Milk Purchase Agreement In India

The livestock sector plays an important role in the Indian economy, but there is a need to further improve the current level of the livestock sector in order to meet the growing population demand. The contracting dairy process in India`s rural economy is a new approach that includes domestication of animals for and on behalf of private or public organizations and the transmission of products at a predetermined price. The Indian dairy is at a crossroads of development, it is considered one of the fastest growing sectors of the various agricultural and allied sectors. Although dairy production is the first in the world, per capita milk availability in India is low at 269 g/person/day, well below the ICMR recommendation of 285 g/person/day. In addition, there is a large difference between the per capita consumption of rural and urban populations. The Dairy Agriculture Treaty can therefore help us to make more progress in resolving these two shortcomings. Agriculture is an ancient livelihood for millions of Indians. However, there were few systems/models that guaranteed farmers a market for their products without paying a remunerative price. Farmers have sometimes had to throw away their products because of a lack of buyers. That`s one side of the coin. On the other hand, there is the agricultural and dairy industry, which requires timely and adequate inputs for high quality agricultural and dairy products.

This underlying paradox of the Indian agricultural scenario has given the notion of contract farming, which promises an appropriate link between “the farm and the market”. Contract agriculture is becoming an important institutional agreement in India, which promotes coordination between production and marketing activities. Contract farming includes a price agreed in advance between the company and the farmer. The agreement is defined by the obligation on the farmer to make available a particular type of agricultural product at a given time and in the quantity requested by a hired buyer, usually a large business. Da Silva (2005) said: That the general term “contract agriculture” refers to a given form of supply chain governance adopted by companies to ensure access to agricultural products, raw materials and deliveries corresponding to the desired quality, quantity, location and time specifications, and in this context contract agriculture is seen as one of the other forms of vertical coordination in which companies can support complete vertical integration and different forms of vertical alliances. Haque (2000) stated that remuneration was a system for producing and supplying agricultural/horticultural products under futures contracts between producers/suppliers and buyers. Son et al (2007) and Huong (2007) showed that contracts, unless specified in the agreements, would focus primarily on the security of wholesale services. Holloway G, Nicholson C, Delgado C, Staal S and Ehui S 2000 Agro-industrialisation through institutional innovations: transaction costs, cooperatives and development of the dairy market in the highlands of East Africa. Agriculture 23: 279 – 288.

Agriculture is a fundamental pillar of the Indian economy. Agriculture and the allied sector accounted for 14.5% of gross domestic product (GDP) at constant prices from 2004-2005, according to estimates published by the Central Statistics Office (CSO) for 2011. In 2010/2011, the livestock and fishing sector contributed more than 4.07% to total GDP and about 29.7% to the value of the production of agricultural and allied activities. In 2010-11, this sector produced 121.8 million tonnes of milk. The livestock sector plays an important role in the Indian economy and there is also a need to further improve the current phase of the livestock sector. Livestock production has continued to grow faster than any other subsector, and by 2020 the livestock sector is expected to account for more than half of the world`s agricultural production. Although India has the largest number of livestock, we have not been able to achieve better productivity per animal.

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