Determinants and impacts of contract farming: evidence from cultivation of onion, okra and pomegranate in Maharashtra, India

Abstract

PurposeThis 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/approachThis study uses instrumental variable regressions and quasi-experimental methods to decipher the impact of contract farming.FindingsThe 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/implicationsThe study is based on cross-sectional data, which presents limitations on considering unobserved farmer-level individual heterogeneity.Originality/valueThe 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.

Comparative Growth Analysis of Onion in Deep Water Culture and Soil Based Systems: Enhancing Medicinal Plant Cultivation in Urbanized Environments

“…Onion cultivation also plays a pivotal role in boosting the economy of many nations like China, Egypt, Nepal, Turkey, Afghanistan, and various regions of India [11,12]. It is cultivated in huge amounts in many Indian states, making India one of the leading producers of onions [10,[13][14][15].…”

“…Cultivation and export of high-quality onion can form the basis for improving the Indian economy. Traditional cultivation methods have unlimited limitations, like risks, demand-supply mismatch, poor soil quality, and lesser arable land, that cause a hindrance towards onion cultivation thus leading to an adverse effect on the Indian economy [10,12,15]. Concerning the significant boost in the Indian economy from onion export and the continuously decreasing farming land and natural resources, there is a dire need to enhance the cultivation of onions.…”

“…Table 1 is a tabular representation of the various growing seasons of onion. The production cycle of onion, if shortened, can be advantageous to mankind in multifold ways [12,13,15]. Apart from being loaded with vitamins, minerals, and other beneficial medicinal, pharmacological, and therapeutic properties, onions are also loaded with several nutritional components.…”

“…Onions are overloaded with Vitamin B, vitamin C, calcium, phosphorous, etc., and can also be used to extract oil [10]. Many of its constituents like thiosulphates, phenolic acids, and quercetin contribute to its therapeutic effects [12]. Many disorders, such as asthma, inflammation, scars, pain, wounds, etc.…”

Contract farming in transitional economies: A stakeholder theory perspective

“…Contract farming helps to address many of these failures by improving economic linkages between farmers and agribusiness companies (cf. Kumar et al, 2023;Pham et al, 2021). According to a prevalent transaction cost economics understanding, contract farming embodies a form of vertical coordination that blends the benefits of both vertical integration and spot market transactions.…”