Does Contract farming Increase Farmers Income and Productivity in India? Evidence from Literature

Abstract

India is a country of villages and approximately 70 per cent of population resides in village. Their livelihood is totally depends on agriculture directly or indirectly. Therefore the agriculture sector is very important for the 70 per cent of population of India in present era also. The share of agriculture sector in total GDP is declining after economic reforms therefore this sector is very important in terms of employment and poverty reduction particular in rural area. Due to rapid population growth and heritance property act the land holding is declining continuously and now the situation of farmers is very critical. As per National Sample Survey NSS 77^th round approximately 98 per cent of the farmers are marginal and small which have less than 4 hectare of land. It is not possible to achieve the target of double farmer’s income on this small piece of land and traditional agriculture system. Government tried to break this traditional agriculture marketing system by introducing Agricultural Produce Market Committee (APMC) in 2003. No doubt this AMPC act helps to break this traditional chain and allowed to the private player in agricultural marketing chain. Retail agricultural marketing chain and contract farming are the new private player in agricultural sector. Contract farming is new agriculture marketing arrangement in India, which provides technical know-how and marketing facilities to farmers at their farm. On the one hand this technical known-how introduce a new cropping patter in rural area which is helpful to break the traditional cropping pattern. On the other hand this marketing arrangement provides the marketing facilities to the farmers at their farms which save all the transportation cost of the farmers.  Therefore the main aim of the study is to examine whether the contracted farming really increase the farmers income and productivity.