CONTRACT FARMING IN HYBRID VEGETABLE SEED PRODUCTION IN NORHTERN KARNATAKA – AN ECONOMIC ANALYSIS

Thesis submitted to the University of Agricultural Sciences, Dharwad

In partial fulfillment of the requirements for the Degree of

MASTER OF SCIENCE (AGRICULTURE)

In

AGRICULTURAL ECONOMICS

By

ASHOK KUMAR H.A.

DEPARTMENT OF AGRICULTURAL ECONOMICS

COLLEGE OF AGRICULTURE, DHARWAD UNIVERSITY OF AGRICULTURAL SCIENCES,

DHARWAD – 580 005

NOVEMBER, 2005

ADVISORY COMMITTEE

DHARWAD NOVMEBER, 2005 (S.B. HOSAMANI)

MAJOR ADVISOR

Approved by: Chairman : ___________________

(S.B. HOSAMANI)

Members: 1. __________________ (S.M. MUNDINAMANI)

2. __________________ (K.C. SHASHIDHAR) 3. _______________ (B. BASAVARAJ)

CONTENTS

Chapter No.

Title Page No.

I. INTRODUCTION

II. REVIEW OF LITERATURE

III. METHODOLOGY

IV. RESULTS

V. DISCUSSION

VI. SUMMARY AND POLICY IMPLICATIONS

VII. REFERENCES

APPENDICES

LIST OF TABLES

Table No.

Title Page No.

3.1. General Features of the Study Area

3.2. Land Use Pattern (2001-02)

3.3. Cropping Pattern in the Study Area

3.4. List of Sample Villages and Distribution of Sample Farmers

4.1. Socio-Economic Characteristics of Sample Farmers

4.2. Cropping Pattern of the Sample Farmers in the Study Area

4.3. Pattern of Employment in Hybrid Tomato Seed Production

4.4. Pattern of Employment in Hybrid Brinjal Seed Production

4.5. Pattern of Employment in Hybrid Okra Seed Production

4.6. Pattern of Employment in Hybrid Ridge Gourd Seed Production

4.7. Input Use Pattern in Hybrid Vegetables Seed Production

4.8. Cost Structure in Hybrid Vegetables Seed Production

4.9. Returns Structure in Hybrid Vegetables Seed Production

4.10. Production Elasticities in Hybrid Vegetables Seed Production

4.11. MVP to MFC ratios in Hybrid Vegetables Seed Production

4.12. Output based Technical Efficiency of Hybrid Vegetable Seed Growers

4.13. Modus Operandi Prevailing in Contract Farming

4.14. Problems Faced by Seed Growers in Hybrid Vegetable Seed Production

4.15. Problems Faced by the Contract Firms

LIST OF FIGURES

Figure No.

Title Between Pages

1. Map showing the study area

LIST OF APPENDICES

Appendix No.

Title Page No.

Ia. Agreement for vegetable seed production (Mahyco and Sungro Seeds Private Limited)

180

Ib. Agreement for hybrid vegetable seed production (Ankur Seeds Private Limited)

187

I. INTRODUCTION

The globalization of Indian agriculture in recent years resulted in the need for the production of export-oriented quality products having comparative advantage. To fulfill the commitment of the World Trade Organization (WTO), the recent dismantling of the system of quantitative restrictions (QRs) on imports by the Union Government has provoked new challenge to the Indian farmers to compete in the world market. With the WTO’s demand for trade liberalization and subsidy cut to farmer, the Indian farmers are facing threats to their survival from every quarter. In this context contract farming could be one of the best solutions which may decrease the polarization of rich and poor and thus encourage Indian farmers to compete with the very large, rich and highly indirect subsidized western farmers. Contract farming can indeed to be a vehicle for the modernization of agriculture in India. It can be a means to bring about a market focus to Indian farming. Also, the contract farming system forms the most heartening part of the vision of the National Policy on agriculture.

Contract farming is defined as a system of production and supply of agricultural and horticultural produce by farmers under forward contracts. The essence of such arrangements is being a commitment to provide agricultural and horticultural produce, at a specified price and in a specified quantity to a known buyer. Contract farming can be described as a half way house between independent farm production and corporate farming.

It basically involves four things; Pre-agreed price, quantity or acreage (minimum/maximum), quality and time. Contract farming is a case for bringing the market to the farmers, which is navigated by agribusiness farms. There is no standard and homogenous method in contract farming in agriculture. Simple market specification contracts or future purchase agreements in agriculture like supplying labour and machinery are more common (Wright, 1989).

Generally, there are three types of contract in agriculture viz., i) Procurement contracts, under which only sale and purchase conditions are specified ii) Partial contracts, wherein only the contracting firms supply some of the inputs and produce is bought at pre-agreed prices and iii) Total contracts, under which the contracting firm supplies and manages all the inputs on the farm and farmer is just a supplier of land and labour. The relevance and importance of each type varies from product to product and these types are not mutually exclusive (Hill and Ingersent, 1982 and Key and Runsten, 1999). Whereas, the first type is generally referred to as marketing contracts, the other two are of production contracts. But, there is a systematic link between product market and factor markets under the contract arrangements as contracts requires a definite quality of produce. Different types of production contracts allocate production and market risks between the producer and the processor in different ways.

REASONS FOR CONTRACT FARMING

The production, marketing and distribution of agricultural products are becoming increasingly sophisticated for i) Modern advances in technology have made it feasible for agricultural products to be produced to specifications and preserved in a fresh condition ii) The optimum scale of operations has been increasing, especially in processing and distribution iii) new selling methods have emerged, emphasizing a brand image based on consistent quality. On the demand side, due to raising income, consumers are increasingly discriminating their tastes and especially all time availability of the quality products. This has made complexity in consumer demand which gives an added impetus to search for improving the co-ordination of production, processing and distribution, especially with regard to timing and quality control (Hill and Ingersent, 1982). This provides a strong rationale, from the demand side for the contract farming as a means of raw material supply.

During the 1950’s and 1960’s ‘contract farming’ emerged as an important phenomenon in the western developed countries. By 1980, about one-third of the total US farm output and as much as 100 per cent poultry meat, milk and certain vegetables were produced under contracts (Little Peter et al., 1994). Even in Tasmania Island of Australia, by the mid 1990’s, ninety percent of the potato production was under contracts compared with almost nil in the 1950’s (Fulton and Clark, 1996). On the other hand, in the developing

countries, the multinational corporations (MNCs) brought in the system of contract farming during the late 1970’s and the early 1980’s. Besides private and multinational enterprises, contract farming is also practiced by Statal and Parastatal agencies in many countries in different commodities sectors like tea in Kenya, tobacco and livestock in Thailand, rubber in Malaysia, coconut in Indonesia, palm oil in Philippines and seed in India (Nanda and Meera, 1999; White, 1997; Shiva et al., 1998). Contract farming had been promoted in the recent three decades as an institutional innovation to improve agricultural performance in under developed countries, some times as a key element of rural development and/or settlement projects (Ghee and Dorall, 1992). This system was accepted and used as one of the promising institutional framework for the delivery of price incentive technology and other agricultural inputs. Wide support has been received for contract farming under the Structural Adjustment Programme (SAP) and Liberalization Policies everywhere by the International Development Agencies like the World Bank, the United States Agency for International Development (USAID), the International Finance Corporation (IFC) and the Common Wealth Development Corporation (CDC, 1989) (Little and Watts, 1994 and White, 1997).

Sugar mills in Karnataka were practicing the contract farming since many decades, where farmers were growing sugarcane at the specified pre-agreed price. In the same manner, corporate sector has introduced it to horticultural and vegetable crops. Similarly, the introduction of contract farming of vegetable for seed purpose in Northern Karnataka was during 1985-86. It was first introduced in the taluks of Ranebnnur, Byadagi and Hirekerur of Haveri district by the seed companies like Mahyco, Sungro and Ankur seed companies. The farmers of this district had engaged since long time in the production of vegetable for seed purpose, hence growing of vegetable for seed purpose by these farmers seems to be economically feasible and profitable, besides the favourable climatic condition of the region to get the higher yield.

BENEFITS OF CONTRACT FARMING

Contracts are generally signed at the time of planting and specify how much produce the company will buy at what price. Often the firm provides credit, inputs, farm machinery rentals, technical advice and retains the rights to reject the substandard produce (Glover, 1990).

To firm

♦ The companies know the acreage planted and is assured of the grower’s output thus reducing its supply risk.

♦ The company is in control of the contract provision and stipulations that can encourage quality and production through the terms of agreement.

♦ The companies know their approximate cost of raw product in advance.

♦ As better growers tend to contract with the same company over several years, some stability in company – grower relationship is attained.

♦ Since, some of the crops have no/less domestic market (at present), the farmers have no option to sell their produce outside and the company is assured to get regular supply of the produce.

To farmers

♦ There is an assured market of their produce, which will eliminate the risk of price fall during glut.

♦ Information on market price is made available ex-ante. This instills confidence among the contract farmers.

♦ It saves the difficulties involved in timely transportation and eradicates the exploitation by the middlemen.

♦ Farmer can receive assistance from the processor in the form of technical service and input supply on credit with/without interest cost.

♦ Companies often provide credit to the farmers, which reduce the burden of self-expenses to the farmer. This enables the farmers to escape from the evils of private moneylenders.

♦ Farmer is assured of better returns compared to other field crops as the companies offer relatively better prices.

Importance of seeds

Necessity of increasing production is the talk of the day and increasing production is the panacea for all our economic ills. The significant increase in agricultural production depends largely upon employment of new technology. The process of modernizing Indian agriculture primarily involves the intensive use of non-conventional inputs such as quality seeds, chemical fertilizers, pesticides, herbicides, irrigation, farm machinery and a network of research and extension infrastructure. These factors enabling a country to make its agriculture more productive and cost competitive especially in the scenario of world agricultural trade under WTO.

Seed is a vital input and dynamic instrument for increasing agricultural production. It has been one of the miraculous inputs responsible for green revolution in India as well as elsewhere. The green revolution has brought prosperity, stability and confidence not only in agriculture, but also in the economic well being of the country. The seed acted as a catalyst to trigger off changes in several sectors.

It has been reported that genetically good quality seed alone can increase crop production by 20 per cent. Farmers in India knew the value of good seed from time immemorial and have contributed for improvement of seeds through selection and cultivation. Seed is a basic input and forms only a small part of the total cultivation expenses. Yet, without good seed the investment on fertilizer, pesticides and other inputs will not pay the required dividend. In fact, seed is the real vehicle of production and other inputs like water and fertilizers can be regarded as fuel. Quality seed production is a specialized activity and a portion of crop produce retained by the farmer as seed cannot substitute for quality seed since such seed is devoid of genetic vigour and may suffer from lack of desired qualities.

Importance of vegetables

India has made significant progress on the vegetable map of the world with the total annual production of over 88.6 million tonnes in 2001-02. India'’ share in world production of vegetables is 11.4 per cent. India is the second largest producer of vegetables next to China.

The overall productivity of vegetables was 14.4 tonnes per ha. Due to the advent of hybrid technology vegetable production of the country is gaining the right momentum. For enhancing the vegetable production in the country our target should be 25 tonnes per ha productivity by 2020, which is presently 15 t per ha. There is a need to improve the productivity of quality vegetables meeting the requirement of WTO standards, to tap the international market (Mathura, 2005).

Majority of Indian vegetable farmers are small scale cultivators ranging from 0.2 to 5.0 ha. Globalization, WTO and the emergence of super markets are enforcing straight demands on vegetable growers in India. Farmers recognize that the potential income from growing vegetable is higher than that of growing cereals and vegetable farmers in India are aware of the importance of good quality seeds. A number of seed companies have emerged in India over the past decade (Shanmugasundaram, 2005).

IMPORTANCE OF THE PRESENT STUDY

The private seed companies in seed production resort to contract farming mainly to have assured supply of genuine seed material in required quantity at the right time, which has been produced under their supervision. On the other hand, the farmers are interested to enter into contract mainly to minimize the price risk, and also to reap higher profits out of this seed production activity over commercial production of crops.

The present investigation is an integrated effort to study all socio -economic aspects of production of hybrid vegetable seeds and also to identify the constraints in its production with an overall view of exploring the possibility of bringing about required improvement. The results obtained from this study would be used to overcome the present limitations in production of hybrid vegetable seeds. The information on cost and returns structure will guide the producer in readjustment and proper management of resources and to bring down the cost of production at the farm level without affecting the output. The results would help the planners and policy makers in formulating suitable policies for grant of loans and fixation of prices and also throw further light on the avenue for future research in the area of hybrid vegetable seed production.

The overall objective of the analysis is to work out economics of production, modus operandi and problems in hybrid vegetable seed production in Haveri district of Northern Karnataka.

OBJECTIVES OF THE STUDY

1. To estimate the cost and returns in selected hybrid vegetables seed production.

2. To analyse the resource use efficiency in selected hybrid vegetables seed production.

3. To document the terms of contract and modus operandi in hybrid vegetables seed production.

4. To analyse the problems encountered by the contract seed growers and contract firms in the production of hybrid vegetables seeds and

5. To suggest appropriate policy measures

HYPOTHESES

1. The total cost incurred is higher in the production of hybrid vegetable seeds.

2. The use of resources is optimum in hybrid vegetables seed production.

3. Terms of contract and modus operandi in contract farming of hybrid vegetables seed production are favourable to farmers.

4. There are numerous problems faced by the contract seed growers and contract firms in the hybrid vegetables seed production.

LIMITATIONS OF THE STUDY

Despite of the advantages contract farming has many constraints, though contract farming is basically a way of allocating risk between the firm and its farmers. The distribution of risk depends largely on such factors as bargaining power, availability of alternatives or access to information. In short term crops such as vegetables, farmers tend to divert their produce to the open market rather than supply to the contracting firm when the prices are high. The cost calculations of the firm crumble, as they are forced to arrange supply of raw materials from alternative sources with attendant uncertainties. Similarly, in long-duration crops such as plantation crops, the firms often fail to honour the contract, as they knew that farmers have no alternative but to sell the products to them at lower prices. The latter often succumb to the firm’s dictates.

The area, production and marketing of hybrid vegetable seed production have not been documented by any institution or government. Thus, the production and requirement estimates made suffers from lack of statistics. The existing marketing network for hybrid vegetable seeds produced is generally more confined and restricted.

II. REVIEW OF LITERATURE

With a view to evaluate the objectives of the study, it was considered desirable to have an idea of the findings of some of the earlier research studies and the methods adopted therein. Such a review of literature connected with the main objectives of the study, it was hoped, would provide a basis either for confirming the earlier findings or for contradicting them and thereby suggest points of departure for further studies.

