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

Swain, Braja Bandhu (2008): The role of contract farming in agricultural development in globalise world: an institutional economics analysis.

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Abstract

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.

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