ANALYSIS OF CONTRACT FARMING AND ITS IMPLICATION ON PROFITABILITY; EVIDENCE FROM POTATO FARMERS IN PUNJAB, INDIA
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Authors
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Sarbjeet Singh
central university of punjab bathinda
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Chidanand Patil
Central University of Punjab, Bathinda
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Chaitra G B
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Mohammad Yaqoob Sharafat
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Venu Prasad H D
Keywords:
Contract farming, Potatoes, Impact assessment, India, ProfitabilityAbstract
Contract farming has become an essential institution for modern value chains but with controversies. Hence, the present study sought to understand whether contract farming is a boon or a bane for farmers. To unravel this, 120 farmers were sampled from the Moga district of Punjab state, India. The data was subjected to inferential analysis, profitability analysis, and qualitative discussion. It was found that areas under potato cultivation, potato farming experience, and having a secondary school education positively affect farmers’ decision to participate in contract farming. The profitability estimates revealed that potato cultivation under no contract is more profitable than cultivation under a contract. Likewise, the impact assessment revealed that contract farming negatively affects farmer’s gross returns. The qualitative discussion revealed myriad terms and conditions followed by the potato farmers under contract, including pre-price fixation, written contract, farm size requirement, quality and quantity requirement, input supply, no credit, farm visits, and cheque payment. Therefore, compensation in the event of crop failures, the provision of crop insurance, credit facilities, and advance payments needs immediate attention from policymakers.
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