Impact of contract farming on yield, costs and profitability in low-value crop: Evidence from a low-income country

Ashok Mishra, Anjani Kumar, Pramod K. Joshi, Alwin D'Souza

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

Lentils, a low-value and highly nutritious crop, are Nepal's largest pulse cash crop. However, the majority of the nation's smallholders produce lentils on very small plots of land. The large gap in lentil yields between Nepal and other lentil-producing countries underscores the importance of improving yields and income of smallholders. When it comes to the financial viability of small farms, particularly in developing countries, and globalisation, contract farming (CF) may prove useful in achieving efficiency and profitability in smallholder lentil farms in Nepal. This study employs the propensity score matching approach to examine the effects of the adoption of CF on yields, profitability and costs of smallholder lentil farms in Nepal. Findings from this study reveal that contrary to popular belief, CF adoption by lentil producers in Nepal has a positive and significant effect on per-hectare revenues, profits and yield and a negative impact on variable and transportation costs. The study finds that only very smallholder lentil farms (0.01-0.05 ha) benefit from CF.

Original languageEnglish (US)
JournalAustralian Journal of Agricultural and Resource Economics
DOIs
StateAccepted/In press - Jan 1 2018
Externally publishedYes

Fingerprint

Lens Plant
lentils
Contracts
Agriculture
profitability
income
farming systems
Nepal
Costs and Cost Analysis
crops
farms
Propensity Score
Internationality
cash crops
small farms
Crops
Contract farming
Costs
Low-income countries
Smallholders

Keywords

  • Contract farming
  • Lentil
  • Low-value crop
  • Nepal
  • Propensity score matching
  • Treatment effect

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

Cite this

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title = "Impact of contract farming on yield, costs and profitability in low-value crop: Evidence from a low-income country",
abstract = "Lentils, a low-value and highly nutritious crop, are Nepal's largest pulse cash crop. However, the majority of the nation's smallholders produce lentils on very small plots of land. The large gap in lentil yields between Nepal and other lentil-producing countries underscores the importance of improving yields and income of smallholders. When it comes to the financial viability of small farms, particularly in developing countries, and globalisation, contract farming (CF) may prove useful in achieving efficiency and profitability in smallholder lentil farms in Nepal. This study employs the propensity score matching approach to examine the effects of the adoption of CF on yields, profitability and costs of smallholder lentil farms in Nepal. Findings from this study reveal that contrary to popular belief, CF adoption by lentil producers in Nepal has a positive and significant effect on per-hectare revenues, profits and yield and a negative impact on variable and transportation costs. The study finds that only very smallholder lentil farms (0.01-0.05 ha) benefit from CF.",
keywords = "Contract farming, Lentil, Low-value crop, Nepal, Propensity score matching, Treatment effect",
author = "Ashok Mishra and Anjani Kumar and Joshi, {Pramod K.} and Alwin D'Souza",
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AU - Kumar, Anjani

AU - Joshi, Pramod K.

AU - D'Souza, Alwin

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N2 - Lentils, a low-value and highly nutritious crop, are Nepal's largest pulse cash crop. However, the majority of the nation's smallholders produce lentils on very small plots of land. The large gap in lentil yields between Nepal and other lentil-producing countries underscores the importance of improving yields and income of smallholders. When it comes to the financial viability of small farms, particularly in developing countries, and globalisation, contract farming (CF) may prove useful in achieving efficiency and profitability in smallholder lentil farms in Nepal. This study employs the propensity score matching approach to examine the effects of the adoption of CF on yields, profitability and costs of smallholder lentil farms in Nepal. Findings from this study reveal that contrary to popular belief, CF adoption by lentil producers in Nepal has a positive and significant effect on per-hectare revenues, profits and yield and a negative impact on variable and transportation costs. The study finds that only very smallholder lentil farms (0.01-0.05 ha) benefit from CF.

AB - Lentils, a low-value and highly nutritious crop, are Nepal's largest pulse cash crop. However, the majority of the nation's smallholders produce lentils on very small plots of land. The large gap in lentil yields between Nepal and other lentil-producing countries underscores the importance of improving yields and income of smallholders. When it comes to the financial viability of small farms, particularly in developing countries, and globalisation, contract farming (CF) may prove useful in achieving efficiency and profitability in smallholder lentil farms in Nepal. This study employs the propensity score matching approach to examine the effects of the adoption of CF on yields, profitability and costs of smallholder lentil farms in Nepal. Findings from this study reveal that contrary to popular belief, CF adoption by lentil producers in Nepal has a positive and significant effect on per-hectare revenues, profits and yield and a negative impact on variable and transportation costs. The study finds that only very smallholder lentil farms (0.01-0.05 ha) benefit from CF.

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