2.1 Cost and returns structure in seed production

2.2 Resource use efficiency and productivity of various resources involved in seed production

2.3 Contract farming and contractual arrangements

2.4 Problems in contract farming and constraints in seed production

2.1 COST AND RETURNS STRUCTURE IN SEED PRODUCTION

Madalia and Charan (1974) studied costs and returns in H-4 cotton seed production in Gujarat and reported that the average cost of seed production was Rs. 44,688.80 per hectare. The labour charges for crossing operation and cost of crossing material accounted for 45.26 and 12.73 per cent of the total cost, respectively. The total quantity of certified seeds produced per hectare was 1225.05 kg. The average net returns from seed production amounted to Rs. 42,549.77 per hectare. Thus, per kg cost and net profit were estimated to Rs. 35.61 and Rs. 33.90, respectively.

Mallikarjunaiah et al. (1974) studied the economics of hybrid jowar seed production and estimated the average cost of hybrid jowar seed production at Rs. 1,722.5 per acre with an average yield of 7.74 quintals of quality seeds. The net returns was Rs. 3,686.58 per acre, while net return per rupee of investment was Rs. 2.14. The average cost of production per kg of seeds was Rs. 1.53.

Rakhunde (1974) studied the economics of the hybrid cotton seed production in Parbhani district of Maharashtra. He worked out the input:output ratio of H-4 cotton seed production to be 1:1.71. The average yield was 1330.22 kg per hectare which was obtained by using 522.95 kg nitrogen, 194.00 kg of phosphorus and 153.42 kg of potash. The per kg cost of seed was calculated to be Rs 34.96 while net return of Rs. 24.04 per kg which was obtained by selling the certified seed at the rate of Rs. 60.00 per kg.

Srinivasan and Gururajan (1974) studied the cost of production of hybrid cotton seed where male sterile line was used and they found that the actual cost of a kg of hybrid cotton seed worked out to be Rs. 22.00 only.

Arunkumar (1976) studied the economics of hybrid jowar seed and potato production (a major competitive crop) in Devanahally taluk of Bangalore district and indicated that the total cost of hybrid jowar seed production was Rs. 6,242.75 per hectare, while it was Rs. 10,354.99 for potato. Seed was a major item of cost in potato cultivation (26%). Manures and fertilizers together accounted for nearly 33 per cent of the total cost of production of both jowar and potato. The gross return from jowar was Rs. 7,997.40 and the net return was Rs. 1,981.53. In potato, these figures were Rs. 7,997.40 and Rs. 1,754.65 per hectare, respectively.

Rajmane (1979) worked out the economics of seed production of Varalaxmi, Godavari and H-4 cotton in Parbhani district of Maharashtra. The cost per quintal of seed in Varalaxmi, Godavari and H-4 was Rs. 5,970.35, Rs. 6,116.81 and Rs. 6,625.49, respectively and corresponding figures of physical yield per hectare were 835 kg, 777 kg and 515 kg, respectively. The net profit at cost C from the seed production of Varalaxmi, Godavari and H-4 were Rs. 12,772.39, Rs 10,747.35 and Rs. 7,078.73 in that order.

Patel and Dholaria (1981) analysed economics of hybrid cotton seed production in Gujarat. It was revealed that the average cost of a kg of seed worked out to be Rs. 53.60, Rs. 36.90 and Rs. 30.97 in the year 1971-72, 1972-73 and 1973-74, respectively. The labour together with processing costs alone formed about two-third of the total cost (cost C) for the three year average. The physical output was 521.66, 1183.70 and 947.74 kg per hectare for the year 1971-72, 1972-73, 1973-74 and the corresponding figures of gross returns were Rs. 66,780.01, Rs. 82,813.46 and Rs. 80,876.64.

Madalia and Patel (1984) compared the economic performance of seed production of two important hybrid cotton varieties viz., Hybrid-4 and Varalaxmi grown in Gujarat. They found that the per acre total cost of seed production of H-4 and Varalaxmi cotton during 1978-79 came to Rs. 23,234 and Rs. 23,101, respectively and where it was Rs. 24,338 (H4) and Rs. 21,445 (Varalxmi) during 1979-80. The cost on hired labour in H-4 cotton seed production during 1978-79 was constituted about 46 per cent of the total cost and that for Varalxmi it was 47.04 per cent. The yields were 842 and 938 kg for H-4 and Varalxmi during the year 1978-79 and 828 kg and 872 kg during 1979-80 in that order. They estimated the ratios of gross return to the total cost and found to be 1:1.34 and 1:1.29 during the year 1978-79 for H-4 and Varalaxmi, respectively and corresponding figures of 1978-80 year were 1:1.27 and 1:1.30.

Anon. (1990) estimated the cost of hybrid cotton seed production at research farm of Central Institute for Cotton Research (CICR) Nagpur. It was reported that the total cost per hectare was around Rs. 60,000. The seed output under optimum conditions would be 600 to 700 kg per hectare. The cost of production per kg of seed thus was from Rs. 90 to 130. The market price per kg of seed realized by the farmer for hybrid cotton seed was around Rs. 150 in public sector and upto Rs. 300 in private companies.

Mane (1991) examined the economics of production of hybrid cotton seeds (NHH-44 and PKV Hy-2) in Parbhani district of Maharashtra state and reported that the total cost of hybrid seed production was Rs. 67,061.62 and Rs. 62,629.44 per hectare for NHH-44 and PKV Hy-2 cotton hybrids, respectively with an average yield of 8.78 quintals and 6.62 quintals per hectare of certified seeds of NHH-44 and PKV Hy-2 hybrids, respectively. The net returns at cost D was Rs. 30,458.38 and Rs. 28,148.21 per hectare for NHH-44 and PKV Hy-2 hybrids, respectively. The per hectare net income realized at cost D was Rs. 30,458 in NHH-44 and Rs. 28,148 in PKV Hy-2 hybrid.

Ramamoorthy (1996) studied the economics of hybrid cotton seed production in Coimbatore. The study revealed that the hybrid seed producer of Savitha variety received a net profit of Rs. 2.37 per rupee invested, whereas the variety LRA 5166 seed producing farmers received a net profit of Rs. 0.63 per rupee invested.

Naik et al. (1996) studied economics of tomato seed production in Dharwad district. The study revealed that the total cost of production per acre of tomato seed production increased with an increase in the size of holding. The total returns from per acre of tomato seed production was Rs. 45,800 for medium farmers, Rs. 44,150 for small farmers and Rs. 43,485 for large farmers. Net profits were the highest in the case of medium category (Rs. 33,215) farmers, followed by small (Rs. 32,465) and large (Rs. 30,779) category farmers. This was due to lower cost of production and higher productivity in smaller sized farms compared to the larger ones.

Anon. (1997) studied the cost and returns in summer cotton in Tamil Nadu and reported that there was a decline in yield and increase in cost of cultivation. The decline in hybrid yield was alarming at 16 per cent. The farmers price and costs showed that the increase in farm price hectares been compensated by an equal increase in cost of cultivation between 1976 and 1996.

Narayanakutty et al. (1998) studied the economics of vegetable seed production at Agricultural Research Station, Mannuthy of the Kerala Agricultural University during the period 1994-95 to 1996-97. The cost of cultivation of vegetable seeds showed a wide variation from Rs. 3,09,218 in the case of okra to Rs. 86,416 per hectare in melon. Bulk of the cost in all the crops was accounted by the labour charges. The net returns for okra were Rs. 3,03,282 and Rs. 23,588 for melon. The per kg cost of seed production was Rs. 252.42 and

Rs. 392.79 for okra and melon, respectively. The benefit cost ratio, which was 1.98 and 1.27 for okra and melon, respectively indicated that seed production of okra is more profitable than melon.

Ramamoorthy (1999) studied the cost of seed production for summer cotton. He observed that for every one rupee invested, the farmer, seed company and retailers realized a profit of 71 paise, Rs. 1.76 and 11 paise, respectively.

Kannababu (2003) studied the costs and net returns of sorghum hybrid (CSH 15R, CSH 16, CSH 18 and CSH 19R) seed production in an experimental station in India during the rabi season of 2000-01. The estimated variable cost and fixed cost of sorghum hybrid seed production per hectare were Rs. 29,280 and Rs. 7,020, which were 81 and 19 per cent, respectively, of the total cost of seed production per hectare (Rs. 36,300). Human labour and material constituted about 57 per cent of the variable cost. The total value of the produce was estimated at Rs. 52,750. The net benefit/cost ratio was 0.45, with net income of Rs. 16,450 per hectare for sorghum hybrid seed production.

2.2 RESOURCE USE EFFICIENCY AND PRODUCTIVITY OF VARIOUS RESOURCES INVOLVED IN SEED PRODUCTION

2.2.1 Productivity of resources in seed production

Kshirsagar (1979) studied the resource use efficiency of different inputs in hybrid cotton seed production using Cobb-Douglas production function. Out of four selected variables in Varalaxmi, the human labour input was significant at one per cent level, while fertilizers and plant protection measures were significant at five per cent level of probability. In the case of H-4 cotton seed, except fertilizer, all selected variables viz., human labour, plant protection measures and irrigation were significant at five per cent level of probability.

Patel (1984) studied the resource use efficiency of various inputs used in seed production of hybrid cotton in Gujarat. The ratios of MVPs of different factors to respective cost of factor were calculated. He found 9.14, 1.23, 5.48, -1.08 and 6.83 ratios of MVP to MFC of bullock labour, human labour, plant protection chemicals, irrigation and other expenditures, respectively.

Pathak (1986) studied economics of production and marketing of certified seeds of high yielding varieties of jowar and wheat. He concluded that the factor product relationship, between the output and human labour, bullock labour and manures and fertilizers was positive in jowar seed production. In wheat seed production, it was seen that there was a positive relationship between the output and human labour, manures and fertilizers.

Muralidharan (1987) studied the resource use efficiency in rice production in Kerala employing the Cobb-Douglas type of production function. Adjusted R

2 (0.84) indicated that 84

per cent of the variation in yield of paddy could be explained by the estimated production function. The coefficient of land and human labour were positive and significant at one per cent probability level.

Radha et al. (1989) evaluated the resource-use efficiency in rice-rice and rice-pulse farming systems in Krishna district of Andhra Pradesh. The results indicated that manures and fertilizers and irrigation were quite productively used in both the farming systems. The sum of production elasticities indicated the operation of constant returns to scale in both farming systems.

Karisomanagoudar (1990) employed Cobb-Douglas type of production function in Gadag taluk of Dharwad district to study resource use efficiency in rainfed onion production. It was observed that land and labour inputs significantly increased the gross revenue. The seed variable exercised a significant negative influence on earnings from onion. The variables included in the production function explained 96 per cent of the variation in output.

Vasudha (1990) assessed the relationship between agricultural output and selected explanatory variables in Karnataka by using Cobb-Douglas production function. It was found

that the gross cropped area, fertilizer consumption, bullock labour and human labour were important variables in explaining variation in agriculture output. The study also indicated that the agricultural production was increased at the rate of 3.11 per cent per annum during the period between 1956 and 1983 and fertilizer and irrigation were the predominant contributors for growth.

Manmohan Reddy (1992) reported economics of sugarcane production in Gulbarga taluk of Karnataka State. By using the Cobb-Douglas type of production function, it was concluded that labour and fertilizer significantly increased the gross income. The variable input bullock labour exercised a negative influence on the earnings from sugarcane. The variables included in the function explained 99 per cent of variation in the dependent variable (returns). The summation of production coefficients (1.27) showed that the production was operating in increasing returns to scale.

Nagaraj (1993) studied the resource-use efficiency of various crops included in each cropping system in Tungabhadra command area in Karnataka. The study indicated that land and manures and fertilizers together had maximum influence on gross returns of maize in maize-sunflower system. In the case of sunflower after maize, land was the single most factor which was greatly influencing the gross returns. The ratio of MVP to MFC for machine labour and bullock labour were less than unity, indicating the overuse of these resources in maize production. In the case of cotton in head-reach, seed had the maximum influence on farm income followed by plant protection chemicals. The variables included in the analysis explained 96.18 per cent of the variation in gross income for cotton. Similarly, the same analysis was done for other important crops in the command area.

Aswathareddy et al. (1997) studied resource use efficiency in groundnut production under rainfed conditions in Challakere taluk of Karnataka. The study revealed that land and farmyard manure in the case of small farmers and farmyard manure in the case of large farmers contributed significantly to production. The average mean technical efficiency indices of small and large farm groups were 0.679 and 0.646, respectively showing that small farmer groups were achieving yield levels which were more efficient than the large farmer groups.

Koppad et al. (1997) studied the resource use efficiency in irrigated wheat in three locations of Malaprabha Command Area in Karnataka. The study revealed that land was under-utilized in head and tail reach and over utilized in mid reach. Human labour was under utilized in head and mid reach and over-utilized in tail reach. Bullock labour was excessively used in all the reaches. Seed was also under-utilized in all the reaches but it hectares contributed significantly to the growth of income in tail reach. Manure and fertilizer contributed significantly to the gross income in tail reach and under-utilized in all the reaches. Further, the results of the functional analysis indicated that the variables included in the function, explained 94, 99 and 95 per cent variation in the gross income in head, mid and tail reaches, respectively.

Nagaraj et al. (1998) employed Cobb-Douglas type of production to evaluate the resource productivity and resource use efficiency. The results of the production function for various crops revealed statistically non-significant regression coefficients for number of inputs. The non-significant positive regression coefficients of factors indicated that these factors did not significantly contribute to the gross returns. The negative coefficients implied that the respective factors were used in excess of requirements.

Raghuwanshi et al. (1999) studied resource use efficiency in wheat cultivation in Bundelkhand region of Madhya Pradesh. The average cost of cultivation of wheat was estimated to be Rs. 6,496 per hectare at overall level. The yield performance was found to be better on small farm when compared to that on medium and large farms. The efficiency of input use in wheat cultivation was analysed by fitting a Cobb-Douglas type of production

function. The sum of elasticities of production (Σbi) was less than unity, indicated decreasing return to scale. Among the five independent variables (human labour, bullock labour, seed, fertilizer and irrigation), fertilizer and irrigation were found to influence the production of wheat positively and significantly.

Chulaki (2001) studied the resource use efficiency of different inputs in hybrid seed production using Cobb-Douglas production function. Out of six selected variables in DCH-32,

land, fertilizer, irrigation charges and human labour inputs were significant at one per cent level, while FYM was significant at 5 per cent level of probability in the pooled category of KSSC seed growers and Mahyco seed growers.

