RURAL DEVELOPMENT

Rural Development Explained

Q. Define Rural Development?

Rural Development is a continuous and comprehensive socio-economic process, attempting to improve all aspects of rural life. It aims at improving the economic and social conditions of people living in villages.

Q. Process of Rural Development or Key issues to Rural Development?

Rural development aims at comprehensive change and improvement in all aspects of rural life. Some of the areas, which are challenging and need fresh initiatives for development in India include :

1. Development of human resources

The quality of the human resources need to be improved by giving proper attention to literacy (specifically on female literacy), education, and skill development. It also requires better health facilities for physical growth.

2. Development of infrastructure

Like electricity, irrigation, credit, marketing, transport facilities including construction of village roads and feeder roads to nearby highways, facilities for agriculture research and extension, and information dissemination.

3. Land Reforms

The land reforms measures are needed to achieve the following aims :

1. Elimination of exploitation in land relations;
2. Actualisation of the goal of ‘land to the tiller’;
3. Improvement of socio-economic conditions of rural poor by widening their land base;
4. Increasing agricultural productivity and production.

4. Alleviation of property

As stated earlier, around 20% of the population is still below the poverty line. So, there is a need for taking serious steps for alleviation of poverty and bringing about significant improvement in the living conditions of the weaker sections.

5. Development of the productive resources of each locality to enhance opportunities of employment (particularly other than farming).
6. Q. What is meant by Rural Credit ?

Rural credit means credit for the farming families as they are small and marginal farmers and produce just enough for subsistence. So, the growth of the rural economy depends on the infusion of capital, from time to time, to realize higher productivity in agriculture and non-agriculture sectors. Due to the long time gap between crop sowing and realization of income, there is a need for credit, to meet initial investment on seeds, fertilizers implements, and other family expenses marriage, death, religious ceremonies, etc. Credit is one of the important supply-side factors, which contribute to agricultural production. Adequate and equitable access to credit for raising agricultural productivity and incomes.

---

(RURAL DEVELOPMENT WIKI)

---

Q. Why there is a Need for rural credit or agricultural finance?

The credit needs of the farmers can be examined from two different angles.

1. On the basis of time
2. On the basis of Purpose

Based on Time

Based on time, the credit needs of the farmers can be classified into three categories.

1. Short-term credit

It refers to credit taken to meet short-term needs (period of fewer than 15 months) viz., purchasing seeds, fertilizers, paying wages to hired workers, etc. The loans taken for a short period can be repaid out of the current income of the farmers.

2. Medium-term credit

The period of medium-term credit ranges from 15 months to 5 years and is required to buy cattle, agricultural implements, etc. They are also needed for meeting various unproductive expenditures like expenditure on marriage, social or religious functions.

3. Long-term Credit

Long-term loans are required for effecting permanent improvements on the land, digging tubewells, purchase of larger agricultural implements and machineries like tractors, harvesters, and repayment of old debts. Long-term funds are needed for a period of more than 5 years and may extend to a period of 15 to 20 years. Such loans are repaid over a long period.

Based on purpose

Agricultural credit needs of the farmers based on purpose can be classified into the following two categories

1. Productive Loans

Productive loans are loans that are taken by farmers for the purchase of seeds, fertilizers farm implements, for making permanent improvements on the land, etc. These loans are productive as they help the farmers in raising agricultural production and productivity.

2. Unproductive Loans

Loans utilized for purposes such as to conduct marriage, religious ceremonies, supporting family in times of crop failure, settling old debts, etc, are unproductive loans. Such loans do not help to raise agricultural production and productivity.

Q. Explain two sources of Rural Credit prevailing in India?

Broadly, there are two sources, from which the farmers can raise loans. (i) Non-Institutional Sources (ii) Institutional Sources.

1. Non-institutional Sources or Informal Sector. Non-institutional sources include moneylenders, traders and commission agents, landlords, relations and friends. Moneylenders play a very important role as far as credit requirement of agricultural sector is concerned. They provided about 93.6% of total financial requirement in 1951-52 and presently it is 30%.

Moneylenders have an unhealthy effect on the agricultural sector because :

1. They intend to exploit labour to their last drop of blood.
2. They charge high rate of interest.
3. They acquire land on failure to pay interest and loan.
4. They manipulate accounts.

