One of the leading food retail chains, ‘Spencers’ have established backward linkages with farmers for procuring fresh fruits and vegetables. The main strategy of this system ensures a steady and continuous supply of fresh vegetables to the food retail chain and flow of income to farmers. This linkage has been able to change the method of farming and the marketing arrangement followed by the food retail chains. The marketing arrangement by Spencers food retail chain has reduced the market risks and transaction cost of farmers and has helped them in breaking away from the clutches of traditional brokers/wholesalers/commission agents. Direct supply by farmers has allowed the retail chain to simultaneously increase control over quality, supply reliability and price stability. An added advantage of this model is that it provides flexibility to the farmers to exit from this system, if they are not satisfied with its functioning, since there are no written contracts. This model of linkage is specially suited to small and marginal farmers and improves their economic conditions by providing an opportunity to grow and supply high-value vegetables round the year at a fairly decent price. The study has analyzed the impact of food retail chain linkage on farmers.