Multi‐national corporations and agricultural development: a study of contract farming in the Indian Punjab

Abstract

Abstract This paper examines the rationale, practice and implications of contract farming under the MNCs in vegetable crops in the Indian Punjab from the new institutional economics perspective. It is found that the MNCs deal with relatively large producers, their contracts are biased against the farmer, and the contract crops perpetuate many of the existing problems of the farming sector like high chemical input intensity, unstable future incomes, and social differentiation, though contracting has led to higher farm incomes and labour employment, especially for women. There is an inherent contradiction in the objectives of the contracting parties and that of the local economy and suitable institutions and organisations are not present in the state. Copyright © 2002 John Wiley & Sons, Ltd.

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