An economic analysis of production and marketing of vegetables under contract farming in Punjab

Abstract

Institutional innovations in agricultural marketing such as contract farming are seen as one of the ways to ensure the viability of the farming in crises ridden agrarian economy of the Punjab. It is argued that linking farmers with agribusiness firms might raise income and shift cropping pattern in favour of high value crops since such firms provide assured markets and price. In this context, the study has made a modest attempt to examine the interface between the farmers and the contracting companies in terms of procurement, factors influencing farmers participation under contract farming, role in diversification, technical efficiency in production under contract, problems faced in contract, etc. in Punjab. The study is mainly based on primary data. Three companies, one MNC viz. PepsiCo and two local companies viz. Paras Spices Pvt. Ltd., and Rana Sugars Limited involved in contract production and procuring of vegetables were selected for the study. A sample of 50 vegetable supplying farmers under contract with each company was selected through the stratified random sampling (SRS) technique. Another set of 50 farmers each in the vicinity of contract farmers for three companies was also selected based on the proportion of the farmers in each category in each location through SRS technique. Thus, the study was carried out Institutional innovations in agricultural marketing such as contract farming are seen as one of the ways to ensure the viability of the farming in crises ridden agrarian economy of the Punjab. It is argued that linking farmers with agribusiness firms might raise income and shift cropping pattern in favour of high value crops since such firms provide assured markets and price. In this context, the study has made a modest attempt to examine the interface between the farmers and the contracting companies in terms of procurement, factors influencing farmers participation under contract farming, role in diversification, technical efficiency in production under contract, problems faced in .......