2.2.2 Technical and allocative efficiency

Russel and Young (1983) estimated both Timmer and Kopp measures of technical efficiency by employing frontier production function for 56 farms in North-West England. They found that the ranking of efficiency levels was the same in both methods. The results indicated that about 36 per cent of the farmers were at least 75 per cent efficient, 75 per cent of farmers were 64 per cent efficient and the entire sample was at least 39 per cent efficient.

Singh and Srinivas (1989) studied the effect of water distribution in different reaches of canal irrigation system on the production responses of farmers with respect to resource-use productivity. The study was taken in the command area of Vamsandhara Irrigation Project in Andhra Pradesh. Cobb-Douglas type of production function for rice crop were estimated with coefficient of multiple determination (R

2) values of 0.99, 0.97, 0.99 for head, middle and

tail reaches, respectively. Positive and significant coefficients of land and fertilizer in all locations indicated the influence exerted by these two factors on yield. Negative coefficient of irrigation in head-reach might be ascribed to excess water use conditions. The allocative efficiencies of different inputs computed as ratios of marginal value products of the inputs to their acquisition costs showed great disequilibrium in resource use efficiency in all locations. All the inputs except fertilizer in middle location were under utilized. The study reinforced the view that reallocation of irrigation water among different reaches brings about increased agricultural production by avoiding excess water in head-reach and using water efficiently in the distant areas.

Kataula (1993) applied a frontier technology to wheat crop grown on reclaimed soils of Karnal district of Haryana. The study revealed that there existed a big scope to increase technical efficiency of wheat farms with the given level of inputs. The mean technical efficiency was found to be 0.76. This implied that the actual output of wheat on an average was 24.0 per cent less than the frontier output.

Bravo-Ureta and Everson (1994) used stochastic efficiency decomposition methodology to derive technical, allocative and economic efficiency measures separately for cotton and cassava for 148 eastern Paraguay peasant farms. The Cobb-Douglas functional form was used to fit separate stochastic production frontiers for both crops using maximum likelihood procedures. They applied Shephard’s Lemma to the cost frontier which yields the minimum cost factor demand equations which inturn were used to obtain the economically efficient input vector and thereby compute technical efficiency (TE) and economic efficiency (EE) indices. The mean economic (EE), technical (TE) and allocative (AE) efficiency indices computed for 87 cotton producers were 40.7, 58.2 and 70.1 per cent, respectively. The corresponding indices for the 101 cassava producers were 52.3, 58.7 and 88.9 per cent. It was concluded that EE and AE were significantly higher in cassava production as compared to cotton production, while no difference was found across two crops for technical efficiency (TE).

Hema Kumari et al. (1995) studied allocative efficiency of resource used in chrysanthemum flower production in east Godavari district of Andhra Pradesh by fitting Cobb-Douglas type of production function and using marginal value product (MVP) to opportunity cost (OC) ratio. The results indicated that in the case of large farmers, the MVP/OC ratios for all included variables except for plant protection chemicals were less than unity and negative implying excessive utilization of inputs. However, MVP to OC ratio was found to be more than unity for chemical fertilizer in small group and manure and fertilizers and human labour in medium group indicating scope to increase the use of these inputs to realize higher returns and profits.

Krishna Rao et al. (1995) studied allocative efficiency with respect to watershed and non-watershed villages by classifying the farmers into small, medium and large in the production of castor in Andhra Pradesh. Marginal value products were calculated for each input for the three farm groups. Allocative efficiency was then determined statistically by testing the equality between the marginal value product (MVP) and marginal factor cost

(MFC) of the inputs. The result showed a considerable potential for increasing profit through reallocation of resoruces. Human labour was found to be under utilized in all groups of farmers, while cattle labour was over-utilized by small and medium farms.

Panda (1996) used Cobb-Douglas production function to derive frontier production function which was estimated by corercted least squares (COLS) method. He examined Timmer’s measure of technical efficiency and Kopp’s measure of allocative efficiency of various resources utilized in sericulture farms in Tamil Nadu State. The results of frontier production revealed that the overall technical efficiency (TE) and allocative efficiency (AE) in Dharmapuri district (traditional area) worked out to be 86.28 per cent (with a range between 76.33 to 100%) and 87.77 per cent, respectively while the overall TE and AE for Dindigul Anna district (non-traditional area) was 76.65 per cent (ranging from 56.32 to 100%) and 74.99 per cent, respectively. In both the districts the ratio of marginal value product (MVP) to price revealed that utilization of these resources could be further increased to maximize the cocoon production.

Aswathareddy et al. (1997) estimated Timmer measure of technical efficiency by employing Cobb-Douglas production function for two categories of 100 groundnut growing farmers in 10 sample villages of Chitradurga district, Karnataka State. They found that small farmers in general achieved relatively higher efficiency compared to large farmers. On an average, the mean efficiency index of small farmers was marginally higher (0.679) than that of the large farmers (0.646). Moreover, the results indicated that the available potential left unexploited in the given environment ranged between 22.1 per cent for small farmers and 22.40 per cent for the large farmers and they attributed that the inefficiency was due to excessive use of some resources and under use of other resources.

Mahadevaiah and Ravi (2000) evaluated the efficiency with which bajra (Pennisetum glaucum) farmers in Karnataka, India, use their resources to maximize their net benefit with the advent of irrigation and technological changes. Field data for the year 1994-95 from 38 bajra farmers were used in the analyses. The production function analysis highlighted that for a 1% increase in use of human labour, there was a 1.02% increase in output. Accordingly, the functional analysis showed that the reallocation of human labour, bullock labour, seed and fertilizer is necessary to make bajra production more profitable. The Timmer measure of technical efficiency indicated that the average technical efficiency was 56%. The Kopp measure of technical coefficient indicated that the farmers were using inputs in excess, to the tune of 80% more of the optimal level.

Amarasinghe and Weerahewa (2001) studied an assessment of technical efficiency of potato production. The purpose of this study was to investigate the technical efficiency and to examine the factors affecting technical efficiency of potato cultivation in Badulla district in Sri Lanka. The extent by which a farmer lies below its production frontier is regarded as the measure of technical inefficiency. A stochastic frontier production function employed to explain technical efficiency. Data were collected from 55 farmers using a structured questionnaire during yala season (July-October 1999). Yield of potato was regressed as a function of land, labour, mechanical services, agrochemicals, and seed, rate. Technical efficiency was regressed as a function of age of the farmer, education level of the farmer, and farm assets. The two models were estimated in a single stage. According to the econometric results, labour and seed rate significantly affect the potato production in yala. Production technology exhibits decreasing returns to scale. The average level of technical efficiency of farmers was found to be 72%, indicating that the production would increase by 28%, if all the farmers achieved the technical efficiency level of the best farmer. However, the average yield of the best farmer too is far below the potential yield. The results of the model for the inefficiency effects indicate that educated farmers tend to be more efficient than the others.

2.3 CONTRACT FARMING AND CONTRACTUAL ARRANGEMENTS

2.3.1 Contract Farming

Porter and Kevin (1975) explored the relationship on a sugar contract farming scheme in the former homeland of Transkei, just after the elections, which returned Transkei

constitutionally to South Africa. Company, out grower and labour perceptions of current issues were presented. The study primarily emphasized the complexity of the land issue even in the former homelands of South Africa and finally showed the importance of examining contract schemes in their totality; to base evaluation on the out grower component alone was insufficient.

Glovar (1990) highlighted the experience of contract farming and out grower’s scheme of seven countries in the Eastern and the Southern Africa. In those schemes, farmers sold their crops under contract to private or public enterprises for processing or export in return for various inputs, services and price guarantee. The researcher identified some of the key determinants of success and evaluated the performance. Also examined the constraints to replication. In most cases, performance in delivering services and providing income to farmers have been quite good although high management costs were widely applied. According to author, lesser control, more reliance on price incentives and farmers participation might have increased overhead costs while developing management capability among growers.

Hossain et al (1996) studied Vegetable seed production through contract growers. The study revealed vegetables play an important role as a food crop in Bangladesh. Improvements in vegetable seed production are required to meet the demand for vegetables. The Bangladesh Agricultural Development Corporation's project to develop vegetable seed production through a contract grower system in order to make the industry more competitive is documented.

Fraser (1997) investigated the impact of protein premiums and discount system on the income stream from growing wheat. Based on a biological relationship between protein and yield in uncertain seasonal conditions, it showed that such a system reduces the expected level and variability of wheat income. It was subsequently argued, using a numerical analysis, that protein payments affect both the attraction to wheat growers of forward contracts and the value of land used for wheat. The nature of both of these impacts was related to the level of seasonal variability regions of the protein and yield in uncertain seasonal conditions.

Porter and Kevin (1997) analysed and recorded the travails of farmers in Africa. Examining their own experience of contract farming in Nigeria and South Africa they have drawn attention to important issues which have received little attention in the literature, notably staffing of schemes, farmers previous experience with Multinational Companies (MNC’s), water and labour issues.

Rehber (1998) presented a brief history along with explanation of contract farming concepts. Further, the reasons behind contract farming were also discussed. Success and failure of contract farming were analysed based on several research works and articles. Finally, a simplified model was presented for the success of private contractual arrangements in the light of evidence taken from the experience.

Anon. (1999) reported a success of contract farming in Nasik district of Maharashtra State. The C and M group responded to establish contract farming in Nasik. The company supplied inputs viz., high yielding variety seeds, fertilizers etc. to the farmers on cash and carry basis along with technical advice and purchased the produce at the prevailing market rates at the farm itself. The Nasik District Central Cooperative Bank, Dena Bank, State Bank of India and Bank of Maharashtra participated in the project. About 2000 acres of maize involving 2036 farmers and 124 acres of soybean involving 150 farmers had been covered under the scheme. The estimated availability of maize and soybean to the company after harvest was 4032 and 150 metric tonnes, respectively.

Key and Runsten (1999) examined the cause of the observed variations in the scale of production and the success of small holder contract farming. The authors opined how the organizational structure of agro-processing firms and the characteristics of contract farmers were influenced by imperfections in the markets for credit, insurance, information, factors of production, the raw product and by transaction costs.

Ramesh (1999) observed the contractual farming arrangements in Indian vegetables and fruit processing industry with particular reference to gherkin crop. He observed that the

contract was oral in nature and trust on each other was the modus operandi of such contracts. He indicated that the relationship between the input supplies and the processors affected the input supply level to the growers. The crops requiring skilled labour and less government intervention were the best suited for contract farming. He indicated that the government would assure a greater role in controlling the activities of the private contractors in the future. Further, the author stressed the need for financing agencies like banks in financing the processors and growers.

Singh (2000) reviewed the logic, practice and implications of contract farming for contract farmers and the local economy with evidence of contract farming experiences from African, Latin America and Asian countries in different sectors of agriculture. He found that agribusiness firms tend to deal with large producers only. Contracting lead to environmental, equity, food security and sustainability problems, though it lead to better incomes for farmers and more employment for labour initially through the introduction of new crop technologies and by providing markets and inputs. In fact, contract farming as a system affected producers positively or negatively was dependent on the context of the economy.

The researcher further studied the role of contract farming in agricultural diversification and development in terms of its practices and implications for the producers and local economy in the Punjab in India. Hindhusthan lever Limited (HLL), Pepsi and Nijjer were engaged in contract farming of tomato, potato and chilli respectively. The main benefits of contracting as perceived by contract farmers were better and reliable income, new and better farming skills, better soil management and outlet for bulk sales. The study also identified the faults of contracting system both at company and at farmers level. About two-thirds of Hindhusthan lever Limited growers and more than 50 per cent of the Nijjer growers did not face any major problem in contracting. The other reported problems were poor coordination of activities, poor technical assistance, delayed payments, outright cheating in dealings and manipulation of norms by the firm. Some of the Pepsi potato farmers had a few problems with the company system, but a large number of them (60%) were happy. The study also highlighted the implications of contract farming on cropping pattern, land lease market, sustainability, farm income and employment. Despite, various problems and conflicts between companies and growers, 62 per cent of Hindhusthan lever Limited, 80 per cent of Nijjer and 68 and 73 per cent of Pepsi (potato and chilli, respectively) farmers wanted to continue contract farming.

Vellema (2000) studied contractual maize seed production. The study revealed that the marketing and manufacturing of hybrid maize seed is a complex process involving several steps: product development, testing, seed multiplication and marketing. Seed companies control the development and marketing of this high-value commodity, but the actual multiplication of maize seeds takes place in farmers' fields. This study highlights that seed multiplication is a product of both biological and social processes involving the interaction of several factors.

Abhiram (2001) examined the supply chain management and role of contract farming. He opined that the services of contract farming system were advantageous to both the farmers and company. The impact was clearly brought out by contract farming. Tomato yields increased three fold (from 16 to 52 Mt/hectare), chilly yields increased from 6 Mt to 18 Mt/hectare, farm incomes increased by more than 2.5 times, processing season linked to fruit availability increased from 28 to more than 55 days and there was an improvement in the quality of produce.

Kiresur et al. (2001) highlighted advantages of contract farming like reduced capital investment, no risk of price fluctuations and guaranteed income. Reduced capital investment, improved efficiency and efficient marketing were the benefits realised by the company through contract farming. He quoted several examples of contract farming of different crops in India and also mentioned the active involvement of the Government of Karnataka to bring some of the agricultural crops such as maize, cotton, tur, bengalgram, barley and chillies under contract farming system to benefit both the farmers and the industry.

Matthew and Key (2001) under took an empirical case study of the impact of a contract-farming scheme on Senegal’s rural community. Small holders in Senegal’s peanut basin entered contract under the Arachide de Bouche (ARB) programme to provide

confectionery peanuts for the international market. ARBS contracting farmers received seeds, fertilizers, pesticides and herbicides on credit and were required to sell back their produce to the programme. The study examined the access of poorer community members to contracts and the effect of the programme on the income of participants. The ARB programme performed very well on both counts; participants and non-participants were indistinguishable by wealth measure and farmers increased their income sustainability by participating in the programme. The study attributed the participants success to the program’s mobilization of local information through its use of village intermediaries, permitting the substitution of social collateral for physical collateral and making the programme more accessible to the poor.

Arunkumar (2002) undertook an empirical study of factors responsible for success/failure of contract farming by using linear regression function. The results revealed that 93 per cent of variation in the success/failure was explained by the independent variables included in the function. The regression coefficients of net returns from contract farming, land under contract, education of the contract farmer and experience of the company were statistically significant. The coefficients of age and family size were positive but statistically not significant.

