IDEAS home Printed from
   My bibliography  Save this paper

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


  • Bharat Ramaswami

    () (Indian Statistical Institute, New Delhi)

  • Pratap Singh Birthal

    (National Centre for Agricultural Economics and Policy Research)

  • P.K. Joshi

    (International Food Policy Research Institute)


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 is what makes 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

  • Bharat Ramaswami & Pratap Singh Birthal & P.K. Joshi, 2005. "Efficiency and distribution in contract farming:The case of Indian poultry growers," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 05-01, Indian Statistical Institute, New Delhi, India.
  • Handle: RePEc:ind:isipdp:05-01

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    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. 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.
    3. 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.
    4. 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.
    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.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. 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).
    2. 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.
    3. 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.
    4. 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).
    5. 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).
    6. 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.
    7. 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.
    8. 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.
    9. 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).
    10. Lefèvre, Mélanie & Tharakan, Joe, 2011. "Intermediaries, transport costs and interlinked transactions," CEPR Discussion Papers 8615, C.E.P.R. Discussion Papers.
    11. 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).
    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).

    More about this item


    Contract Farming; Contracting; 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

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ind:isipdp:05-01. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamprasad M. Pujar). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.