Emergence of Contract Farming and Its Impact on Indian Agriculture: A Study from Two Indian States*

Contract farming is one of several modes of crop production. What influences firms and farmers to participate in contract farming? This study examines the factors and the impacts of contract farming on farmer efficiency, income and soil health. We carried out a primary survey of gherkin, rice seed and green chilli in Telangana and Bihar. The impact on farm productivity, farmers’ income and access to market is positive, but on soil health and water use is negative. Institutional mechanisms (involvement of local government) need to improve, drip irrigation should be promoted and awareness generated and farming has to become inclusive and sustainable. JEL Classification: N5, N55, Q13