Abstract: Contract farming involves a pre-agreed price between the company and the farmer. The agreement is defined by the commitment of the farmer to provide an agricultural commodity of a certain type at a time and a price and the quantity required by a committed buyer, mostly a large company. The present paper is intended to conduct a case study of PEPSICO Plant, located in village Channo, district Sangrur, Punjab. Present study provides a detailed look on concept of contract farming and relationship between processing firm and farmers in the villages around the plant. The methodology used in the study is the interview schedule by random collection of primary data where the study subjects are the farmers practicing contract farming in the villages. Study concludes that majority of the large farm size farmers are involved in contract farming as compare to small farmers.