Determinants and impacts of contract farming: evidence from cultivation of onion, okra and pomegranate in Maharashtra, India
Journal of Agribusiness in Developing and Emerging Economies
ISSN: 2044-0839
Article publication date: 29 June 2023
Abstract
Purpose
This study investigates the impact of contract farming in onion, okra and pomegranate production on profits of smallholder farmers in India. It also investigates the determinants of farmers’ participation in contract farming. The study is based on a survey of 1,131 farmers from Maharashtra, India engaged in the cultivation of these three crops.
Design/methodology/approach
This study uses instrumental variable regressions and quasi-experimental methods to decipher the impact of contract farming.
Findings
The study reveals that contract farming ensures higher returns for smallholders, enables their access to high-end markets and brings in risk-sharing with protection during price fluctuations. Farm size and farmers’ risk perceptions are significantly associated with their participation in contract farming.
Research limitations/implications
The study is based on cross-sectional data, which presents limitations on considering unobserved farmer-level individual heterogeneity.
Originality/value
The study shows that contracts highlight the functioning of the contractor/integrator on both the input and output sides of the market. By providing better-quality inputs on credit and at discounted prices and by providing training, the integrator helps small farmers meet international food safety and quality standards, a historically difficult challenge for smallholders in India.
Keywords
Acknowledgements
The authors are grateful to the United States Agency for International Development (USAID) for extending financial support to conduct this study through the Policy Reform Initiative Project in Nepal. The authors are also grateful to Ms. Bhushana Karandikar, research collaborator and development consultant, for implementing the farmers’ survey. Special thanks are due to Jain Farm Fresh Foods Limited, Kay Bee Exports and Sangola Dalimb Kharedi Vikri Sangh, for their heartfelt cooperation in interviewing farmers. Last but not least, the authors express sincere thanks to all the farmers who provided the needed information for the accomplishment of this study.
Citation
Kumar, A., Roy, D., Tripathi, G. and Joshi, P.K. (2023), "Determinants and impacts of contract farming: evidence from cultivation of onion, okra and pomegranate in Maharashtra, India", Journal of Agribusiness in Developing and Emerging Economies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JADEE-05-2022-0094
Publisher
:Emerald Publishing Limited
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