Geography Matters: Evidence And Implications Of Spatial Selection In Contract Farming Schemes In Southern India

Current literature on farmer participation in dynamic agri-food supply chains focuses predominantly on one kind of inclusion based on individual farmer characteristics. Relatively less attention has been devoted to spatial selection. This chapter contends that exclusion can often be based on geographies and the precise nature of exclusion has important implications for the level at which public policy interventions should operate. This study investigates multiple sources of farmer exclusion in contract farming schemes involving agro-processors and farmers in five commodity sectors in southern India, including broiler, cotton, gherkins, marigold and papaya. Using data on 822 farmers, collected through surveys conducted between 2007 and 2010, this chapter decomposes the likelihood of inclusion into two components, spatial selection and farmer selection, to examine the pattern of exclusion across the different commodity sectors. The study finds that geography matters and that firms regularly select communities spatially over a geographic domain before choosing a portfolio of farmer–suppliers, implying that sorting across farmers is relevant only within the chosen geographies of procurement. Further the chapter discusses the implications for public policy relating to contract farming in India, especially pertaining to agroprocessing clusters and agro export zones.