Rich Landlords

Small as well as marginal farmers and tenants take loans from landlords, for meeting their financial requirements. Landlords also charge high rates of interest on such loans and exploit the peasants, particularly small farmers, and tenants.

• Institutional Sources or Formal Sector. In 1904, Co-operative Credit Societies Act was adopted. It played a major role in quantitative expansion and diversification of funds. Credit was the main function of cooperative credit societies. In July 1969, 14 major commercial banks were nationalised, since then their role has been growing. In 1970, a practice was introduced known as the Multi-Agency Approach in rural credit.
• Two new institutions known as Regional Rural Banks (RRBs) and the Farmers’ Service Societies were established. These are supported by Central Co-operative Banks and regional offices of commercial banks and RRBs at the district level with RBI and NABARD at the national level.

Distinction between Institutional Sources of Rural Credit

1.	Institutional Credit Institutional sources of credit are regulated by the monetary authority (say Reserve Bank of India) of the Country.	Non – Institutional Credit 1. Non – Institutional sources are not regulated by the monetary authority of the country.
2.	These sources mainly provide credit for productive purposes.	2. These sources provide credit both for productive and non – productive purposes.
3.	Credit from Institutional sources often involves a lengthy procedure of formal agreement between the bank and the borrower.	3. Non – Institutional credit does not require any such formal agreement between the borrower and the lender.
4.	Since these sources are regulated; the cost of credit (i.e., rate of interest) generally remains low.	4. Non – Institutional credit is generally very expensive because it remains unregulated by the RBI.
5.	Institutional credit is generally guided by some welfare considerations.	5. The credit from the non – Institutional sources is purely motivated by profit consideration.

1. Co-operative Credit Societies

Efforts are being made to make co-operative societies more efficient because of their motive for social welfare and the betterment of cultivators. This sector has one disadvantage, i.e., as loans can be taken for any purpose the emergency and purpose of loans are ignored, Hence, they have not been able to prove themselves to be good substitutes of moneylenders.

There are two separate wings of the cooperative credit structure, one fulfilling the short-term needs and the other managing long-term needs.

These are:

1. Primary Agricultural Credit Society. It operates at the village level and maintains direct contact with the farmers to fulfil their short-term needs. For its own requirements of finance, it is linked to a Central Co-operative Bank which operates at district level.
2. Land Development Banks. These come under the category of long-term loan needs. Their other names are Land Mortgage Banks and Agricultural Development Banks. By 1920, all states had this bank to cater to the long-term needs of the farmers.

Functions of Co-operative Sector

1. To provide timely and increased flow of credit to the farmers.
2. To reduce and gradually eliminate the moneylenders from the rural scene.
3. To provide credit facilities to all the regions of the country i.e., reduce regional imbalances.
4. To provide adequate credit support to areas covered by special programing;

Weaknesses of Co-operative Sector

1. These have remained financially and administratively weak and consequently have been unable to provide the needed credit to farmers. In the case of Primary Agricultural Credit Societies (PACS) they have small area of operation and less membership. Due to less business, their income is very low and they cannot keep proper staff
2. A large part of these societies is managed by large farmers and hence, small and medium farmers are deprived of benefits.
3. There are serious regional imbalances observed in their growth.
4. They depend more on external sources of finance which is not a good and healthy sign for their development in future.
5. The other problem is relate with recovery of loans and advances. The overdues are large and growing.
6. They suffer from inadequate organisation and lack of managerial efficiency. Most of them are weak.
7. Some of them face the problem of gainful utilisation of their funds. They have to keep surplus funds with the commercial banks in short-term deposits.

2. Commercial Banks

These provide loans for all agricultural operations and allied purposes.

These may broadly be classified into:

1. Direct Advances. It may be for short, medium or long-term. Short-term may take the form of crop loans or production loans. These loans have to be repaid within a period of one month or two months, after the harvest of crops.

Medium and long-term loans are granted for development programs that are capital intensive. The maximum repayment period is 15 years.

2. Indirect Advances. These include:

(i) Credit granted to dealers of fertilizers to meet their working capital requirements.

(ii) Advances made to co-operative milk societies, sheep breeders co-operative societies, etc., which in turn extend credit assistance to their members for the purchase of milk, cattle, sheep. Weaknesses of Commercial Banks Cost of conducting agricultural advances is very high and there are huge losses in opening and operating rural branches. The regional managers have to be forced to carry out agricultural advances because their initiative and interest is always lacking) Banks are quite selective in their village adoption approach.

