What’s the Impact of Contract Farming on Profits and Food Losses of Okra Growers?
AAEA members publish new research in AEPP
Reducing food loss in the production and supply chains by 2030 is one of the UN’s Sustainable Development Goals. With the ongoing policy debate in India on the implementation of contract farming, food security, and livelihood strategy in the agricultural sector, increasing food security in India, other developing and emerging economies, could include an increased focus on reducing food waste at the farm level.
In the new article “Vertical coordination and post-harvest losses: Implications on food loss”published in the Applied Economic Perspectives & Policy, Ashok Mishra and Scott Webster from the Arizona State University, as well as Alwin Dsouza from Arkansas Tech University, find what the impact of contract farming has on profits and post-harvest losses of smallholder okra growers.
Dsouza says, “The study found that okra growers under production or marketing contracts have higher profits and post-harvest losses than independent okra growers. However, under a low rejection rate (where the growers hire more labor) scenario, growers under production or marketing contracts have significantly lower post-harvest losses and increased profits. The reduction in post-harvest losses is not surprising, but the magnitude of the decrease shows that rejection rates are the major contributor to post-harvest losses for contracted growers. Thus, contract farming with increased labor availability reduces the rejection rate and thus lowers post-harvest losses and increases the profits of smallholders ─a win-win situation for growers and contracting firms.”
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ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes two journals, the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit www.aaea.org.
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