Impact of contracts in high yielding varieties seed production on profits and yield: The case of Nepal |
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| Institution: | 1. MSA, ASU, Mesa, AZ, United States;2. IFPRI South Asia, New Delhi, India;1. University of Manitoba, Winnipeg, Canada;2. University of Copenhagen, Frederiksberg C, Denmark;3. Danish Institute for International Studies, Copenhagen Ø, Denmark;1. University of Bern, Faculty of Science, Institute of Geography (GIUB), University of Bern, Hallerstr. 12, 3012 CH Bern, Switzerland;2. University of Bern, Center for Regional Economic Development (CRED), Schanzeneckstrasse 1, Postfach, 3001 Bern, Switzerland;3. Interdisciplinary Center for Gender Studies (IZFG), University of Bern, Vereinsweg 23, 3012 CH Bern, Switzerland;1. Department of Agricultural Economics and Rural Development, Georg-August-University of Goettingen, Platz der Goettinger Sieben 5, 37073 Goettingen, Germany;2. International Rice Research Institute (IRRI), National Agricultural Science Complex, DPS Marg, New Delhi 110012, India;1. Department of Applied Economics, University of Minnesota, 1994 Buford Ave, Saint Paul, MN 55108, United States;2. Department of Food, Agricultural & Resource Economics, University of Guelph, 50 Stone Road East, Guelph, ON N1G 2W1, Canada;3. Department of Economics, Colby College, 5237 Mayflower Hill, Waterville, ME 04901, United States |
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| Abstract: | 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. |
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| Keywords: | Nepal Contract farming HYV paddy seed Smallholder farms Propensity score matching estimators Profits Yield Costs Treatment effect |
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