Contract farming can be defined as an agricultural production carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products. Typically, the farmer agrees to provide agreed quantities of a specific agricultural product.Well-managed contract farming is an effective way to coordinate and promote production and marketing in agriculture.Contract farming can be defined as an agreement between farmers and processing and/or marketing firms for the production and supply of agricultural products under forward agreements, frequently at predetermined prices.It reduces the risk of production, price and marketing costs. Contract farming can open up new markets which would otherwise be unavailable to small farmers.

It also ensures higher production of better quality, financial support in cash and /or kind and technical guidance to the farmers.Contract farming involves agricultural production being carried out on the basis of an agreement between the buyer and farm producers. Whereby the farmer’s provide specific quality and type of farm produce, required by the buyer. In return, the buyer, usually a company, agrees to buy the product, often at a price that is established in advance.Contract farming has been used for agricultural production for decades but its popularity appears to have been increasing in recent years. Contract farming is more beneficial for large farmers in terms of production so the small earn less profit in comparison to large farmers. The use of contracts has become attractive to many farmers because the arrangement can offer both an assured market and access to production support.