Dunne and Dunne (2003) studied trends in the western native plant seed industry since 1990. The study revealed that in the 1990s, western native seed markets expanded beyond traditional mine land reclamation and wildlife habitat customers to fire rehabilitation and nonprofit organization conservation efforts. The emphasis of the USDA Conservation Reserve Programme (CRP) on native plants for agricultural set-aside acreage was also a major contributor to industry growth during this period. In contrast to 13 years ago, government-based demand now dominates the market. Unpredictable government demand resulting from CRP and wild-land fires has caused sharp price escalations when demand has exceeded supply. Conversely, over planting and subsequent multi-year harvests of these perennial crops have resulted in price drops as seed stocks accumulated in the face of weakened demand. But overall, prices quadrupled between 1990 and 2000 before falling back in the 2000 to 2002 period. From 1996 to 2000, native grass seed acreage increased by 118% to nearly 6070 hectare (15 000 ac). Today, seed crops are much more likely to be produced by growers under contract to seed companies, rather than speculatively by producers/marketers as was typical in 1990.

Erappa (2005) studied contract farming in Karnataka for Gherkin crop. In a study Tumkur was purposively selected in Karnataka and covered 150 contract farmers. Educational level of contract farmers have very high literacy rate (99%). The employment generation was to the tune of 450 to 500 man days /year and majority of labourers employed were women. The availability and utilization of facilities given by the companies like inputs, transport and technical support were found to be satisfactory.

Hemanth Kumar and Ranveer Singh (2005) studied success and failure of contract farming in Himachal Pradesh for cauliflower seed production in the agricultural year 2002-2003. The study was based on the data collected from 45 farmers of saproon valley of Himachal Pradesh. National Seed Corporation (NSC) firstly introduced the contract farming in saproon valley in 1966 and it remained in operation up to 1977. After withdrawal of NSC from the area the producers are dependent on the private firms for the marketing of seed. In the present system the net returns per hectare were relatively higher in cauliflower seed (Rs 112994 /hectare) followed by tomato (Rs 68971/hectare), peas (Rs 28068/hectare) and capsicum (Rs 21180/hectare). The production of cauliflower seed reduces the seasonality of employment in agricultural lean period and utilize the idle family labour. The private firms operative in the area are successfully attracting the firms for the production of cauliflower seeds as they are providing technical know how, timely supply of mother seed and credit and assured market.

Vasudev and chowdhry (2005) studied contract farming in theory and practice. The study was conducted in Zaheerabad, Medak districts of Andra Pradesh revealed that contract farming to some extent affected the farmers. The VST Company, which supply input to the farmers has refused to purchase the produce on the place of inferior quality. The decision of the company was unilateral in the sample. Mahyco- Monsanto Company, enter into agreement with farmers in Karnool district of AP for the cotton seed production and as per the agreement the farmers raised the seed. The company paid the meager amount of Rs 250 per

bag of 750 gm, where as it has sold the seed of 450 gm for Rs. 1650, which is a clear case of exploitation by the company under contract farming.

2.3.2 Contractual arrangements

Verhulst (1949) suggested the ways to improve contracts. He proposed that contracts should be mutual and the payments should be made within 60 days after final harvest of the crop. He suggested that an ideal contract should indicate the obligations and the rights of both the parties in writing in a clear and concise manner.

Crouse (1958) put forth the reason for development of contract farming and vertical integration. He opined that processors should enter the contract to get regular supply of produce and to effectively utilize the fixed labour force engaged in processing and packaging business. He suggested that new technology in production could be pushed into practice through contract farming.

Roy (1963) defined contract farming as those contractual arrangements between farmers and companies, whether oral or written, specifying one or more conditions of production and /or marketing of an agricultural product. He highlighted various contractual arrangements prevailing in vegetables and fruit processing sector in USA. He observed two types of contracts namely bailment coupled with contract to produce and supply and contract to produce and sell. Further, observed that the processors were supplying the seed material for cultivation at a stated price to be paid by the grower after the harvest. Fertilizer and plant protection provisions were not found in such contracts. Researcher also evidenced that the processors provided a variety of services other than technical support. The growers were found to maintain better relationship with the extension worker of the company. The growers had problems with grading of the produce in some areas. The contracts made were exclusive and growers were not supposed to sell their produce outside, other than the contractor. The violations of the contractual arrangements led to termination of contract with that crop. Researcher also indicated the future thrust areas for research in contract farming.

Williamson (1979) examined the factors affecting the organization of production systems in a market hierarchy framework. He propounded that in such a framework the organizational criteria were minimization of production and transaction costs. Further, suggested the use of various administered vertical exchange arrangements to reduce the transaction costs and provided insight into the structure of contracts within the vertical co-ordination process and classified contractual arrangements into Classical, Neoclassical and relational contracts. He defined relational contracts as agreement in principle, which circumscribes the contracting parties relationship, including tacit as well as explicit arrangements.

Further, the author argued that increase in transaction complexity, frequency and uncertainty results in a shift in the co-ordination structure from classical to neoclassical then to bilateral and finally to relational contracts. One party typically becomes dominant in this progression.

Barry et al. (1992) opined that due to self-interest of the agent, limited cognitive powers, information asymmetries and uncertainties about future events, it was virtually impossible to write and complete comprehensive contracts to cover all possible future events. Thus, contracts generally were incomplete. Agency costs were incurred in structuring, administering and enforcing contracts to more closely align the goals of the principal and agent. He concluded those decisions about integration or other forms of vertical control depended on the degree of asset specificity, potentially opportunistic behaviour, contract completeness and on the effect of changes in the asset control on investment of the parties to a transaction.

Sporleder (1992) compared the various inter-firm relationships with particular reference to strategic alliances. He opined that a key differentiating feature of strategic alliance was trust, flexibility and unanticipated actions were discouraged in written contract. The exit costs were relatively low compared to other arrangements. Generally, a third party enforcement was anticipated when breach occurred in a written contact.

Arunkumar (2002) opined that written agreement was used in potato and chilli contract farming. The agreement were drafted in short, simple terms, clarifying the responsibilities of both farmer and firms. Breach of contract was included in order to counteract the possibility of extra-contractual marketing. The agreements were effective from the time of hand over the seeds to the farmer and terminated upon the farmer hand over the entire field of produce.

The researcher further studied the various aspects of modus operandi. Majority of the farmers (>50%) took up cultivation of vegetables due to persuation of the company staff. The influence of fellow farmers was the second major force in the case of 40 per cent of the farmers of tomato. All the companies provided technical guidance to farmers. In terms of frequency of field visits, chilli farmers had regular contracts while tomato and potato farmers had frequent contact with the officer. The farmers in chilli contract farming realized full payments within 30 and 45 days, respectively after final harvest. In potato 16 per cent of the farmers received payments after 60 days and 70 per cent of the farmers in tomato received payments in 31-45 days time.

2.4 PROBLEMS IN CONTRACT FARMING AND CONSTRAINTS IN SEED PRODUCTION

Vaishnav (1983) reported that seed production like any other venture was subject to losses on account of weather and the risk of rejection on account of seed being substandard for no fault of the growers, as this might be the result of poor quality of the foundation seed. He further reported that in Punjab, acute shortage of land made it difficult even for the institutional producers of seeds such as Seeds Corporation or the University to raise seeds economically on large farms.

Pathak (1986) conducted the opinion survey to identify the problems in seed production of cereals in Maharashtra. He found that the major difficulties encountered by the farmers were non-availability of labour, poor financial position, inadequate irrigation, lesser prices for seed produced as compared to risk and efforts and isolation trouble.

Khanna and Gupta (1988) observed that production of certified seeds was limited on account of non-availability of adequate volume of breeder and foundation seed. Plan provisions were made to strengthen the National Seeds Corporation to enable it to assume direct responsibility for production of breeder and foundation seed so that the shortage exhibited at the national level in the past could be eliminated.

Crissman (1989) identified strengths and weakness in seed programmes, that the existing potato seed production and distribution system in the project area had not been fully incorporated into the project design. Following ten years implementation (1977-87), the quantity of seed material provided by the scheme was small (<10% of farmers total requirements). The project had anticipated a significant level of farmer participation in the production of certified seed. Although technically viable production, it overlooked farmers cash flow constraints, limited storage capability and customary buying practices.

Khanna (1989) pointed out that the increase in extra costs of certified seed was because of high cost of foundation seeds, extra sowing cost, isolation cost, roughing cost and hybiridization charges.

Mane (1991) conducted an opinion survey of hybrid cotton seed producers in Parbhani district of Maharashtra to identify the constraints in production, financing and marketing aspects. It was reported that almost all seed growers in PKV Hy-2 and more than 50 per cent of seed growers of NHH-44 complained about the non-availability of trained labourers and high wage rate. Nearly 65 per cent in NHH-44 and 47 per cent of seed growers in PKV Hy-2 expressed their apprehension on the pest and diseases. Isolation trouble which would be a main hindrance in the extension of seed programme was expressed by more than 81 per cent of seed growers of both the hybrids.

About 94 per cent of NHH-44 seed growers and 83 per cent of PKV Hy-2 seed growers experienced inadequacy and timely availability of capital for purchase of inputs in the seed production. Regarding marketing problems, many seed growers incurred higher

transportation charges. Delayed payment on seeds was reported by 73 and 35 per cent of seed growers of NHH-44 and PKV Hy-1 hybrids, respectively.

Ramamoorthy (1995) studied the major socio-economic constraints in cotton production and management. The constraints were identified and ranked through rank analysis. The study identified the major production constraints as poor quality input supply, inadequate credit supply and high production risk and the marketing constraints as price fluctuation, storage problems, under weightment and poor market development.

Naik (1998) identified the problems for operatinalization of recommended technologies in different farming systems in Uttara Kannada district. The problems faced by the farmers were broadly classified into production, financial, marketing and infratructural/ extension problems. Among production problems, non-availability of plant material and timely availability of fertilizers were common. Major marketing problems were absence of procurement of food grains and surplus milk, lack of market information and delay in obtaining sale proceeds. Financial problems included non-availability of credit facilities while infrastructural or extension problems were lack of training facilities and field demonstrations.

Key and Runsten (1999) examined the main disincentive for firms to contract with small holders appeared to be the transaction costs associated with providing inputs, credit, extension services and product collection and grading. Many firms had found it easier and more profitable to deal with a few large growers. The study suggested to increase small holders participation in contract farming with a renewed effort on the part of growers to organize themselves or to organise with the help of government agencies, non-profit organizations, or the agro-processors.

Chulaki (2001) identified the problems faced by seed growers in production and marketing of hybrid cotton seeds in Northern Karnataka. The problems faced by the farmers were classified into production and marketing problems. Among production problems, non-availability of skilled labour and non-availability of financial assistance were common.

Arunkumar (2002) opined that major problems faced by the contract farmers were low contract price and irregular payments. The other problems faced were unawareness of potentiality of crops, poor technical assistance, manipulation of norms by firms and higher rejection rate. He also opined that major problems faced by contract firms were land constraints and fixing of contract price. The other problems were farmers discontent and holding up of vehicles. The contract farmers try to put lower grade into higher grade and it was difficult to check and make sure of the grade as quantity hectarendled was more. Farmers held up vehicles in the villages demanding that they should be paid higher prices eventhough agreement does not say so.

Hemanth Kumar and Ranveer Singh (2005) studied success and failure of contract farming in Himachal Pradesh. A case study of cauliflower seed production in the agricultural year 2002-2003. The problems faced were absence of written legal agreement, lack of prior price information, near monopoly of big firms, deductions made to account the moisture content and foreign material in the seed.

III. METHODOLOGY

This chapter deals with the brief description of the study area, sampling design, nature and sources of data, analysis of data are presented under the following heads.

3.1 Description of the study area

3.2 Selection of crops

3.3 Selection of study area and sampling procedure

3.4 Analytical techniques

3.5 Definition of terms and concepts used in the study

3.1 DESCRIPTION OF THE STUDY AREA

3.1.1 Location of the study area

The study was undertaken in Ranebennur, Hirekerur and Byadagi taluks of Haveri district. It falls under the northern transitional tract of Karnataka state. It geographically lies within the interior of Deccan Peninsular between 14

019' and 14

048' North latitude and

between 70015' and 75

050' East longitude. The area of the district is 4,85,156 hectare and it is

bounded on the North by Dharwad and Gadag districts, on the south by Shimoga and Davanagere districts, on the East by Bellary district and on the West by Uttar Kannada district (Fig. 1).

3.1.2 Demographic features of the study area

The geographical area of Haveri district is spread in 7 taluks, 19 hoblies and 675 inhabited villages, as well as 7 un-inhabited villages (Table 3.1). The population of the district according to 2001 census was 14,39,116 with 1000:943 male to female ratio. Out of the total population of the district, 11,400,96 were in rural area and the rest were in urban and semi-urban area. The overall population density of the district is 296 per sq. km and the growth rate of population in the district was 13.29 per cent (1991-2001) during the past decade.

The geographical area of Ranebennur taluk is 90,475 hectare consisting of three hoblies and 103 inhabited villages. The population of the taluk was 3,04,990 and the density of population of the taluk was 335 per sq. km. The growth rate of population in the taluk was 13.15 per cent (1991-2001) during the past decade.

The geographical area of the Hirekerur taluk is 80,694 hectare consisting of three hoblies and 125 inhabited and 3 un-inhabited villages. The population of the taluk was 2,12,458 and the overall population density of the taluk was 263 per sq. km. The growth rate of population in the taluk was 10.7 per cent (1991-2001) during the past decade.

The geographical area of Byadagi taluk is 43,656 hectare consisting of two hoblies and 62 inhabited and one un-inhabited villages. The population of the taluk was 1,27,944 and the average population density of the taluk was 293 per sq. km. The growth rate of population in the taluk was 14.27 per cent (1991-2000) during the past decade.

3.1.3 Climate, rainfall and soil type

There are three distinct agricultural seasons in the district viz., kharif (June-September), rabi (October-January) and summer (February-May). The southwest monsoon commences by about the end of the May or early June and it continues intermittently till the end of September.

The average annual rainfall in the district is 752.8 mm with a major portion of the same being received from Southwest monsoon only. The average temperature ranged from 16

0C to 42

0C. The average annual rainfall in Ranebennur taluk is 623.3 mm with temperature

range of 160C and 42

0C. The number of rainy days in the district was 63 days during 2002 but

in Ranebennur taluk it was 55 days.

