ECONOMICS OF CONTRACT FARMING - A STUDY OF ASHWAGANDHA (Withania somnifera) IN NORTH KARNATAKA
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Date
2005
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UNIVERSITY OF AGRICULTURAL SCIENCES GKVK, DHARWAD
Abstract
"Contract farming can be described as a half way house between
independent farm production and corporate farming. Contract farming
involves a contractual relationship between farmers and a central processing
or exporting unit/firms. This unit purchases, produce from contract farmers
under the agreed terms of contract. Ashwagandha is an important cultivated
medicinal crop of India. It is mentioned as an important drug in ancient
Ayurvedic literature. Several type alkaloids are found in this plant, of which
'Withanin' and 'Somniferine' are important. The study was undertaken in
Raichur, Gadag and Koppal districts of North Karnataka. All the farmers
adopting contract farming were chosen. The companies who are practicing
contract farming of Ashwagandha in these districts were also chosen.
Hence, the total sample size was 30. The study revealed that family size and
young age coupled with better education (96.67%) has made the farmers to
increase their farm income by adopting commercial agriculture. The total per
acre cost of Ashwiigandha production was Rs. 6896 and net returns
obtained per acre was Rs. 14,820. The output elasticities of human labour,
machine hour, FYM were statistical significant output elasticities of seeds,
bullock labour and other (PPC + interest on working capital) was positive but
non-significant. An increased returns to scale was evident in case of
Ashwagandha production as returns to scale (2.083) was more than unity.
Written agreement was used in Ashwagandha contract farming. The
technical aspect of agreement was drafted in short, simple terms, clarifying
the responsibilities of both farmer and firms.
The regression coefficients of net returns from contract farming land
under contract farming, education of the contract farmer and experience of
the company were statistically significant. The coefficients of the age of the
contract farmer and family size were positive but were statistical!}^
non-significant. There were several problems faced by contract farmer and
contract firm, which can be well handled with proper policy interventions."
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No. of references 56