More backward villages have not been adopted. The manager lends to the rural poor very carefully because the manager’s performance will lead to his promotion or demotion. As a result, he is very cautious while lending. The proper feedback system is absent. There is no linkage between bank credit and its use in raising productivity.

Regional Rural Banks (RRBs)) These have been set up under the Regional Rural Banks Act of 1976. The areas of their operation have been very carefully selected as the area where banking facilities and co-operatives are absent). The Central Government through NABARD participates in its 50% capital. They cater exclusively to the needs of the weaker sections. They have been able to achieve the main objective of helping the weaker sections in the rural areas. Weaknesses of RRBs Regional Disparities in Growth. The growth of RRBs in all parts of the country was not proportionate.

Continuous Losses. Most RRBS are incurring losses year after year. The rich farmers do not come forward to deposit their savings with these banks. Rates of lending are also low.

The problem of Growing Overdue. As much as 50% of the advances extended have become overdue due to increasing defaults.

Methods of Operation. RRBS has adopted the methods adopted by the sponsoring banks. These methods have not proved to be useful.

National Bank for Agriculture and Rural Development (NABARD) In 1979, RBI appointed a committee to go into the whole structure of rural credit and make recommendations for reorganizing and strengthening it. The Committee gave its report in March 1981 and recommended the setting up of NABARD. It was set up in July 1982. The National Agricultural Credit Fund has been transferred from RBI to NABARD to form a part of its National Rural Credit Fund. It is permitted to raise resources from the government and the market.

Functions of NABARD

1. To provide short, medium and long-term credits to State Co-operative Banks, RRBs, Land Development Banks and other financial institutions, approved by the RBI.
2. To grant long-term loans to the State Government for subscribing to the share capital of co-operative societies.
3. To coordinate the activities of the Central and the State Government and other all India and state level institutions entrusted in the development of small-scale industries, village industries and rural crafts.
4. To take the responsibility of inspecting cooperative banks, RRBS and primary co-operative societies.
5. To promote research in agriculture and rural development.
6. To serve as a refinancing agency for the institutions providing finance to rural and agricultural development.
7. To sanction credit limits and refinance to State Co-operative Banks, Land Development Banks and the RRBS for supplementing their resources for short-term and medium-term loans for various agricultural and non-agricultural purposes.
8. NABARD can help tenant farmers and small farmers to consolidate their landholdings.

SHGs and Micro Credit Programmes

SHGs (Self Help Groups) and microcredit programs promote thrift in small proportions by a minimum contribution from each member. Prom the pooled money credit needs are fulfilled. The member has to repay the credit in small installments at a low rate of interest. The borrowings are mainly for consumption purposes. SHGs promote thrift (saving habit) among rural households, Small savings are mobilized by SHGs and offered as a credit to their members depending on their needs. Credit is offered Without any security. Presently approximately more than seven lakhs SHGs are operating across different rural areas.

The following points emerge on the latest status of agricultural credit :

1. To improve credit flow to the agriculture sector, the Government initiated a number of policy measures, from time to time, like Farm Credit Package and Special Agricultural Credit Plans (SACP).
2. To provide adequate and timely credit support to the farmers fromthe formal banking system in a flexible and cost-effective manner the Kisan Credit Card (KCC) Scheme was introduced in February 1999.
3. The Agricultural Debt Waiver and Debt Relief Scheme was announced in the Union Budget 2008-09.
4. Farmers have been receiving crop loans up to a principal amount of Rs. 3 lakhs at 4 percent per annum effective rate of interest.

Q1. What are the benefits of institutional sources?

Sol. Institutional sources of credit possess several advantages.

1. The institutional credit is not exploitative in nature. The basic aim of institutional credit is to help the farmers in raising their productivity and not to exploit them.
2. The rate of interest of institutional credit is low. Moreover, different rates of interest are charged for different types of loans and for different categories of farmers.

3. Institutional agencies also draw a clear-cut distinction between short-term credit and long-term credit requirements and provide loans accordingly.

4. Institutional credit is integrated with other agricultural operations and improvements, like the use of seeds, fertilizers, etc.