Fig 1: Map Showing the study area

Table 3.1: General Features of the Study Area

Taluks

Sl. No. Particulars

Ranebennur Hirekerur Byadagi

Study area

Haveri district

1. Geographical area (ha) 90475 80694 43656 214825 485156

2. Hoblies (Nos.) 3 3 2 8 19

3. Villages (Nos.) inhabited 103 125 62 290 675

Un-inhabited - 3 1 4 7

4. Population (Nos.) 304990 212458 127944 645392 1439116

5. Density of population (per km2) 335 263 293 297 296

6. Growth rate of population (%) 13.15 10.70 14.27 12.71 13.29

7. Average rainfall (mm) 623.30 809.11 712.60 715.00 752.80

8. Number of rainy days (average)

55 68 65 63 63

9. Temperature

i. Minimum 16 16 16 16 16

ii. Maximum 42 42 42 42 42

Source : Haveri District at a Glance-2003-2004, District Statistical Office, Haveri

The average annual rainfall in Hirekerur taluk is 809.11 mm with temperature ranging from 16

0C to 42

0C. The average number of rainy days in 2002 was 68 days.

The average annual rainfall in Byadagi taluk is 712.6 mm with temperature ranging from 16

0C to 42

0C. The average number of rainy days in 2002 was 65 days.

The major soil type in the district has been red loamy soils, which are shallow in depth and well drained. Some patches of black soils also found in the district and they are highly suitable for vegetable production.

3.1.4 Land utilization

The land utilization pattern in the study area has been depicted in Table 3.2. The total geographical area of Haveri district was 4,85,156 hectare, out of which the net cultivable area was 3,46,425 hectare. The total irrigated area was 89,420 hectare. The area not available for cultivation was 37,360 hectare, fallow land were 17,303 hectare and 47,452 hectare area was under forests.

The total geographical area of Ranebennur taluk was 90,475 hectare, out of which net cultivable area was 54,736 hectare. In the taluk 6,605 hectare of land was not available

Table 3.2: Land Use Pattern (2001-02)

(area in ha)

Taluks

Sl. No. Particulars

Ranebennur Hirekerur Byadagi

Study area

Haveri district

1. Geographical area 90475 80694 43656 214825 485156

2. Forest area 10614 8876 4889 24379 47452

3. Land not available for cultivation

6605 6856 2613 16074 37360

4. Fallow land 3066 2999 1307 7372 17303

5. Net cultivable area 54736 56316 32845 143897 346425

6. Irrigated area 13412 16248 9142 38802 89420

Source : Haveri District at a Glance-2003-2004, District Statistical Office, Haveri

for cultivation, fallow land was 3,066 hectare and forest land was 10,614 hectare during the year 2001-02.

The total geographical area of Hirekerur taluk was 80,694 hectare, out of which the net cultivable area was 56,316 hectare. Total irrigated area was about 16,248 hectare. In the taluk, area not available for cultivation was 6,856 hectare, fallow land was 2,999 hectare and forest land was 8,876 hectare during the year 2001-02.

The total geographical area of Byadagi taluks was around 43,656 hectare, out of which the net cultivable area was 32,845 hectare. The total irrigated area was 9,142 hectare. In the taluk 2,613 hectare of land was not available for cultivation 1,307 hectare was fallow land and 4,889 hectare was forest area.

3.1.5 Cropping pattern

The cropping pattern in the study area has been depicted in Table 3.3. In Haveri district during 2001-02, the total net area sown was 3,81,085 hectare, out of which paddy was grown in 58,134 hectare, sorghum in 62,967 hectare, maize in 92,123 hectare, cotton in 80,825 hectare, oilseeds 32,494 hectare and pulse crop was in 33,155 and vegetables in 11,548 hectare of the net sown area.

Table 3.3: Cropping Pattern in the Study Area

(in hectares)

Taluks Crop

Ranebennur Hirekerur Byadagi

Total study area Haveri district

Paddy 3069 7284 3448 13801 58134

Ragi 424 891 205 1520 2370

Sorghum 15747 5343 8129 29219 62967

Wheat 270 39 50 359 1362

Bajra 218 48 7 273 344

Maize 13387 30704 11934 56025 92123

Sugarcane 1143 803 316 2262 5763

Cotton 11196 11795 8017 31008 80825

Oilseeds 4238 3200 1494 8932 32494

Pulses 5501 6813 3871 16185 33155

Vegetables 4870 2709 1451 9030 11548

Net sown area 60063 69629 38886 168578 381085

In Ranebennur taluk during 2001-02, the total net area sown was 3,31,085 hectare, out of which paddy was grown in 3,069 hectare, ragi in 424 hectare, sorghum in 15,747 hectare, maize in 13,387 hectare, cotton in 11,196 hectare, oilseeds in 4,238 hectare, pulse crop in 5,501 hectare and vegetables in 4,870 hectare of the net sown area.

In Hirekerur taluk during 2001-02, the total net sown area was 69629 hectare, out of which paddy was grown in 7,284 hectare, ragi in 891 hectare, sorghum in 5,343 hectare, maize in 30,704 hectare, cotton in 11795 hectare, oilseeds in 3,200 hectare, pulse crop in 6,813 hectare and vegetables in 27098 hectare of the net sown area.

In Byadagi taluk during 2001-02, the total net area sown was 38,886 hectare, out of which paddy occupied 3,448 hectare, sorghum 8,129 hectare, maize 11,934 hectare, cotton 1,494 hectare, pulse crop 3,871 hectare and vegetables in 1,451 hectare of the net sown area.

3.2 SELECTION OF CROPS

The crops predominantly grown in the study district are tomato, brinjal, okra and ridge gourd for seed production. All the crops were included for an in-depth analysis.

3.3 SELECTION OF STUDY AREA AND SAMPLING PROCEDURE

The selection of study area and the sampling procedure adopted has been described below.

3.3.1 Selection of study area

Haveri district was purposively selected for the study, as it is one of the important and major hybrid vegetable seed growing district in Karnataka. Out of seven taluks in the district, Ranebennur, Hirekerur and Byadagi taluks were selected for the study because hybrid vegetable seed producing companies were concentrated only in these three taluks of the district.

3.3.2 Sampling procedure

To evaluate the objectives of the study, a multistage sampling procedure was adopted. In the first stage, three taluks were selected, in the second stage 15 village were selected from the hinter land, of these three taluks and in the third stage, farmers growing hybrid vegetable seeds were choosen.

3.3.3 Selection of taluks

In Haveri district, large scale cultivation of hybrid vegetable seed has been concentrated in Ranebennur, Hirekerur and Bydagi taluks. Therefore, these three taluks were purposively selected for the study.

3.3.4 Selection of villages

From the three selected taluks, five villages from each taluk were selected where the maximum hybrid vegetable seed growing area was concentrated. Totally 15 villages were selected (Table 3.4).

3.3.5 Selection of farmers and firms

From each village, eight farmers were randomly selected in consultation with seed company personals. Thus, the total sample size worked out to be 120 farmers. The leading three firms dealing in production of vegetable seeds interviewed for eliciting the information. The firms viz., Mahyco Seeds Private Limited, Sungro Seeds Private Limited and Ankur Seeds Private Limited

Table 3.4: List of Sample Villages and Distribution of Sample Farmers (in numbers)

Mahyco Sungro Ankur

Taluk Name of the village Tomato Brinjal Okra

Ridge gourd

Tomato Brinjal Okra Ridge gourd

Tomato Brinjal Okra Ridge gourd

Total

Guddahosahalli 2 2 2 2 8

Benakanakonda 2 2 2 2 8

Joyasarahalli 2 2 2 2 8

Tirumaladevara koppa 2 2 2 2 8

Ranebennur

Halageri 2 2 2 2 8

Sub-total 4 2 4 6 2 6 2 2 4 2 4 2 40

Chikkaboodihal 2 2 2 2 8

Kunchur 2 2 2 2 8

Sannagubbi 2 2 2 2 8

Rattihalli 2 2 2 2 8

Hirekerur

Makari 2 2 2 2 8

Sub-total 4 2 2 0 4 4 4 4 2 4 4 6 40

Kalagonda 2 2 2 2 8

Masanagi 2 2 2 2 8

Timakapur 2 2 2 2 8

Bennihatti 2 2 2 2 8

Byadagi

Beesalahalli 2 2 2 2 8

Sub-total 2 6 4 4 4 0 4 4 4 4 2 2 40

Total 10 10 10 10 10 10 10 10 10 10 10 10 120

3.3.6 Nature and sources of data

For evaluating the objectives of the study necessary data relating to production of hybrid vegetable seeds were obtained from the selected farmers with the help of a pre-tested and well structured schedule. The farmers were personally interviewed to ensure accuracy and comprehension. Since, the survey method was adopted, there was a heavy reliance on the memory recall of the respondents. The data were relating to cropping pattern, land holdings, asset position, education, family size, cost and returns and problems faced etc. Details regarding input use and output obtained were collected. Further, the data on the quantity of produce sold, the prices of inputs and outputs etc. were collected from the sample farmers. The opinion about the hybrid vegetable seeds cultivation and the problems faced by the hybrid vegetable seed farmers were recorded. Every effort was made to elicit accurate information from the sample farmers. The assistance of the Agricultural Field Officers, who were appointed by the private companies and they are giving essential inputs and technical guidance in cultivation of hybrid vegetable seeds. Local leaders were also used in contacting the farmers which helped to create confidence in the minds of the respondents. The data pertained to crops grown during kharif and rabi seasons of 2004-05.

3.4 ANALYTICAL TECHNIQUES

The analytical techniques used to evaluate the objectives of the present study are summarized below.

3.4.1 Tabular analysis

The technique of tabular analysis was employed for computing the costs, returns, terms of contract and modus operandi, problems faced by contract farmers and contract firms were documented using averages, means and percentages.

3.4.2 Functional analysis

The Cobb-Douglas type of production function was used to study the effect of various inputs on hybrid vegetable seed production, on account of its well known properties like its computational simplicity that justify its wide application in analysing production relations (Handerson and Quandt, 1971). It being a homogenous function provided a scale factor enabling one to measure the returns to scale. The estimated regression coefficients represented the production elasticities.

The form of Cobb-Douglas production function used in the present study is as follows.

Y = aX1b1

X2b2

X3b3

X4b4

X5b5

X6b6

X7b7

X8b8

eu

Where,

Y = Gross output in rupees

X1 = Value of seeds in rupees

X2 = Value of FYM in rupees

X3 = Human labour charges in rupees

X4 = Bullock and tractor charges in rupees

X5 = Value of fertilizers and micronutrients in rupees

X6 = Value of plant protection chemicals in rupees

X7 = Irrigation charges

X8 = Staking sticks and gunny thread in rupees

u = Random error term

bi’s = Output elasticities of respective factor inputs, i = 1, 2….8 and

a = Intercept (efficiency) term

The Cobb-Douglas production function was converted into log linear form and parameters (coefficients) were estimated by employing Ordinary Least Square Technique (OLS) as given below.

log Y = log a + b1 log X1 + b2 log X2 + b3 log X3 + b4 log X4 + b5 log X5 + b6 log X6 + b7 log X7 + b8 log X8 + u log e

The regression coefficients (bi’s) were tested for their significance using ‘t’ test at five per cent and one per cent probability levels.

t =

In order to know the goodness of fit, the adjusted co-efficient of multiple determination R

2 was calculated by using the formula.

R2 = 1 – (1 - R

2)

Where,

R2 = The adjusted coefficient of multiple determination (adjusted for the size of the

sample)

R2 = The coefficient of multiple determination which is given by

R2 =

n = Number of observations in the sample

P = Number of parameters in the function

Measurement of efficiency

The analysis of efficiency should help to identify the possibilities for increasing income while conserving resources. The role of efficiency may be viewed as an important component in policy making to stimulate income and/or promote resource conservation.

The concept of efficiency was first defined by Farrel (1957) in terms of its two dimensions, technical efficiency and allocative efficiency. Technical efficiency arises when the maximum output is obtained from a given bundle of inputs and allocative efficiency arises when inputs are used in proportion which yield maximum output. Allocative efficiency exists when resources are allocated within the farm according to market prices. It is therefore, suggested that within a static frame work measures of technical efficiency retain validity as a measure of goal achievement in a materialistic world (Russel and Young, 1983). The idea of frontier production function is built around the concept of efficiency adduced by Farrel (1957).

a. Technical efficiency

Timmer’s output based measure of technical efficiency

Timmer (1971) imposed the Cobb-Douglas production function on the frontier and computed an output-based measure of efficiency. The approach adopted here is to specify a fixed parameter frontier amenable to statistical analysis. This takes the following general form.

Y = f(x)eu, u<0

and the Cobb-Douglas production function in natural logarithmic form would be :

1n Y = a + Σ bj log xj + u, u<0

bi

Standard error of bi

(n-1)

(n-p)

Regression sum of squares

Total sum of squares

J=1

n

In estimating the above equation Corrected Ordinary Least Squares (COLS) regression is chosen as the most convenient means. This method is briefly outlined as under.

As a first step, the foregoing equation is estimated by the method of OLS yielding the best linear unbiased estimates of bi’s coefficients. The intercept ‘a’ is then corrected by shifting the function until no residual is positive and one case is zero. This is done by adding the largest error term of the fitted model to the intercept. Greene (1980) has shown that a consistent, though biased, estimate of ‘a’ which imposes the sign uniformity on the residuals will be generated by this procedure.

Thus, Timmer measure of technical efficiency (TEi) of a farm ‘i' is the ratio of actual output to potential (Frontier) output, given the level of input use on farm ‘i’. It thus indicates how much extra output could be obtained if farm ‘i' were on the frontier with the given technology and level of input.

Timmer measure of technical efficiency is given by :

TEi = <1

Where,

Y = Actual output

Y* = The potential output obtainable for given level of inputs

b. Allocative efficiency

Given the technology, allocative efficiency exists when resources are allocated within the farm according to market prices and it implies the proper level of input use in production. To decide whether a particular input is used rationally or irrationally, its marginal value products will be computed. If the marginal value product of an input just covers its acquisition cost it is said to be used most efficiently.

The marginal value products were calculated at the geometric mean levels of variables by using the formula.

Marginal value product of ith

resource = bi

Where,

Y = Geometric mean of the output

Xi = Geometric mean of ith independent variable

bi = The regression coefficient of the ith independent variable

In order to determine the efficiency of allocation of the resources or price efficiency, the value of the marginal product obtained by multiplying the marginal product by the price of the product was compared with its marginal cost. A ratio of the value of marginal product to the factor price more than unity, implied that the resources were advantageously employed. If the ratio was less than one, it suggested that resource was over used.

3.5 DEFINITION OF TERMS AND CONCEPTS USED IN THE STUDY

In this section, different concepts of cost and returns used in the study are presented. It is observed at the time of data collection that farmers of this region are more familiar with acre as the unit of measuring the land area instead of hectare. Hence, in this study, all calculations pertaining to the cost and returns of hybrid vegetable seed production were calculated on per acre basis (2.47106 acres = 1 hectare).

