Correct Option
The correct option is 1 and 3 only.
Explanation
The question pertains to the operational model of Contract Farming and the establishment of backward linkages by multinational corporations (MNCs) in the food processing sector. These companies integrate with the agricultural sector to secure a consistent supply of raw materials.
Statement-wise Analysis
- Statement 1 is Correct: Multinational fast food chains and food processing companies require specific varieties and standardized quality of produce (e.g., process-grade potatoes for chips or tomatoes for ketchup). Consequently, they encourage and contract farmers to cultivate crops that meet these specific quality parameters.
- Statement 2 is Incorrect: To ensure the production of the "desired quality" mentioned in Statement 1, these companies typically provide farmers with critical agricultural inputs. This includes high-quality seeds, fertilizers, technology, and extension services. Providing inputs is a standard practice to minimize the risk of crop failure and ensure quality compliance.
- Statement 3 is Correct: A core component of the contract farming model is the buy-back agreement. The companies assure the procurement of the produce at pre-decided prices, which helps farmers hedge against market price volatility while guaranteeing the firm a steady supply chain.
Key Takeaway
Contract Farming arrangements by MNCs are characterized by pre-agreed prices, strict quality standards, and the provision of inputs and technical assistance to farmers to ensure supply chain stability.