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Efficiency and Distribution in Contract Farming: The Case of Indian Poultry Growers

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  • Ramaswami, Bharat
  • Birthal, Pratap Singh
  • Joshi, P.K.

Abstract

This paper is an empirical analysis of the gains from contract farming in the case of poultry production in the state of Andhra Pradesh in India. The paper finds that contract production is more efficient than noncontract production. The efficiency surplus is largely appropriated by the processor. Despite this, contract growers still gain appreciably from contracting in terms of lower risk and higher expected returns. Improved technology and production practices as well as the way in which the processor selects growers are what make these outcomes possible. In terms of observed and unobserved characteristics, contract growers have relatively poor prospects as independent growers. With contract production, these growers achieve incomes comparable to that of independent growers.

Suggested Citation

  • Ramaswami, Bharat & Birthal, Pratap Singh & Joshi, P.K., 2006. "Efficiency and Distribution in Contract Farming: The Case of Indian Poultry Growers," MTID Discussion Papers 58573, CGIAR, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:ags:iffp12:58573
    DOI: 10.22004/ag.econ.58573
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    References listed on IDEAS

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    1. Warning, Matthew & Key, Nigel, 2002. "The Social Performance and Distributional Consequences of Contract Farming: An Equilibrium Analysis of the Arachide de Bouche Program in Senegal," World Development, Elsevier, vol. 30(2), pages 255-263, February.
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    5. Charles R. Knoeber & Walter N. Thurman, 1995. ""Don't Count Your Chickens...": Risk and Risk Shifting in the Broiler Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 486-496.
    6. Key, Nigel & Runsten, David, 1999. "Contract Farming, Smallholders, and Rural Development in Latin America: The Organization of Agroprocessing Firms and the Scale of Outgrower Production," World Development, Elsevier, vol. 27(2), pages 381-401, February.
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    More about this item

    Keywords

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    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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