Contractual Arrangements and Enforcement in India: The Case of Organic Basmati Paddy Farming
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The study analyses the empirical relationship between contractual arrangements and their enforcement in
organic basmati paddy farming. For the purpose a list of agribusiness firms operating in Sonepat, Karnal,
Kaithal and Kurukshetra districts of Haryana state were collected from the official records of their
respective markets. The data on contents of contractual arrangements and their enforcement were
collected from 40 agribusiness firms operating contract farming schemes in traditional basmati rice belt of
the state pertaining to the year 2011-12. Binary logit model was used to capture the determinants of
contract fulfilment rates. The study concludes that the provisions in designs of contract, viz., social
capital, assured price in advance, bonus clause and specific investment for infrastructure creation for
carrying out production and post-harvest operations in contract organic basmati scheme are likely to
promote contract fulfilment rate by the farmers. Contractual arrangements are enforced through a mix of
quid pro quo, altruism, and adherence to social norms.