Who Rewards Farmers Better for Commercialisation? Public versus Private Contracting Firms in North India

Abstract

This article explores the socioeconomic factors of wheat growers’ participation intensity in contract farming (CF) under both public and private firms in Haryana. Using the primary survey data of 754 wheat growers collected from two districts of Haryana, the study finds that CF participation intensity is higher under government corporations than in private firms. The Tobit regression results show that similar variables determine the participation intensity under both types of firms. But the perception of agricultural profitability has different significant signs for public and private firms. This difference in profitability perception spawns from the different contracting nature of both types of firms. The government firms directly contact farmers, while private firms hire agents to communicate with farmers. In addition, government firms encourage marginal and small farmers to adopt CF, while private firms prefer medium to large farmers owning a minimum of five acres of cultivable land. Payment security is another reason for the intensity difference between types of firms. Therefore, the study calls for a policy framework to establish better institutional structure to strengthen CF inclusiveness, where both types of firms provide the scope for more extensive participation across the groups of farmers. JEL Codes: Q12, Q13, C01