3.5.1 Costs

The total costs (TC) were divided into two broad categories viz.,

Y

Y*

Y

Xi

a) Variable costs and b) Fixed costs

a) Variable costs

These costs comprised of costs incurred on variable inputs such as seeds, planting material, farmyard manure (FYM), fertilizers, micronutrients, plant protection chemicals, labour (human, bullock and machine), staking sticks and gunny thread, irrigation and interest on working capital. The computations of different terms of variable cost components are as follows:

Seed : The cost of the seeds was computed by using the actual price paid by the sample farmer, which prevailed at the time of sowing in contract farming.

Farmyard manure : The value of FYM generated on their farm was imputed by considering the rates prevailing in the locality at the time of its application.

Fertilizer and micronutrients : The cost of fertilizer was based on the actual price paid by the sample farmers including the cost of transportation and other incidental charges, if any.

Plant protection chemicals : The actual price paid by the farmers was used to compute the cost of plant protection chemicals.

Labour : The cost of labour was computed by taking the wage rate paid by the sample farmer for human labour and bullock labour. The same wage rates were used while computing the imputed value of family labour and owned bullock labour.

Woman labour was converted into male equivalents. The formula used for conversion was

Male equivalents of female labour = 0.60 X total number of female labour days.

Conversion factor 0.60 was taken based on the ratio of wage paid to the men labour v/s women labour.

Crossing materials

It included plastic lockets, cotton thread and covers. All these items were valued at actual price.

Staking materials (used only in tomato and ridge gourd)

It includes cost of wooden poles, thread and plastic wires, which were used for staking the plant, the actual price paid by the farmer was used to compute the cost of staking.

Registration and inspection fees

Each farmer has to register as a seed grower and had to pay registration and inspection charges along with foundation seeds per plot (20 guntas) to the selected seed companies.

Interest on working capital : This was calculated at the rate of 8.5 per cent for the duration of crop, on the total value of the seed, manure, fertilizer, micronutrients, plant protection chemicals, human labour, bullock labour, machine labour, staking sticks and gunny thread (based on the interest rates charged by financial institutions).

b) Fixed cost : These include depreciation on farm implement and machinery, interest rate on fixed capital and rental value of land.

The measurement and depreciation of fixed cost component are as follows:

Interest on fixed capital : Interest charges and fixed capital was calculated at the rate of 9.5 per cent per annum, as it was the rate of interest charged on long-term loans by commercial banks.

(i) Depreciation charges : Depreciation on each capital equipment and machinery owned by the farmers and used for plant was calculated separately, based on the purchase value using the straight line method. Thus, the

Annual depreciation =

The average life of an asset as indicated by each farmer was used in the computation of the depreciation. The average value of an asset after its useful life (time value) was considered based on the value expressed by the respondents. The deprecation cost of each equipment apportioned to the crop, based on its percentage use.

(ii) Rental value of land : Rental value of land was calculated at the prevailing rate per acre per annum in the locality and was apportioned to the hybrid vegetable crops for the period for farm business analysis.

3.5.2 Returns

For contract farmers, after harvest the hybrid vegetable seeds are marketed for a pre-fixed price.

• Gross Returns - Worked out by multiplying total yield of hybrid vegetable seeds with price and is denoted as

Gross Returns (GR) = yield × price

• Net returns over variable cost (TVC) - This can be obtained by deducting total variable cost from gross return and is denoted as;

Net returns over variable cost = GR – TVC

• Net returns over total cost - Net returns over total cost was worked out by deducting total cost (TC) of production from gross return.

Net returns over total cost = GR – TC

• Cost of production per kg - This can be worked out by dividing total variable cost

(TVC) by yield of main product.

Cost of production per kg = TVC / yield of product

• Net returns over variable cost per kg - Derived by dividing net returns over variable cost by total yield. Which can be denoted as

Net returns over variable cost per kg = Net returns over variable cost/yield

• Net returns over total cost per kg - Obtained by dividing net returns over total cost by total yield.

Net returns over total cost per kg = Net returns over total cost/yield

• Returns per rupee of expenditure - This can be worked out by dividing gross returns by total cost.

Returns per rupee of investment = GR / TC

3.5.3 Terms of contract and Modus Operandi

Terms of contract : The conditions that people offer, demand or accept when they make

an agreement.

Modus operandi : A particular method of working.

Purchase value – junk value

Useful life of the asset (years)

3.5.4 Problems of the contract farmers and the contract firm

Opinions expressed by the farmers and the contract firms regarding the problems of contract farming.

IV. RESULTS

The findings of the study are presented in this chapter under the following headings in consonance with the objectives of the study.

4.1 Socio-economic characteristics of the farmers

4.2 Pattern of employment in the cultivation of hybrid vegetables seed production

4.3 Input use pattern in hybrid vegetables seed production

4.4 Cost and returns in hybrid vegetables seed production

4.5 Resource use and allocative efficiency in hybrid vegetables seed production

4.6 Technical efficiency in hybrid vegetables seed production

4.7 Terms of contracts and modus operandi

4.8 Problems faced by the contract seed growers and the contract firms

4.1 SOCIO-ECONOMIC CHARACTERISTICS OF THE FARMERS

The results in respect of socio-economic characteristics of the sample farmers are presented as follows.

4.1.1 General features of contract farmers

The average family size of hybrid vegetable seed growers was around 9 members. With respect to education level was concerned, all the farmers were literate (Table 4.1). About 12.5, 21.67 and 28.33 per cent of farmers studied upto primary, middle and high school level, respectively. The remaining 37.50 per cent of the farmers were studied upto college level and above. The average age of the respondents was 41 years.

4.1.2. Pattern of land holdings of the sample farmers

The pattern of land holding of the hybrid vegetable seed growers is given in Table 4.1. The average size of the land holdings of the contract seed grower was 9.35 acres, of which rainfed land was 6.61 acres and irrigated land was 2.74 acres, which worked out to 70.70 and 29.30 per cent of the total holdings, respectively. The average area under hybrid vegetable seed accounted for about 0.50 acres, which worked out to 5.34 per cent of total land holding.

4.1.3 Cropping pattern of the sample farmers

Cropping pattern of sample farmers is presented in Table 4.2. It was evident from the table that in the study area 78.81 per cent of gross cropped area was cultivated in the kharif and 21.19 per cent in the rabi seasons. Maize occupied major portion of the area in kharif, which worked out to be 29.74 per cent of gross cropped area, followed by cotton, jowar, vegetables and other crops, which occupied 21.74, 18.40, 4.65 and 4.28 per cent of the gross cropped area in that order.

In the rabi season, jowar occupied a major portion of the gross cropped area, which worked out to be 10.04 per cent, followed by sunflower and other crops, which occupied 7.90 and 3.25 per cent of gross cropped area, respectively.

The cropping intensity of sample farmers was 126.89 per cent.

Table 4.1: Socio-Economic Characteristics of Sample Farmers

(N = 120)

Sl. No. Particulars Unit Average Percentage

1 Age of the farmer Years 41 -

2 Size of the family Number 9 -

3 Education level -

a. Illiterate Number 0 0.00

b. Literate Number 120 100.0

i. Primary school Number 15 12.50

ii. Middle school Number 26 21.67

iii. High school Number 34 28.33

iv. College Number 22 18.33

v. Degree and above Number 23 19.17

4. Average size of holdings Acre 9.35 100.00

a. Rainfed Acre 6.61 70.70

b. Irrigated Acre 2.74 29.30

5. Area under seed production Acres 0.50 5.34

4.2 PATTERN OF EMPLOYMENT IN HYBRID VEGETABLES SEED PRODUCTION

The results of the labour employment in hybrid tomato, brinjal, okra and ridge gourd seed production per acre are presented in Tables 4.3, 4.4, 4.5 and 4.6, respectively.

Tomato

In contract farming about 6.33 mandays of human labour used for land preparation. For FYM transportation and application 8.64 mandays were employed. For nursery raising 5.80 mandays were employed. About 4.92 mandays for planting, 16.88 mandays for weeding and 5.93 mandays for application of fertilizers were employed. For pollen collection and crossing about 408.73 mandays and 17.67, 12.07 and 43.14 mandays for irrigation, plant protection chemicals spraying and harvesting, respectively were employed. And about 30.07 mandays for seed extraction, 9.08 mandays for drying and cleaning and 10.94 mandays for other activities like planting of staking sticks for support of the crop and tieing thread were employed.

Table 4.2: Cropping Pattern of the Sample Farmers in the Study Area

Sl. No.

Particulars Area (acre) Per cent

I. Kharif season

1. Maize 384.00 29.74

2. Jowar 237.60 18.40

3. Cotton 280.80 21.74

4. Vegetables 60.00 4.65

5. Others 55.20 4.28

Total 1017.60 78.81

II. Rabi season

1. Jowar 129.60 10.04

2. Sunflower 102.00 7.90

3. Others 42.00 3.25

Total 273.60 21.19

III. Gross cropped area 1291.20 100.00

IV. Net cropped area 1017.60

V. Cropping intensity (%) 126.89

Total of 580.20 mandays were employed for different activities in hybrid tomato seed production. Only 75.15 mandays of family labour were employed for different activities. Hired labour to the extent of 505.05 mandays were used in hybrid tomato seed production.

Brinjal

In contract farming about 4.87 mandays of human labour used for land preparation. For FYM transportation and application 12.48 mandays were employed. For nursery raising 5.44 mandays were employed. About 3.60 mandays for planting, 16.12 mandays for weeding and 6.74 mandays for application of fertilizers were employed. For pollen collection and crossing about 190.46 mandays and 22.39, 9.47 and 21.92 mandays for irrigation, plant protection chemicals spraying and harvesting, respectively were employed. And about 30.41 mandays for seed extraction, 9.60 mandays for drying and cleaning were employed.

Total of 333.50 mandays were employed for different activities in hybrid brinjal seed production. About 60.74 mandays of family labour were employed for different activities. Further, 272.76 mandays of hired labour were used in hybrid brinjal seed production.

Table 4.3: Pattern of Employment in Hybrid Tomato Seed Production

(per acre)

Family Hired

Sl. No. Type of operation Male (mandays)

Female (converted mandays)

Male (mandays)

Female (converted mandays)

Total human labour

(mandays)

1. Land preparation 2.20 0.00 4.13 0.00 6.33

2. FYM / compost (transportation & application) 0.67 0.00 7.93 0.04 8.64

3. Raising Nursery 0.80 0.96 1.60 2.44 5.80

4. Planting 0.00 0.48 0.00 4.44 4.92

5. Weeding 0.00 1.24 0.00 15.64 16.88

6. Application of fertilizers 0.73 0.00 5.20 0.00 5.93

7. Pollen collection and crossing 18.93 25.67 26.40 337.73 408.73

8. Irrigation 10.87 0.00 6.80 0.00 17.67

9. Plant protection chemicals spraying 0.47 0.00 11.60 0.00 12.07

10. Harvesting 3.27 2.36 8.67 28.84 43.14

11. Seed extraction 3.27 0.68 25.60 0.52 30.07

12. Drying & cleaning 0.00 1.68 0.00 7.40 9.08

13. Others 0.87 0.00 10.07 0.00 10.94

Total 42.08 33.07 108.00 397.05 580.20

Table 4.4: Pattern of Employment in Hybrid Brinjal Seed Production

(per acre)

Family Hired

Sl. No. Type of operation Male

(mandays)

Female (converted mandays)

Male (mandays)

Female (converted mandays)

Total human labour

(mandays)

1. Land preparation 1.60 0.00 3.27 0.00 4.87

2. FYM / compost (transportation & application) 1.73 0.00 10.27 0.48 12.48

3. Raising Nursery 3.07 0.28 1.33 0.76 5.44

4. Planting 0.00 0.56 0.00 3.04 3.60

5. Weeding 0.00 0.88 0.00 15.24 16.12

6. Application of fertilizers 1.07 0.00 5.67 0.00 6.74

7. Pollen collection and crossing 7.87 16.33 31.26 135.00 190.46

8. Irrigation 14.32 0.00 8.07 0.00 22.39

9. Plant protection chemicals spraying 1.27 0.00 8.20 0.00 9.47

10. Harvesting 1.00 0.88 2.80 17.24 21.92

11. Seed extraction 4.80 0.40 24.33 0.88 30.41

12. Drying & cleaning 0.00 4.68 0.00 4.92 9.60

Total 36.73 24.01 95.20 177.56 333.50

Table 4.5: Pattern of Employment in Hybrid Okra Seed Production

(per acre)

Family Hired

Sl. No. Type of operation Male

(mandays)

Female (converted mandays)

Male (mandays)

Female (converted mandays)

Total human labour

(mandays)

1. Land preparation 1.17 0.00 1.30 0.00 2.47

2. FYM / compost (transportation & application) 0.97 0.00 7.37 0.00 8.34

3. Dibbling 0.00 0.20 0.00 2.90 3.10

4. Weeding 0.00 0.76 0.00 22.48 23.24

5. Application of fertilizers 0.33 0.00 3.77 0.00 4.10

6. Pollen collection and crossing 5.87 17.03 5.80 157.03 185.73

7. Irrigation 3.50 0.00 4.37 0.00 7.87

8. Plant protection chemicals spraying 0.33 0.00 6.77 0.00 7.10

9. Harvesting 0.00 0.18 2.40 3.18 5.76

10. Seed extraction 0.00 0.28 0.00 10.92 11.20

11. Drying & cleaning 0.00 0.88 0.63 4.56 6.07

Total 12.17 19.33 32.41 201.07 264.98

Table 4.6: Pattern of Employment in Hybrid Ridge Gourd Seed Production

(per acre)

Family Hired

Sl. No. Type of operation Male

(mandays)

Female (converted mandays)

Male (mandays)

Female (converted mandays)

Total human labour

(mandays)

1. Land preparation 1.67 0.00 3.60 0.00 5.27

2. FYM / compost (transportation & application) 1.33 0.00 7.13 4.64 13.10

3. Dibbling 0.00 0.04 0.93 1.80 2.77

4. Weeding 0.00 3.76 0.00 13.96 17.72

5. Application of fertilizers 1.00 0.00 3.13 0.00 4.13

6. Pollen collection and crossing 6.07 12.40 30.93 117.80 167.20

7. Irrigation 12.00 0.00 3.53 0.00 15.53

8. Plant protection chemicals spraying 0.60 0.00 7.67 0.00 8.27

9. Harvesting 1.00 0.64 0.73 3.80 6.17

10. Seed extraction 0.00 1.76 0.00 9.44 11.20

11. Drying & cleaning 0.00 0.80 0.00 2.44 3.24

12. Others 3.00 0.00 10.13 0.00 13.13

Total 26.67 19.40 67.78 153.88 267.73

Okra

In contract farming about 2.47 mandays of human labour used for land preparation. For FYM transportation and application 8.34 mandays were employed. For dibbling 3.10 mandays were employed. About 23.24 mandays for weeding and 4.10 mandays for application of fertilizers were employed. For pollen collection and crossing about 185.73 mandays and 7.87, 7.10 and 5.76 mandays for irrigation, plant protection chemicals spraying and harvesting, respectively were employed. And about 11.20 mandays for seed extraction, 6.07 mandays for drying and cleaning were employed.

