Smallholder attrition in contract farming schemes in India: extent, causes, and concerns

Abstract

This paper maps the extent and causes of farmer exit from contract farming arrangements in southern India using survey data for five schemes: cotton, gherkins, papaya, marigold, and broiler chickens. The paper finds that farmer attrition is quite widespread and that poorer farmers from marginalized social groups are more likely to exit these arrangements. While this is an important policy concern, the study also distinguishes between voluntary exit, where the farmer opts out, versus involuntary exit, where the contracting firm drops the farmer as a supplier because of constraints in delivering quality produce, or the firm's interaction with the farmer forces the farmer out. The paper also highlights the episodic nature of farmer participation, wherein farmers leverage opportunities to contract occasionally as part of a dynamic portfolio of alternatives. The paper emphasizes that while involuntary exclusion is of serious concern, voluntary exit and episodic participation are perhaps less important issues f...