of exploitation and unfair contracts, as small farmers may lack bargaining power and face unequal terms.
  • Loss of land control and decision-making power for farmers, potentially leading to dependency on corporate entities.
  • Potential threat to food security if large tracts of land are leased for non-food crops or commercial purposes.
  • Socioeconomic disparities may widen, with large farmers benefiting more than small farmers.
  • Challenges in implementing and regulating contracts and leasing agreements, requiring robust legal frameworks and oversight.


In conclusion, considering the small land holdings in India, promoting contract farming and land leasing holds the potential to uplift small farmers by providing access to technology, markets, and resources, leading to increased productivity, incomes, and resilience in the agricultural sector.