Does Contract Farming Improve Farmers’ Income and Efficiency?

This study compares the economics of contract versus non-contract farming of potato and basmati paddy in Punjab, and finds that on average, contract farmers have better farm returns and resource use efficiency than non-contract farmers. However, the efficiency differentials between these two categories of farmers are less significant in the case of basmati paddy. What then is the sustainability of contract farming in basmati paddy, and should contract farming be promoted only for high-value, non-cereal and horticultural crops in agricultural crisis-stricken Punjab?