Total of 264.98 mandays were employed for different activities in hybrid okra seed production. About 31.50 mandays of family labour were employed for different activities. Further, 233.48 mandays of hired labour were used in hybrid okra seed production.

Ridge gourd

In contract farming about 5.27 mandays of human labour used for land preparation. For FYM transportation and application 13.10 mandays were employed. For dibbling 2.77 mandays were employed. About 17.72 mandays for weeding and 4.13 mandays for application of fertilizers were employed. For pollen collection and crossing about 167.20 mandays and 15.53, 8.27 and 6.17 mandays for irrigation, plant protection chemicals spraying and harvesting, respectively were employed. And about 11.20 mandays for seed extraction, 3.24 mandays for drying and cleaning and 13.13 mandays for other activities like planting of staking materials for support of the crop, tieing thread were employed.

Total of 267.73 mandays were employed for different activities in hybrid ridge gourd seed production. About 46.07 mandays of family labour were employed for different activities. Further, 221.66 mandays of hired labour were used in hybrid ridge gourd seed production.

4.3 INPUT USE PATTERN IN HYBRID VEGETABLES SEED PRODUCTION

Tomato

In contract farming of hybrid tomato seed production (Table 4.7) on an average the farmer used 13.33 grams of male and 30 grams female seeds per acre. The quantity of FYM applied per acre was 13.46 tonnes. Whereas, the chemical fertilizer application was 157.54 kg per acre. Around 21 kg of micronutrients was used. The most commonly used were Multiplex, Agromix and Agroplus. The most commonly used insecticides /pesticides by the sample seed growers were monocrotophos, confidor, octra and Apride. The average quantity of these plant protection chemicals used in the form of liquids was 6.40 litres by the tomato seed growers. On an average, the human labour employed per acre for tomato seed production was around 580.20 mandays, 4.8 pairdays of bullock labour and 3.33 machine hours utilized by each contract seed growers.

The hybrid tomato seed growers used on an average 5800 number of staking sticks for supporting the plant stem and 13.57 kg of gunny thread was used for one acre seed production of hybrid tomato.

The average quantity of output produced per acre by the contract seed grower was worked out to 78.80 kg of F1 hybrid tomato seeds.

Brinjal

In contract farming of hybrid brinjal seed production on an average the farmer used 13.33 grams of male and 30 grams female seeds per acre (Table 4.7). The quantity of FYM applied per acre was 10.30 tonnes. Whereas, the chemical fertilizer application was 122.17 kg per acre. Around 25.67 kg of micronutrients was used. The most commonly used were Multiplex, Agromix and Agroplus. The most commonly used insecticides/pesticides by the sample seed growers were bavistin, radomil, parathion and systane. The average quantity of these plant protection chemicals used in the form of liquids was 12.42 litres by the brinjal seed growers. On an average, the human labour employed per acre for brinjal seed

Table 4.7: Input Use Pattern in Hybrid Vegetables Seed Production

(per acre)

Sl. No.

Particulars Unit Tomato Brinjal Okra Ridge gourd

A. Inputs

1. Seed – Male Grams 13.33 13.33 250.00 133.33

Female Grams 30.00 30.00 1000.00 400.00

2. FYM Tonnes 13.46 10.30 9.52 11.28

3. Chemical fertilizers

a. Nitrogen Kgs 63.79 51.77 37.22 47.51

b. Phosphorus Kgs 48.53 45.61 28.32 30.98

c. Potassium Kgs 45.22 24.79 26.39 33.68

Sub total Kgs 157.54 122.17 91.93 112.17

4. Micronutrients Kgs 21.00 25.67 17.17 18.20

5 Plant protection chemicals Litres 6.40 12.42 11.13 4.93

6. Labour

a. Human labour Mandays 580.20 333.50 264.98 267.73

b. Bullock labour Pairdays 4.80 1.53 1.57 1.93

c. Machine hour Hour 3.33 3.67 2.46 3.53

7. Staking sticks No. 5800.00 - - 1171.00

Gunny thread Kgs 13.57 - - 36.40

B. Output

1. Seed Kgs 78.80 302.43 298.13 140.53

production was around 333.50 mandays, 1.53 pairdays of bullock labour and 3.67 machine hours utilized by each contract seed growers.

The average quantity of output produced per acre by the contract seed grower was worked out to 302.43 kg of F1 hybrid brinjal seeds.

Okra

In contract farming of hybrid okra seed production on an average the farmer used 250 grams of male and 1000 grams female seeds per acre (Table 4.7). The quantity of FYM applied per acre was 9.52 tonnes. Whereas, the chemical fertilizer application was 91.93 kg per acre. Around 17.17 kg of micronutrients was used. The most commonly used were Multiplex, Agromix and Agroplus. The most commonly used insecticides/pesticides by the sample seed growers were hostathion, spark, avanta, and lanate. The average quantity of these plant protection chemicals used in the form of liquids was 11.13 litres by the okra seed growers. On an average, the human labour employed per acre for okra seed production was around 264.98 mandays, 1.57 pairdays of bullock labour and 2.46 machine hours utilized by each contract seed growers.

The average quantity of output produced per acre by the contract seed grower was worked out to 298.13 kg of F1 hybrid okra seeds.

Ridge gourd

In contract farming of hybrid ridge gourd seed production on an average the farmer used 133.33 grams of male and 400 grams female seeds per acre. The quantity of FYM applied per acre was 11.28 tonnes. Whereas, the chemical fertilizer application was 112.17 kg per acre. Around 18.20 kg of micronutrients was used. The most commonly used were Multiplex, Agromix and Agroplus. The most commonly used insecticides/pesticides by the sample seed growers were carathion and systane. The average quantity of these plant protection chemicals used in the form of liquids was 4.93 litres by the ridge gourd seed growers. On an average, the human labour employed per acre for ridge gourd seed production was around 267.73 mandays, 1.93 pairdays of bullock labour and 3.53 machine hours utilized by each contract seed growers.

The hybrid ridge gourd seed growers used on an average 1171 number of staking sticks for supporting the plant stem and 36.40 kg of gunny thread was used for one acre seed production of hybrid ridge gourd.

The average quantity of output produced per acre by the contract seed grower was worked out to 140.53 kg of F1 hybrid ridge gourd seeds.

4.4 COST AND RETURNS IN HYBRID VEGETABLE SEED PRODUCTION

4.4.1 Cost structure in hybrid vegetables seed production

The results in respect of various items of economics of cultivating hybrid tomato, brinjal, okra and ridge gourd seed production per acre in contract farming are presented in Table 4.8.

Tomato

Among the variable cost, expenditure on human labour was the major cost, which was Rs. 29010 (52.85% of the total cost). The expenditure on staking sticks, gunny thread was Rs. 5331 (9.71% of the total cost). The amount spent on fertilizers and micronutrients was Rs. 4073 (7.42% of the total cost) and FYM was Rs. 2692 (4.90% of the total cost) and cost involved in use of plant protection chemicals was Rs. 1600 (2.91% of the total cost) and irrigation was Rs. 635 (1.17% of the total cost). The amount spent on seeds, registration and inspection charges was Rs. 633 (1.15% of the total cost).

Table 4.8: Cost Structure in Hybrid Vegetables Seed Production

(Rs./acre)

Sl. No.

Items Tomato Brinjal Okra Ridge gourd

A. Variable cost

1. Seeds (registration and inspection charges)

633.33 (1.15) 680.00 (1.85) 550.00 (1.88) 666.67 (1.86)

2. Farmyard manure 2692.00 (4.90) 2060.00 (5.61) 1904.00 (6.50) 2256.00 (6.29)

3. Chemical fertilizer

a. Nitrogen 693.43 (1.27) 760.06 (2.08) 404.62 (1.38) 516.38 (1.44)

b. Phosphorus 2426.99 (4.42) 2660.7 (7.25) 1416.16 (4.84) 1807.50 (5.04)

c. Potassium 346.71 (0.63) 380.05 (1.04) 202.31 (0.69) 258.22 (0.72)

4. Micronutrients 606.35 (1.10) 641.67 (1.75) 442.83 (1.51) 614.21 (1.71)

5. Plant protection chemicals 1600.00 (2.91) 3105.00 (8.47) 2782.50 (9.50) 1232.50 (3.44)

6. Labour

a. Human labour 29010.00 (52.85)

16675.00 (45.45)

13249.00 (45.24)

13386.50 (37.32)

b. Bullock labour 960.00 (1.75) 306.00 (0.83) 314.00 (1.08) 386.00 (1.08)

c. Machine hour 999.00 (1.82) 1101.00 (3.00) 738.00 (2.52) 1059.00 (2.95)

7. Staking sticks and gunny thread

5331.80 (9.71) - - 6039.93 (16.84)

8. Irrigation 635.60 (1.17) 635.60 (1.73) 409.33 (1.40) 701.60 (1.96)

9. Interest on working capital 3904.49 (7.11) 2465.43 (6.72) 1905.08 (6.50) 2458.58 (6.85)

Sub-total 49839.70 (90.79)

31470.51 (85.78)

24317.83 (83.03)

31383.09 (87.50)

B. Fixed cost

1. Depreciation 282.27 (0.51) 315.17 (0.86) 289.33 (0.99) 296.33 (0.83)

2. Rental value (including land revenue)

4333.33 (7.90) 4450.00 (12.13)

4250.00 (14.51)

3800.00 (10.59)

3. Interest on fixed capital 438.48 (0.08) 452.69 (1.23) 431.24 (1.47) 389.15 (1.08)

Sub-total 5054.08 (9.21) 5217.86 (14.22)

4970.57 (16.97)

4485.48 (12.50)

Total cost 54893.78 (100.00)

36688.37 (100.00)

29288.40 (100.00)

35868.57 (100.00)

Note : Figures in the parentheses are percentage to the total cost

The total cost of hybrid tomato seed production was Rs. 54893 per acre, out of this variable cost was Rs. 49839, which was 90.79 per cent of the total cost and interest on working capital was Rs. 3904 (7.11% of the total cost).

Among fixed cost, rental value of land was major chunk of the cost, which was Rs. 4333 (7.90% of the total cost) and other fixed cost items were depreciation Rs. 282 (0.51% of the total cost). Land revenue was not taken separately in the fixed costs as it was included in the rental value of land. The interest on fixed capital was Rs. 438 (0.08% of the total cost).

Brinjal

Among the variable cost, expenditure on human labour was the major cost, which was Rs. 16675 (45.45% of the total cost). The amount spent on fertilizers and micronutrients was Rs. 4442 (12.12% of the total cost) and cost involved in use of plant protection chemicals was Rs. 3105 (8.47% of the total cost), and the cost of FYM was Rs. 2060 (5.62% of the total cost) and irrigation was Rs. 635 (1.73% of the total cost). The amount spent on seeds, registration and inspection charges was Rs. 680 (1.85% of the total cost).

The total cost of hybrid brinjal seed production was Rs. 36688 per acre, out of this variable cost was Rs. 31470, which was 85.78 per cent of the total cost and interest on working capital was Rs. 2465 (6.72% of the total cost).

Among fixed cost, rental value of land was major chunk of the cost, which was Rs. 4450 (12.13% of the total cost) and other fixed cost items were depreciation Rs. 315 (0.86% of the total cost). Land revenue was not taken separately in the fixed costs as it was included in the rental value of land. The interest on fixed capital was Rs. 452 (1.23% of the total cost).

Okra

Among the variable cost, expenditure on human labour was the major cost, which was Rs. 13249 (45.24% of the total cost). The cost involved in use of plant protection chemicals was Rs. 2782 (9.50% of the total cost). The amount spent on fertilizers and micronutrients was Rs. 2465 (8.42% of the total cost) and FYM was Rs. 1904 (6.51% of the total cost) and irrigation was Rs. 409 (1.40% of the total cost). The amount spent on seeds, registration and inspection charges was Rs. 550 (1.88% of the total cost).

The total cost of hybrid okra seed production was Rs. 29288 per acre, out of this variable cost was Rs. 24317, which was 83.03 per cent of the total cost and interest on working capital was Rs. 1905 (6.50% of the total cost).

Among fixed cost, rental value of land was major chunk of the cost, which was Rs. 4250 (14.51% of the total cost) and other fixed cost items were depreciation Rs. 289 (0.99% of the total cost). Land revenue was not taken separately in the fixed costs as it was included in the rental value of land. The interest on fixed capital was Rs. 431 (1.47% of the total cost).

Ridge gourd

Among the variable cost, expenditure on human labour was the major cost, which was Rs. 13386 (37.32% of the total cost). The expenditure on staking sticks, gunny thread was Rs. 6039 (16.84% of the total cost). The amount spent on fertilizers and micronutrients was Rs. 3196 (8.91% of the total cost) and FYM was Rs. 2256 (6.29% of the total cost) and cost involved in use of plant protection chemicals was Rs. 1232 (3.44% of the total cost) and irrigation was Rs. 701 (1.96% of the total cost). The amount spent on seeds, registration and inspection charges was Rs. 666 (1.86% of the total cost).

The total cost of hybrid ridge gourd seed production was Rs. 35868 per acre, out of this variable cost was Rs. 31383, which was 87.50 per cent of the total cost and interest on working capital was Rs. 2458 (6.85% of the total cost).

Among fixed cost, rental value of land was major chunk of the cost, which was Rs. 3800 (10.59% of the total cost) and other fixed cost items were depreciation Rs. 296 (0.83% of the total cost). Land revenue was not taken separately in the fixed costs as it was included in the rental value of land. The interest on fixed capital was Rs. 389 (1.08% of the total cost).

4.4.2 Returns structure in hybrid vegetables seed production

The details of returns structure per acre are presented in Table 4.9 for hybrid tomato, brinjal, okra and ridge gourd seed production.

