Management Accounting: An Important Strategic Tool for Contract Farming

Abstract

With India moving from sustenance farming to commercial farming, and from traditional distributional channels to organized corporate retailing, the importance of Contract Farming is increasing day by day and with it the role of management accounting. CONTRACT Farming is an arrangement, wherein a Farmer conducts the farming activities in his own land, under a contract entered beforehand with the company. The terms normally include i) contractor supplying inputs and providing technical guidance and supervision on the farming activity and ii) buying the output at a pre agreed price. PepsiCo's is an excellent example of the success of this concept.