Comparative Economics of Contract and Non-contract Farming of Potato in Gujarat

V.K. Gondalia
Journal article Economic Affairs • December 2017

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(English, 8 pages)

Abstract

To study the comparative economics of contract and non-contract farming of potato in Gujarat state, a sample of 120 potato growers comprising 60 each from contract and non-contract were selected. The Cost Concept (CACP approach) was used to work out various costs and “t” test was used for testing their statistical significance. The results revealed that the cost of cultivation (Cost C2) was higher on contract farms (` 185435 per ha) when compared to the non-contract farms, (` 154930 per ha) due to higher cost of labor, manures, seeds and chemical fertilizers. The average production of potato was higher on contract farms (399.92 q/ha) than on the non-contract farms (303.83 q/ha). This might be due to the use of better variety, proper use of inputs and better production technology as specified by the contracting firm. The average price received by the farmers was higher on the contract farms (` 830.29 per quintal) when compared to the non-contract farms (` 808.17 per quintal). The net returns received over Cost C2 was higher on contract farms (` 146615 per ha) when compared to the non-contract farms (` 90620 per ha). The yield uncertainty ratio was lower on the contract farms (0.1806) than the non-contract farms (0.4588). Similarly, the price uncertainty ratio was lower on contract farms (0.0162) than the non-contract farms (0.1358). In nutshell, these results clearly revealed that the contract farming in potato was economically more profitable and less risky when compared to traditional non-contract farming.

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Economic Affairs

Economic Affairs, Quarterly Journal of Economics, is a Peer-Review publication based on multi-dis... see more