Q. Critically evaluate the role of the rural banking system in the process of rural development in India?

Rural Banking -A Critical Evaluation

Since 1969, when the nationalization of commercial banks took place, rural banking has expanded a great deal, Significant expansion of the rural banking system played a positive role in :

1. Raising farm and non-farm out-put by providing services and credit facilities to farmers.
2. Providing long-term loans with better repayment options. It, thus helped in eliminating moneylenders from the scene.
3. Generating credit for self-employment schemes in rural areas.
4. Achieving food security which is clear from the abundant buffer stocks of grains.

Some of the problems faced in rural banking are :

1. Insufficiency : In spite of expansion of rural credit structure, the volume of rural credit in the country is still insufficient as compared to its growing requirement.
2. Inadequate coverage of institutional sources : The development of co-operative, commercial banks and regional rural banks have failed to cover the entire rural farmers of the country.
3. Inadequate amount of Sanction : The amount of loan sanctioned to the farmers is also inadequate, to meet their different aspects of agricultural operations. Due to this reason, farmers often divert such loans for unproductive purposes, which dilutes the very purpose of such loan.

5. Less attention to poor or marginal farmers : Lesser attention has been given on the credit requirements of the needy (small and marginal) farmers.
6. Growing overdues : The problem of overdues inagricultural credit conlinuestobe an area of concern. The basic reason for the growing overdues is the poor repaying capacity of farmers. As a result of that, the credit agencies, are becoming cautious of granting loan to farmers.

Q2. Explain the solution to an effective rural credit system.

Sol. A good system of rural credit should have the following features.

5. Low interest rate : Credit terms should be easy i.e., it should be granted at a low rate of interest for a fairly long period, which is commensurate with the operation.
6. Convenience to farmer : The repayment producer should be convenient to the needs of the farmer. i.e., there is convenience in repaying the loan by the farmer in easy installments, spread over the period and payment should be after marketing his produce.
7. Equity to the farmer : In the event of failure and liquidation of the farmer’s property, a fair price should be secured to the farmer and the balance, after the claims of the creditors and the cost of liquidation, should be returned to him.

Q. Explain Agricultural Marketing System

Agricultural marking encompasses all activities in moving farm products from the producers to the final consumers such as storage, transport, processing, etc, In India, agricultural marketing, by and large, was regarded as operationally inefficient and exploitative. The farmer needs the services of a good marketing system to get the maximum price of the goods produced, to incur the minimum cost of handling good so he needs :

Facilities for storing goods: Adequate and economical transport facilities to bring the agricultural produce to markets (mandi) Elimination of intermediaries who partake commissions. Basic information of market condition to get better prices for his produce Measures to improve agricultural marketing.

Regulated Markets: The first measure was regulation of the market to create orderly and transport marketing conduct. It has been organized to protect the farmers from the malpractices of sellers and brokers. They aim at eliminating unhealthy market practices and reducing market charges.

Co-operative marketing: Under this marketing societies are formed by farmers to sell the output collectively and to take advantage of collective bargaining for obtaining a better price. The success of milk co-operations in transforming the social and economic status of Gujarat is an example.

Infrastructure facilities: The central govt. is also assisting in the creation of infrastructural facilities like roads, railways, warehouses, godowns old storage, etc. Standardization and Grading: Promotion of the standardization and grading of agricultural products in the main function under agricultural marketing. To improve the marketability of products, an effective control mechanism is essential. Grading and quality control help the farmers fetch a good price for quality products produced by them.

Minimum support price (MSP): To safeguard the interest of the farmer, govt. fixes the minimum support price of agricultural products like wheat, rice, cotton, sugarcane, pulses, etc. Such a price may be regarded as an offer price at which govt. is willing to buy any amount of grains from the farmers.

Public distribution system (PDS): Govt. has made provision for buffer stock of food grains to distribute it through the public distribution system, which operates through a network of ration shops and fair price shoes.

Q. Explain Defects of Agricultural Marketing.

The present system of agricultural marketing is far from satisfactory.

1. Inadequate Warehouse: The warehouses don’t fulfill the need of the farmer. As a result, the farmer has no better choice but to store grains in mud vessels, gunny bags, etc. There’re unscientific methods of storing which lead to considerable wastage.

