Impact of contract farming on land productivity and income of maize and potato growers in Pakistan. (May 2019)

• Record Type: Journal Article
• Authors: Khan, Muhammad Fawad; Nakano, Yuko; Kurosaki, Takashi
• Is Part Of: Food policy. Volume 85(2019)
• Page Start: 28
• Page End: 39
• Publication Date: 2019-05
• Subjects: Contract farming -- Grower-processor contracts -- Staple food marketing -- Pakistan; Food supply -- Periodicals; Food security -- Periodicals; Food -- Quality -- Periodicals; Food Supply -- Periodicals; Alimentation -- Périodiques; Electronic journals; 338.1905
• DOI: 10.1016/j.foodpol.2019.04.004
• Languages: English
• ISSNs: 0306-9192

Abstract

Highlights: We study heterogeneity of effects between maize and potatoes contract farming schemes. We also study spillover effect of contract farming towards labor market. Potato contract farming has significant association with price and income. Maize contract farming scheme does not have income or productivity implications but involves an attractive payment system. Abstract: While the positive income effect of contract farming is well established in the literature, the heterogeneity of effects for different crops has not been widely investigated. This study compares the income and productivity effects of large-scale contract farming under contract schemes for potatoes and maize in Pakistan. In the area of the study, maize is a common staple crop, widely available in the market, while the potatoes produced by contract farmers are a special variety not sold in the market. We find that potato contracting is associated with significantly higher income for participating farmers, while maize contracting has no association with either income or productivity. We found no negative association between contract participation and income from other sources. Taken together, these results show a higher total household income for potato contract farmers. We also show unique evidence that potato contract farmers tend to employ more skilled workers under a salary system for the management of farms, which implies that contract farming may have positive spillover effects in the skilled labor market. Neither scheme, however, is associated with larger employment of agricultural labor for simple tasks.