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Notional contracts: The Moral economy of contract farming arrangements in India

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  • Sudha Narayanan

    ()
    (Indira Gandhi Institute of Development Research)

Abstract

This study examines the moral economy of firm-farmer contracts in contract farming schemes in India, bringing together data from field surveys, conducted between 2007 and 2010, of 42 agribusinesses and 484 contract farmers from multiple commodity sectors. The central argument of this paper is that contract farming relationships in India are seen more as relationships and less as contracts, with formal enforcement mechanisms playing only a peripheral role in maintaining and supporting transactions. This is related only in part to the costs and inefficacy of formal enforcement mechanisms. Both firms and farmers prefer to operate outside the prescribed legal-institutional structure whenever these structures are perceived to undermine the handshake ethic. The findings indicate that state policies that presume legal institutional development to be necessary and sufficient for promoting agribusiness interaction with farmers might be misplaced if not merely ineffective.

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Bibliographic Info

Paper provided by Indira Gandhi Institute of Development Research, Mumbai, India in its series Indira Gandhi Institute of Development Research, Mumbai Working Papers with number 2012-020.

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Length: 29 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:ind:igiwpp:2012-020

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Keywords: contract farming; private enforcement; moral economy; legal institutions; agriculture;

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  1. Johnson, Simon & McMillan, John & Woodruff, Christopher, 1999. "Contract Enforcement in Transition," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2081, C.E.P.R. Discussion Papers.
  2. Clay, Karen, 1997. "Trade without Law: Private-Order Institutions in Mexican California," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 13(1), pages 202-31, April.
  3. de Janvry, Alain & McIntosh, Craig & Sadoulet, Elisabeth, 2010. "The supply- and demand-side impacts of credit market information," Journal of Development Economics, Elsevier, Elsevier, vol. 93(2), pages 173-188, November.
  4. Otsuka, Keijiro & Kikuchi, Masao & Hayami, Yujiro, 1986. "Community and Market in Contract Choice: The Jeepney in the Philippines," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 34(2), pages 279-98, January.
  5. Gow, Hamish R. & Streeter, Deborah H. & Swinnen, Johan F. M., 2000. "How private contract enforcement mechanisms can succeed where public institutions fail: the case of Juhocukor a.s," Agricultural Economics, Blackwell, Blackwell, vol. 23(3), pages 253-265, September.
  6. McMillan, John & Woodruff, Christopher, 1999. "Dispute Prevention without Courts in Vietnam," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 15(3), pages 637-58, October.
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