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

What is it about?

This paper quantifies the effects of contract farming on farmers’ income and investigates the determinants of farmers’ participation in it by using. survey data of onion, okra, and pomegranate cultivators. We used instrumental variable regressions and quasi-experimental methods to decipher the impact of contract farming. we find that contract farming ensures higher returns for smallholders, helps them access high-end markets and reduces the risk during price fluctuations. Extension services, farm size, personal ownership of transport, belonging to higher castes, and education are significantly associated with farmers’ participation in contract farming. The benefits of contract farming are product- and contract-specific, and therefore policymakers should design appropriate strategies and mechanisms to promote contract farming accordingly.

Featured Image