Impact of contracts in high yielding varieties seed production on profits and yield: The case of Nepal

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

Research output: Contribution to journalArticlepeer-review

51 Scopus citations


Nepal's population continues to grow, but the agricultural sector's performance remains almost stagnant. This has led to a decline in the per capita availability of food. Increasing agricultural productivity is the key to agricultural growth, and one strategy for increasing agricultural productivity is to use improved seeds. This study investigates the impact of contract farming (CF) in high yielding varieties (HYV) of paddy seed production on costs, yield, and profits of smallholder farms in Nepal. Using farm-level data and a non-parametric propensity score matching estimator, the study finds a significant positive impact of contract HYV seed farming on revenues, profits, and yield, and a significant negative impact on total costs of production. Additionally, very small farms (≤0.43 ha) with CF in HYV paddy seeds tend to gain the most when it comes to yield per hectare. Our estimates reveal that the average smallholder household in Nepal engaged in CF with input conditions receives higher profits. However, farmers engaged in CF with output conditions tend to have higher yields but smaller profits. Finally, farmers engaged in CF in HYV paddy seeds with both input and output conditions have the highest yield gains and significantly higher profits.

Original languageEnglish (US)
Pages (from-to)110-121
Number of pages12
JournalFood Policy
StatePublished - Jul 1 2016


  • Contract farming
  • Costs
  • HYV paddy seed
  • Nepal
  • Profits
  • Propensity score matching estimators
  • Smallholder farms
  • Treatment effect
  • Yield

ASJC Scopus subject areas

  • Food Science
  • Development
  • Sociology and Political Science
  • Economics and Econometrics
  • Management, Monitoring, Policy and Law


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