2. Multiplicity of middlemen : There’re large no. of middlemen beween cultivators and consumers. they expoit both farmers and consumers. It is observed that there is a big differnece between the price released by the farmer and final price paid by the consumer.
3. Mal practicies in unregulated markets : A no. of mal practices prevail in Indian markets. Broker takes undue advantage of the ignorance and illetrecy of farmers. they use unfair means to cheat them.
4. Improper meausring for weighting, grading and standaridisation : India a large veriety of weights and measures’re used in the some market. Sometimes, two sets of weights are used, one for buying and another for selling.
5. Lack adequate finance : Farmer is a man with small means. He doesn’t have much money to repay back his old dues or to pay his land revenue. Bank and co-opertive socieities are not able to fully meet the credit needs of the farmers. So, farmer’re forced to depend upon money lenders traders, who charge a very high rate of interest.
6. Inadequate means of transport and communication : Many of the villages’re not connected with ‘Pucca’ roads. Most of the village roads’re not fit for motor vehicles, especially the rainy season. The produce has to be carried in slow moving bullock carts on long journey.

Remedial Measures for improvement of Agricultural Marketing

1. Extension of a stroge facilities at the farm level and storage and warehousing facilities in the markets and consumption centres.
2. Establishment of regulated market.
3. Improvement of transport facilities between the villages and the mandies.
4. Establishment of co-operatinve marketing socieities.
5. Provision of cheap credit, especially from institutional sources.
6. Provision for Grading of the produce to ensure good quality to the consumers and better prices for the producers.
7. Prompt supply of market information.

Diversification of Agricultural Activities

Diversification means a major proportion of the increasing labor force in the agricultural sector needs to find alternate employment opportunities in other non-form sectors.

Diversification is an emerging challenge in the context of rural development. It has two aspects

1. Diversification of crop production and
2. Diversification of productive activity

1. Diversification of crop production : It invovles a shift from single cropping system to multi cropping system. There is a need to encourage farmers to take up cultivation of a wide variety of crops. It’ll raise their income. The main aim is to promote shift from subsitence farming to commercial farming.
2. Diversification of productive activity : As agriculturel is already over crowded a major employment opportunities in another non-farm sector like ;
   • Animal husbandary and dairying : Under livestock farming cattles, goats are the widely held species live stock production provide increase stability in income, food security, transport, fuel and nutrition for the family without disturbing other food producing activities.
   • Fisheries : fishries sector plays on important role in the socio-economic devlopment of the country. It provide on important source of livelihood for a large section of economically backward population of the country in the coastal area like Kerala, Gujrat, Maharashtra etc. It also acted as an important source of employment generation through establishement of number of subsidiary industries.
   • Horticulture : It is an important sector for potential diversification and value addition in agirculture. It includes growing of diverse horticulture crops such as fruits, vegetables, flowers, medicinal and aeromatic plants, speices etc. It has improved economic conditions of many farmers and has become a means of improving livelihood for many unpriviledged classes.

These crops play an important role in providing:

1. food
2. nutrition
3. employment

The period between 1991-2003 is called the ‘Golden Revolution’ because during this period, the planned investment in horticulture became highly productive and the sector emerged as a sustainable livelihood option. India is the largest producer of mangoes, an as, coconuts, cashew, papaya, and the largest producer and exporter of spices.

Cottage and Household Industry

These are traditional sources of non-farm production activity in rural areas. It includes spinning, weaving, dyeing, and bleaching, But new activities have emerged in the rural area like doll making; soap and candle manufacturing, mushroom cultivation, bee-keeping, poultry farm, etc. Most of these activities are promoted by women groups.

Problems and Solution of Non-Farm Activities

1. Livestock. Though its number is quite impressive but its productivity is quite low as compared to other countries. The solution is: (a) Promotion of good breeds of animals to raise productivity (b) Improved veterinary care is essential.

(c) Better credit facilities to small and marginal farmers and landless laborers would raise sustainable livelihood options through livestock.

2. Fisheries. Problems related to over-fishing and pollution need to be solved. The solution is :

1. Welfare programmes for the fishing community have to be reoriented in a manner which can provide long-term gains and sustenance of livelihoods.
2. Pollution of water bodies needs to be controlled.

