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Profits from participation in high value agriculture: Evidence of heterogeneous benefits in contract farming schemes in Southern India


  • Narayanan, Sudha


This paper assesses the variable impact of participation in high value agriculture through contract farming arrangements in southern India. Using survey data for 474 farmers in four commodity sectors, gherkins, papaya marigold and broiler, an endogenous switching model is used to estimate net profits from participation. Findings suggest that average treatments effect vary widely across contract commodities. Papaya and broiler contracting offer clear net gains for participants whereas marigold contracting leaves participants worse off. For gherkins, while contracting holds net gains for participating farmers overall, this is true of contracts with some firms but not others. The standard deviations of point estimates of treatment effects are quite large indicating variability in profit gains even within the same commodity sectors. Thus, notwithstanding the sign of average treatment effects, contract farming arrangements have diverse impacts on income for individual farmers and these could have implications for sustained participation of farmers in high value agriculture.

Suggested Citation

  • Narayanan, Sudha, 2014. "Profits from participation in high value agriculture: Evidence of heterogeneous benefits in contract farming schemes in Southern India," Food Policy, Elsevier, vol. 44(C), pages 142-157.
  • Handle: RePEc:eee:jfpoli:v:44:y:2014:i:c:p:142-157
    DOI: 10.1016/j.foodpol.2013.10.010

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    References listed on IDEAS

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    Cited by:

    1. Van den Broeck, Goedele & Swinnen, Johan & Maertens, Miet, 2017. "Global value chains, large-scale farming, and poverty: Long-term effects in Senegal," Food Policy, Elsevier, vol. 66(C), pages 97-107.
    2. Herrmann, Raoul T., 2017. "Large-Scale Agricultural Investments and Smallholder Welfare: A Comparison of Wage Labor and Outgrower Channels in Tanzania," World Development, Elsevier, vol. 90(C), pages 294-310.
    3. repec:spr:endesu:v:19:y:2017:i:6:d:10.1007_s10668-016-9854-z is not listed on IDEAS
    4. Ragasa, Catherine & Lambrecht, Isabel & Kufoalor, Doreen S., 2018. "Limitations of Contract Farming as a Pro-poor Strategy: The Case of Maize Outgrower Schemes in Upper West Ghana," World Development, Elsevier, vol. 102(C), pages 30-56.
    5. repec:spr:ssefpa:v:9:y:2017:i:6:d:10.1007_s12571-016-0642-2 is not listed on IDEAS
    6. Coromaldi, Manuela & Pallante, Giacomo & Savastano, Sara, 2015. "Adoption of modern varieties, farmers' welfare and crop biodiversity: Evidence from Uganda," Ecological Economics, Elsevier, vol. 119(C), pages 346-358.
    7. Ma, Wanglin & Abdulai, Awudu, 2016. "Does cooperative membership improve household welfare? Evidence from apple farmers in China," Food Policy, Elsevier, vol. 58(C), pages 94-102.
    8. Muriithi, Beatrice W. & Matz, Julia Anna, 2015. "Welfare effects of vegetable commercialization: Evidence from smallholder producers in Kenya," Food Policy, Elsevier, vol. 50(C), pages 80-91.
    9. Briones, Roehlano M., 2015. "Small Farmers in High-Value Chains: Binding or Relaxing Constraints to Inclusive Growth?," World Development, Elsevier, vol. 72(C), pages 43-52.
    10. Nicholas Minot & Loraine Ronchi, 2014. "Contract Farming," World Bank Other Operational Studies 24249, The World Bank.
    11. Ton, Giel & Vellema, Wytse & Desiere, Sam & Weituschat, Sophia & D’Haese, Marijke, 2016. "Effectiveness of contract farming for improving income of smallholder farmers-Preliminary results of a systematic review," 149th Seminar, October 27-28, 2016, Rennes, France 244792, European Association of Agricultural Economists.
    12. repec:eee:wdevel:v:95:y:2017:i:c:p:73-87 is not listed on IDEAS
    13. Maertens, Miet & Vande Velde, Katrien, 2017. "Contract-farming in Staple Food Chains: The Case of Rice in Benin," World Development, Elsevier, vol. 95(C), pages 73-87.
    14. Upton, Joanna B. & Lentz, Erin C., 2016. "Finding Default? Understanding the drivers of default on contracts with farmers’ organizations under the World Food Programme Purchase for Progress Pilot," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235656, Agricultural and Applied Economics Association.


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