It is viewed as an important tool to increase private corporate involvement in agro-processing.
In this system, companies engaged in processing/ marketing of agriculture products enter into contract with the farmers.
They provide the farmers necessary facilities and buy back the products with a rate specified in advance.
The Field Fresh Company, a multinational has 1000 acres land under horticulture in Punjab.
Pepsi and McDonalds have started contract cultivation of citrus fruits and lettuce respectively.
Ballapur and ITC provide farmers with fast growing cloned varieties of tree that mature in just four years and buy the out-put.
Such type of farming is said to be getting popular among farmers especially in Punjab.