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

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, I...

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Bibliographic Details
Published in:Journal of agribusiness in developing and emerging economies 2025-01, Vol.15 (1), p.131-149
Main Authors: Kumar, Anjani, Roy, Devesh, Tripathi, Gaurav, Joshi, P K
Format: Article
Language:English
Subjects:
Agriculture
Commodities
Contract farming
Costs
Cultivation
Developing countries
Experimental methods
Farmers
Farming
Food
Food quality
Food safety
Heterogeneity
Integrators
LDCs
Okra
Onions
Prices
Profits
Quality standards
Rationality
Regression analysis
Risk perception
Risk sharing
Small farms
Suppliers
Vegetables
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Summary: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.
ISSN:2044-0839
2044-0847
DOI:10.1108/JADEE-05-2022-0094