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Efficiency and distribution in contract farming: the case of Indian poultry growers

Author

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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." Authors' Abstract

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 91, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:mtiddp:91
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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.
    2. Glover, David J., 1987. "Increasing the benefits to smallholders from contract farming: Problems for farmers' organizations and policy makers," World Development, Elsevier, vol. 15(4), pages 441-448, April.
    3. Eswaran, Mukesh & Kotwal, Ashok, 1985. "A Theory of Contractual Structure in Agriculture," American Economic Review, American Economic Association, vol. 75(3), pages 352-367, June.
    4. Minot, Nicholas, 1986. "Contract Farming and Its Effect on Small Farmers in Less Developed Countries," Food Security International Development Working Papers 54740, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    5. 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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    Citations

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    Cited by:

    1. Mehta, Rajesh & Narrod, Clare & Tiongco, Marites, 2008. "Livestock industrialization, trade and social-health-environment impacts in developing countries: a case of Indian poultry sector," MPRA Paper 32678, University Library of Munich, Germany.
    2. Birthal, Pratap S. & Jha, Awadhesh K. & Tiongco, Marites M. & Narrod, Clare A., 2009. "Farm-Level Impacts of Vertical Coordination of the Food Supply Chain: Evidence from Contract Farming of Milk in India," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 64(3).
    3. Roy, Devesh & Thorat, Amit, 2008. "Success in High Value Horticultural Export Markets for the Small Farmers: The Case of Mahagrapes in India," World Development, Elsevier, vol. 36(10), pages 1874-1890, October.
    4. Henningsen, Arne & Mpeta, Daniel F. & Adem, Anwar S. & Kuzilwa, Joseph A. & Czekaj, Tomasz G., 2015. "The Effects of Contract Farming on Efficiency and Productivity of Small-Scare Sunflower Farmers in Tanzania," 2015 Conference, August 9-14, 2015, Milan, Italy 212478, International Association of Agricultural Economists.
    5. Pandit, Arun & Pandey, N.K. & Rana, Rajesh K. & Lal, Barsati, 2009. "An Empirical Study of Gains from Potato Contract Farming," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 64(3).
    6. Chang, Ching-Cheng & Chen, Chi-Chung & Tseng, Wei-Chun & Hu, Wu-Yueh, "undated". "Estimating the Profit Efficiency of Contract and Non-Contract Rice Farms in Taiwan -- A Meta-Frontier and A Cross-Frontier Appraoch Applications," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205445, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    7. Lefèvre, Mélanie & Tharakan, Joe, 2011. "Intermediaries, transport costs and interlinked transactions," CEPR Discussion Papers 8615, C.E.P.R. Discussion Papers.
    8. Birthal, Pratap S. & Jha, Awadhesh K. & Tiongco, Marites & Narrod, Clare, 2008. "Improving farm-to-market linkages through contract farming: A case study of smallholder dairying in India," IFPRI discussion papers 814, International Food Policy Research Institute (IFPRI).
    9. Saigenji, Yoshiko & Zeller, Manfred, 2009. "Effect of contract farming on productivity and income of small holders: The case of tea production in north-western Vietnam," 2009 Conference, August 16-22, 2009, Beijing, China 51681, International Association of Agricultural Economists.
    10. Birthal, Pratap Singh & Jha, Awadhesh K. & Singh, Harvinder, 2007. "Linking Farmers to Markets for High-Value Agricultural Commodities," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 20(2007).
    11. Senakpon F. A. Dedehouanou & Johan Swinnen & Miet Maertens, 2013. "Does Contracting Make Farmers Happy? Evidence from Senegal," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59, pages 138-160, October.
    12. Sudha Narayanan, 2012. "Safe gambles? Farmer perceptions of transactional certainty and risk-return tradeoffs in contract farming schemes in Southern India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-021, Indira Gandhi Institute of Development Research, Mumbai, India.
    13. Krishna, Vijesh V. & Erenstein, Olaf & Sadashivappa, Prakash & Vivek, B. S., 2014. "Potential Economic Impact of Biofortified Maize in the Indian Poultry Sector," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 17(4).
    14. Birthal, Pratap S., 2008. "Linking Smallholder Livestock Producers to Markets: Issues and Approaches," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 63(1).

    More about this item

    Keywords

    Contract farming; Poultry; Vertical integration;

    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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