3. Horticulture. Problem is that of more investment in this sector. The solution lies in more investment in infrastructure like: electricity cold storage systems, marketing linkages, small- scale processing units and technology improvement.
4. IT-Every Village a Knowledge Centre

Information technology plays a very significant role in achieving sustainable development and food security in the following ways :

1. It can act as a tool for releasing the creative potential and knowledge embedded in our people.
2. Issues like weather forecast, crop treatment, fertilizers, pesticides, storage conditions, etc. can be well administered if expert opinion is made available to the farmers,
3. The quality and quantity of crops can be increased manifold if the farmers are made aware of the latest equipments, technologies and resources.
4. IT has ushered in a knowledge economy.
5. It has potential of employment generation in rural areas.

Q5. What is organic farming? How does it promote sustainable development?

Sol. Organic farming is the process of producing food naturally. This method avoids the use of synthetic chemical fertilizers and genetically modified organisms. The main idea behind organic farming is ‘zero impact’ on the environment and producing safe and healthy food. Organic agriculture is a production system that sustains the health of soils, ecosystems, and people.

Organic agriculture combines tradition, innovation, and science, to benefit the shared environment and promote fair relationships and a good for all involved

Reason for the Need for Organic Farming

1. In the past, modern farming methods made excessive use of chemical fertilizers and pesticides, It led to soil, Water and air pollution, loss of soil fertility and too much chemical contents in foodgrains.
2. There is urgency to conserve the environment and eco-system and promote sustainable development.
3. Organic farming is an expensive farming technology. It can be purchased by small and marginal farmers.

Q6. Identify the benefits and challenges of organic farming?

Ans.Benefits of Organic Farming

1. Organic Farming offers a means to substitute costlier agricultural inputs (such as HYV seeds, chemical fertilisers, pesticides, etc.) with locally produced organic inputs, that are cheaper and thereby, generate good returns on investment.
2. It generates income through international exports as demand for organically grown crops is on a rise.
3. It provides healthy food as organically grown food has more nutritional value than food grown through chemical farming.
4. Since organic farming requires more labour input than conventional farming, India will find organic farming an attractive proposition.
5. Produce of organic farming is pesticide-free and is produced in an environmentally sustainable way.

Limitations of Organic Farming

1. It has been observed that the yield from organic farming is much less than modem agricultural farming. Thus, goods produced organically command a higher price.
2. Small and marginal farmers may not adapt to this type of farming due to lack of awareness and limited choice of alternate production in off-seas.
3. Organic produce may have a shorter shelf life.

Challenges before Organic Farming: Organic farming needs to be popularized by creating awareness and willingness on the part of farmers, for the adoption of new technology Inadequate infrastructure and the problem of marketing the products are major concerns, which need to be addressed, apart from an appropriate agriculture policy, to promote organic farming. It has been observed that the yields from organic farming are less than modern agricultural farming in the initial years. Therefore, small and marginal farmers may find it difficult to adapt to large-scale production. Organic produce may also have more flaws and shorter shelf life than sprayed produce. Moreover, the choice in the production of off-season crops is quite limited in organic farming. Organic farming helps in the sustainable development of agriculture and India has a clear advantage in producing organic products, for both domestic and international markets.

Critically Evaluate rural development There is a need to make the rural areas more vibrant through diversification of dairying, poultry, fisheries, vegetables, and fruits. Efforts should be made to link up the rural production centers with the urban and foreign (export) markets to realize higher returns on the investments for the products. Infrastructure elements like credit and marketing, farmer-friendly agricultural policies, and a constant appraisal and dialogue between farmers groups and state agricultural departments are essential to realizing the full potential of the sector. There is a need to invent or procure alternative sets of eco-friendly technologies that lead to sustainable development in different circumstances.

Q. Why is agricultural diversification essential for sustainable livelihoods?

Ans. Diversification into non-farm activities is important because it will: reduce the risk from the agriculture sector. provide sustainable livelihood options to people living in villages. provide ecological balance.

Q. What are the alternative channels available for agricultural marketing? Give some examples.

Ans. In India, alternative marketing channels are emerging. Through these channels, farmers directly sell their produce to the consumers. This system increases farmers’, share in the price paid by the consumers. Important examples of such channels are: (a) Apani Mandi (Punjab, Haryana, and Rajasthan), (b) Hadaspar Mandi (Pune); Rythu Bazars (Vegetable and fruit market in Andhra Pradesh), and (c) Uzhavar Sandies (Tamil Nadu), (d) Several national and international fast-food chains and hotels are also entering into contracts with the farmers to supply them fresh vegetables and fruits.