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Roopam Singh Linu Mathew Philip Sampath Raghavan Annual Conference on Agri Business Management  Bangalore June 29, 2009
[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],Sources: Statistical Abstract of Punjab 2006  http://www.punjabpolice.org/map11/index.html  Basmati Potato Contract 25 15 Non Contract 25 15 Total 50 30 % Farmers Population (no.) 2,08,841 40.68 Area under CF (ac) 35,855 16.15 Small & Marginal holdings (no.) 37,212 50.21
[object Object],[object Object],Contract Farming Arrangements
Contract Farming Arrangements Particulars PepsiCo Markfed Pre Contract Assessment Direct Direct & thru middlemen Texts of Contract Written (English) Written (Local dialect) Type of Contract Bipartite Tripartite Copy provided to farmers No Yes Registration fee No On the farmers (Rs.100) ID Cards No Yes Inputs supplied Seed, Tech know-how Brands specified w.r.to. Fertilizers & Pesticides No credit Seed (Optional) Tech know how No credit  Procurement of produce Direct Direct & thru middlemen Transportation By the farmers upto the collection centers At the farm gate  Price realization Market rate  +   Rs.15-25 / q  Market rate
[object Object],[object Object]
Contract Farming Arrangements Playing it safe? Particulars Potato Basmati Contract Non-Contract Contract Non-Contract Total area under cultivation ,[object Object],75 45 19 23 ,[object Object],10 18 8 6 ,[object Object],300 80 50 52 Area under contracted crops ,[object Object],55 25 8 10 ,[object Object],4 5 4 3 ,[object Object],150 65 20 21 % of area under contracted crop ,[object Object],77%  56% 48% 47% ,[object Object],25% 13% 20% 11% ,[object Object],100% 100% 100% 100%
Contract Farming Arrangements Particulars Potato Basmati Contract Non-Contract Contract Non-Contract Area owned (ac) ,[object Object],25  20 7 9 ,[object Object],4 2 2 2 ,[object Object],53 45 20 30 Area Leased (ac) ,[object Object],50 25 13 14 ,[object Object],4 11 4 3 ,[object Object],280 45 35 40
Contract Farming Arrangements Profile of Land Holding (Contract) CF in Potato – A ‘Large Farmers’ game? Basmati  N = 25; Potato N = 15
Contract Farming Arrangements Land Leased & Owned (in acres) Under contract …  Proportion of area leased in more than twice the area owned
Contract Farming Arrangements Land Leased > Owned Under contract … Basmati – Small holders dominant  Potato  – Large farmers  Basmati  Contract N = 20, Non Contract N = 16   Potato Contract N = 8, Non Contract N = 10
Contract Farming Arrangements A ‘Win-Win’ game? Particulars PepsiCo Markfed Farmers Company Farmers Company Assured market for produce   Assured supply of raw materials or produce   Higher incomes from  contract  Vs no contract  Lower transaction costs per unit of produce    Flexible terms for buyback     Technical support &  know how   Assistance for credit  
Contract Farming Arrangements The Power Equation Particulars PepsiCo Markfed Farmers Company Farmers Company Participation of Small Farmers Low High Level of commitment in the contract arrangement High High Equal Equal Costs of breach of contract by the other party High Moderate Equal (Low) Equal (Low) Alternatives in case of default by the other party Few -- Equal Equal Terms of Contract Highly Binding Moderate Binding Equally binding Equally binding Risk sharing in the contract arrangement High Low Equal Equal
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Points to Ponder
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Points to Ponder
[object Object],[object Object],[object Object],[object Object],Way Forward
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],About CENTAD
[object Object]

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Cf Presentation 25 Sep 08

  • 1. Roopam Singh Linu Mathew Philip Sampath Raghavan Annual Conference on Agri Business Management Bangalore June 29, 2009
  • 2.
  • 3.
  • 4.
  • 5. Contract Farming Arrangements Particulars PepsiCo Markfed Pre Contract Assessment Direct Direct & thru middlemen Texts of Contract Written (English) Written (Local dialect) Type of Contract Bipartite Tripartite Copy provided to farmers No Yes Registration fee No On the farmers (Rs.100) ID Cards No Yes Inputs supplied Seed, Tech know-how Brands specified w.r.to. Fertilizers & Pesticides No credit Seed (Optional) Tech know how No credit Procurement of produce Direct Direct & thru middlemen Transportation By the farmers upto the collection centers At the farm gate Price realization Market rate + Rs.15-25 / q Market rate
  • 6.
  • 7.
  • 8.
  • 9. Contract Farming Arrangements Profile of Land Holding (Contract) CF in Potato – A ‘Large Farmers’ game? Basmati N = 25; Potato N = 15
  • 10. Contract Farming Arrangements Land Leased & Owned (in acres) Under contract … Proportion of area leased in more than twice the area owned
  • 11. Contract Farming Arrangements Land Leased > Owned Under contract … Basmati – Small holders dominant Potato – Large farmers Basmati Contract N = 20, Non Contract N = 16 Potato Contract N = 8, Non Contract N = 10
  • 12. Contract Farming Arrangements A ‘Win-Win’ game? Particulars PepsiCo Markfed Farmers Company Farmers Company Assured market for produce   Assured supply of raw materials or produce   Higher incomes from contract Vs no contract  Lower transaction costs per unit of produce    Flexible terms for buyback     Technical support & know how   Assistance for credit  
  • 13. Contract Farming Arrangements The Power Equation Particulars PepsiCo Markfed Farmers Company Farmers Company Participation of Small Farmers Low High Level of commitment in the contract arrangement High High Equal Equal Costs of breach of contract by the other party High Moderate Equal (Low) Equal (Low) Alternatives in case of default by the other party Few -- Equal Equal Terms of Contract Highly Binding Moderate Binding Equally binding Equally binding Risk sharing in the contract arrangement High Low Equal Equal
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