Sugarcane is a major cash crop of India, particularly in UP, Maharastra, Tamil Nadu, Karnataka, Andhra Pradesh, Bihar, Gujurat, and foot hils of Uttarakhand. Sugarcane crop has an productivity of 70 tonnes/ha and an area of 4.2 mha. It plays a pivotal role in the state and national economy. Sugarcane is considered as one of the best cash crops in Orissa. It is grown in all the 30 districts of Orissa. The selected district Dhenkanal occupied 10th position in area (1.19 thousand ha), 9th position in production (81.46 thousand MTs) and 14th position in yield (68510 kg/ha) in 2004-05.

The establishment of a sugar factory in Dhenkanal district has increased the prospect of this crop in the surrounding area. On contract farms the important constraints experienced by the sugarcane contract growers in its order of importance were (i) delay in payment of produce, (ii) lack of credit

for crop production, (iii) scarcity of water for irrigation, (iv) difficulty in meeting quality requirements and (v) lower prices of crop produce. The constraints expressed by the sugar industry were (i) violation of terms and conditions by farms, (ii) lack of proper management by company, (iii)

frequent price fluctuations in international market, (iv) scarcity of transport vechicle during peak periods, (v) inability to provide proper transport facilities to farms and (vi) families negligence in maintaining quality. Among different benefits from contract farming, contract farmers felt that lack of

initial investment was the prime factor to prefer contract farming as the firms provided the inputs such as seeds, fertilizers etc. to the farmers without cash from the farmers and these costs were deducted at the time of final payment.