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The role of contract farming in agricultural development in globalise world: an institutional economics analysis


  • Swain, Braja Bandhu


In the wake up ubiquitous agrarian crisis reflected in decelerating growth and increasing farmer suicides this paper examines the institutional constraints faced by agricultural sector. This paper interprets institutions in the very general sense of rules of structure in agricultural production and market interaction. Considering contract farming as a new institutional arrangement evolved in Indian agriculture to minimize risk and maximize profit, the paper assesses its strength in addressing the above problems. The basic question examined is how can contract farming help farmers especially smaller ones in the presence of imperfection of agrarian market (input, output, credit, etc)? Insights from theoretical literature and evidence from empirical studies show that contract farming would be able to address (at least partially) the market imperfections and have significant positive impact on farm households’ income and employment. Nonetheless the impact of contract farming is specific to regions, crops and farmer.

Suggested Citation

  • Swain, Braja Bandhu, 2008. "The role of contract farming in agricultural development in globalise world: an institutional economics analysis," MPRA Paper 18683, University Library of Munich, Germany, revised 14 Sep 2009.
  • Handle: RePEc:pra:mprapa:18683

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    References listed on IDEAS

    1. Davis, Lance & North, Douglass, 1970. "Institutional Change and American Economic Growth: A First Step Towards a Theory of Institutional Innovation," The Journal of Economic History, Cambridge University Press, vol. 30(1), pages 131-149, March.
    2. Singh, Sukhpal, 2002. "Contracting Out Solutions: Political Economy of Contract Farming in the Indian Punjab," World Development, Elsevier, vol. 30(9), pages 1621-1638, September.
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    Cited by:

    1. Hrabrin I. BACHEV, 2016. "Unpacking Agrarian and Agri-business Contracts," Journal of Economics Library, KSP Journals, vol. 3(3), pages 524-547, September.

    More about this item


    Agrarian Crisis; Institutional Constraints; and Contract Farming;

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness


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