Tomato

The average gross returns realized per acre was Rs. 151505. Net returns over variable cost from an acre was Rs. 101665 and net returns over total cost was Rs. 96611. The cost incurred per kg was Rs. 632.48. Net returns over total variable cost per kg was accounted to Rs. 1290.17 and net returns over total cost per kg was accounted to Rs. 1226.03. Returns per rupee of expenditure was Rs. 2.76 in hybrid tomato seed production.

Brinjal

The average gross returns realized per acre was Rs. 100303. Net returns over variable cost from an acre was Rs. 68833 and net returns over total cost was Rs. 63615. The cost incurred per kg was Rs. 94.88. Net returns over total variable cost per kg was accounted

Table 4.9: Returns Structure in Hybrid Vegetables Seed Production

(per acre)

Sl. No. Particulars Unit Tomato Brinjal Okra Ridge gourd

1. Price obtained for seeds Rs./kg 1922.66 331.66 140.50 359.33

2. Gross returns Rs. 151505.60 100303.93 41887.26 50496.64

3. Total cost Rs. 54893.78 36688.37 29288.40 35868.57

4. Net returns over variable cost Rs. 101665.9 68833.42 17569.43 19113.55

5. Net returns over total cost Rs. 96611.82 63615.56 12598.86 14628.07

6. Cost of production Rs./kg 632.48 94.88 81.56 87.33

7. Net returns over variable cost Rs./kg 1290.17 207.54 58.93 53.19

8. Net returns over total cost Rs./kg 1226.03 191.80 42.26 41.05

9. Returns per rupee of expenditure Rs. 2.76 2.73 1.43 1.40

to Rs. 207.54 and net returns over total cost per kg was accounted to Rs. 191.80. Returns per rupee of expenditure was Rs. 2.73 in hybrid brinjal seed production.

Okra

The average gross returns realized per acre was Rs. 41887. Net returns over variable cost from an acre was Rs. 17569 and net returns over total cost was Rs. 12598. The cost incurred per kg was Rs. 81.56. Net returns over total variable cost per kg was accounted to Rs. 58.93 and net returns over total cost per kg was accounted to Rs. 42.26. Returns per rupee of expenditure was Rs. 1.43 in hybrid okra seed production.

Ridge gourd

The average gross returns realized per acre was Rs. 50496. Net returns over variable cost from an acre was Rs. 19113 and net returns over total cost was Rs. 14628. The cost incurred per kg was Rs. 87.33. Net returns over total variable cost per kg was accounted to Rs. 53.19 and net returns over total cost per kg was accounted to Rs. 41.05. Returns per rupee of expenditure was Rs. 1.40 in hybrid ridge gourd seed production.

Table 4.10: Production Elasticities in Hybrid Vegetables Seed Production

Coefficients

Explanatory variables Parameters

Tomato Brinjal Okra Ridge gourd

Intercept a -40.2461 -28.3634 -13.7335 -8.0057

Seeds b1 1.1250*

(0.4913)

1.4393** (0.1607)

-0.2466

(0.3630)

0.3604

(0.1998)

Farmyard manure b2 -0.1939

(0.1090)

0.0405

(0.1607)

1.5349**

(0.5291)

0.4770**

(0.1599)

Human labour b3 3.8498**

(1.3236)

3.5514**

(0.4930)

1.4967

(0.8022)

-0.0546

(0.4378)

Bullock and tractor charges b4 -0.0757

(0.0930)

0.1039

(0.0600)

0.2234*

(0.0962)

0.06899

(0.0560)

Fertilizers & micronutrients b5 0.3977*

(0.1574)

-0.0301

(0.0489)

0.2849

(0.1818)

0.3097*

(0.1122)

Plant protection chemicals b6 0.0861

(0.0508)

0.0083

(0.1064)

-0.1862

(0.3303)

-0.0675

(0.0974)

Irrigation b7 0.5771

(0.4717)

-0.3587

(0.2020)

-0.3456*

(0.1470)

2.5255**

(0.2438)

Staking sticks and gunny thread b8 0.3803

(0.2132) - -

-0.4904

(0.2737)

Coefficient of multiple determination (R2) 0.64 0.80 0.61 0.88

F value 4.6862* 13.2015** 5.0015** 20.9852**

Returns to scale (Σbi) 6.1859 4.7547 2.7614 3.1291

Note : Figures in the parentheses indicate standard errors ** - Significant at 1% level * - Significant at 5% level

4.5 RESOURCE USE AND ALLOCATIVE EFFICIENCY IN HYBRID VEGETABLES SEED PRODUCTION

The estimated coefficients of Cobb-Douglas production function are presented in Table 4.10 for hybrid tomato, brinjal, okra and ridge gourd.

Tomato

The output elasticities of human labour (3.84) was significant at one per cent, the output elasticity of seeds (1.12), fertilizers and micronutrients (0.39) were significant at five per cent level. The output elasticities of plant protection chemicals (0.08) and irrigation (0.57) were positive, but found to be non-significant. Staking sticks and gunny thread (0.38) was

also positive but found to be non-significant, while FYM (-0.19) and bullock and tractor charges (-0.07) had non-significant negative elasticities.

The coefficient of multiple determination (R2) for hybrid tomato seed was 0.64. This

indicates that the variables included in the function explained 64 per cent of the variation in the production of hybrid tomato seeds.

The sum of elasticities (Σbi) was 6.1859 which indicated an increasing returns to scale. A one per cent increase in all the inputs used in the production simultaneously would increase output by 6.18 per cent.

Binjal

The output elasticities of seeds (1.43), human labour (3.55) were significant at one per cent level, the output elasticities of bullock and tractor charges (0.10), farmyard manure (0.04) and plant protection chemicals (0.008) were positive but found to be non-significant. The output elasticities of irrigation (-0.35), fertilizer and micronutrients (-0.03) were negative and found to be non-significant.

Table 4.11. MVP to MFC ratios in Hybrid Vegetables Seed Production

MVP:MFC Explanatory

variable Parameters

Tomato Brinjal Okra Ridge gourd

Seeds b1 294.445 210.425 -18.560 26.900

Farmyard manure b2 -9.019 1.959 33.325 10.541

Human labour b3 18.436 21.162 4.665 -0.202

Bullock and tractor charges

b4 -6.056 7.491 13.938 2.481

Fertilizer and micronutrients

b5 12.676 -0.701 4.825 4.850

Plant protection chemicals

b6 7.491 0.269 -2.770 -2.751

Irrigation b7 16.098 -56.165 -35.320 179.225

Staking sticks and gunny thread

b8 9.176 - - -4.038

Note : MVP – Marginal value product MFC – Marginal factor cost

The coefficient of multiple determination (R2) for hybrid brinjal seed was 0.80. This

indicates that the variables included in the function explained 80 per cent of the variation in the production of hybrid brinjal seeds.

The sum of elasticities (Σbi) was 4.7547 which indicated an increasing returns to scale. A one per cent increase in all the inputs used in the production simultaneously would increase output by 4.75 per cent.

Okra

The output elasticities of FYM (1.53) was significant at one per cent level and bullock and tractor charges (0.22) was significant at five per cent level. The output elasticities of human labour (1.49), fertilizers and micronutrients (0.28) were positive and found to be non-significant. The output elasticities of seeds (-0.24) and plant protection chemicals (-0.18) were negative and found to be non-significant. The output elasticity of irrigation (-0.34) was found to be negative and significant at five per cent level.

The coefficient of multiple determination (R2) for hybrid okra seed was 0.61. This

indicates that the variables included in the function explained 61 per cent of the variation in the production of hybrid okra seeds.

The sum of elasticities (Σbi) was 2.7614 which indicated an increasing returns to scale. A one per cent increase in all the inputs used in the production simultaneously would increase output by 2.76 per cent.

Ridge gourd

The output elasticities of FYM (0.47) and irrigation (2.52) were significant at one per cent level. The output elasticities of fertilizer and micronutrients (0.30) was significant at five per cent level. The output elasticities of seed (0.36) and bullock and tractor charges (0.06) were positive but found to be non-significant. The output elasticities of human labour (-0.05), plant protection chemicals (-0.06) and staking sticks, gunny thread cover (-0.49) were negative and found to be non-significant.

The coefficient of multiple determination (R2) for hybrid ridge gourd seed was 0.88.

This indicates that the variables included in the function explained 88 per cent of the variation in the production of hybrid ridge gourd seeds.

The sum of elasticities (Σbi) was 3.1291 which indicated an increasing returns to scale. A one per cent increase in all the inputs used in the production simultaneously would increase output by 3.12 per cent.

Allocative efficiency of hybrid vegetables seed production

The allocative efficiency of resources in the production of selected vegetables seed production has been explained as under (Table 4.11).

Tomato

The ratio of Marginal Value Product (MVP) to Marginal factor cost (MFC) in the case of human labour, fertilizers and micronutrients, seeds, plant protection chemicals, irrigation, staking sticks and gunny thread were 18.43, 12.67, 294.44, 7.49, 16.09 and 9.17, respectively indicating returns of Rs. 18.43, 12.67, 294.44, 7.49, 16.09 and 9.17 for every additional unit of inputs used in that order.

The negative ratio of MVP to MFC for FYM and bullock and tractor charges, indicated that the factors were used at higher level than necessary, resulting in a loss due to excess use.

Brinjal

The ratio of MVP to MFC in the case of seeds, FYM, human labour, bullock and machine charges and plant protection chemicals were 210.42, 1.95, 21.16, 7.4 and 0.2, respectively indicating returns of Rs. 210.42, 1.95, 21.16, 7.4 and 0.2 for every additional unit of input use.

The negative ratio of MVP to MFC for irrigation, fertilizer and micronutrients indicated that the factors were used at higher levels than necessary, resulting in a loss due to excess use.

Table 4.12: Output based Technical Efficiency of Hybrid Vegetable Seed Growers

Tomato Brinjal Okra Ridge gourd

Relative efficiency (%)

Number Percentage Number Percentage Number Percentage Number Percentage

0-50 1 3.33 0 0.00 0 0.00 2 6.66

51-60 1 3.33 0 0.00 6 20.00 4 13.33

61-70 9 30.00 9 30.00 8 26.67 8 26.67

71-80 7 26.67 12 40.00 8 26.67 5 16.67

81-90 9 26.67 6 20.00 6 20.00 6 20.00

91-100 3 10.00 3 10.00 2 6.66 5 16.67

Total 30 100.00 30 100.00 30 100.00 30 100.00

Mean efficiency index 0.7529 0.7673 0.7293 0.7390

Potential returns level (Rs/acre)

194069.20 130210.60 57387.69 68404.77

Okra

The ratio of MVP to MFC for FYM, human labour, bullock and machine charges, fertilizer and micronutrients were 33.32, 4.66, 13.93 and 4.8, respectively indicating returns of Rs. 33.32, 4.66, 13.93 and 4.8 for every additional unit of input use.

The negative ratio of MVP to MFC for seeds, plant protection chemicals and irrigation indicated that the factors were used at higher levels than necessary resulting in a loss due to excess use.

Ridge gourd

The ratio of MVP to MFC for seeds, FYM, bullock and machine charges, fertilizer and micronutrients and irrigation were 26.90, 10.54, 2.48, 4.85 and 179.22, respectively indicating returns of Rs. 26.90, 10.54, 2.48, 4.85 and 179.22 for every additional unit of input use.

The negative ratio of MVP to MFC for human labour, plant protection chemicals and staking sticks and gunny thread indicated that the factors were used at higher levels than necessary resulting in a loss due to excess use.

4.6 TECHNICAL EFFICIENCY IN HYBRID VEGETABLES SEED PRODUCTION

Technical efficiency of hybrid vegetable seed production was studied using the frontier production function approach. The coefficients obtained from the production function analysis to study resource productivity were used to establish the frontier production functions by the method of Corrected Ordinary Least Squares (COLS). The Timmer measure of technical efficiency, which is an output based measure of efficiency was computed to know the efficiency in production. The frontier function provided the information base for the construction of a technical efficiency index for the individual seed growers. The technical efficiency index as indicated by Timmer was measured as the ratio of actual output to the potential output. The results of this analysis revealed various levels of efficiency attained by individual farmers through monetary output. The distribution of hybrid tomato, brinjal, okra and ridge gourd seed growers according to their efficiency indices expressed in percentage was developed and are presented in Table 4.12.

Tomato

It was evident from the Table 4.12 that 3.33 per cent each of the hybrid tomato seed growers had attained upto 50.00 per cent and 51 to 60 per cent efficiency levels, respectively. About 30.00 per cent of seed growers were operating in the efficiency range of 61.00 to 70.00 per cent. About 26.67 per cent of the seed growers were operating in the efficiency range between 71.00 to 80.00 per cent as well as 81.00 to 90.00 per cent. Hardly 10.00 per cent were found operating at more than 91.00 per cent efficiency level. The least efficient farm was observed to be atleast 44.95 per cent.

It was also observed that on an average the mean efficiency index of hybrid tomato seed growers was (0.75). However, when the mean potential output level attainable by these units was computed by dividing the mean output level with their respective mean efficiency indices, it was apparent that the mean potential returns attainable by tomato seed growers was Rs. 145551. The corresponding values expressed per acre worked out to be Rs. 194069.

Brinjal

It was evident from the Table 4.12 that 30.00 per cent of the hybrid brinjal seed growers had attained less than 70.00 per cent efficiency, 40.00 per cent of the seed growers operating in the efficiency range of 71.00 to 80.00 per cent, 20.00 per cent of seed growers were operating in the efficiency range of 81.00 to 90.00 per cent. Hardly 10.00 per cent operating at more than 91.00 per cent efficiency level. The least efficient farm was atleast 63.55 per cent.

It was also observed that on an average the mean efficiency index of hybrid brinjal seed growers was (0.76). However, when the mean potential output level attainable by these units was computed by dividing the mean output level with their respective mean efficiency indices, it was apparent that the mean potential returns attainable by brinjal seed growers was Rs. 99871. The corresponding value expressed per acre worked out to be Rs. 130210.

Okra

It was evident from the Table 4.12 that 20.00 per cent each of the hybrid okra seed growers had attained less than 60.00 per cent efficiency as well as 81.00 to 90.00 per cent. About 26.67 per cent of the seed growers operating in the efficiency range of 61.00 to 70.00 per cent as well as 71.00 to 80.00 per cent. Hardly 6.67 per cent operating at more than 91.00 per cent efficiency level. The least efficient farm was atleast 54.74 per cent.

It was also observed that on an average the mean efficiency index of hybrid okra seed growers was (0.72). However, when the mean potential output level attainable by these units was computed by dividing the mean output level with their respective mean efficiency indices, it was apparent that the mean potential returns attainable by tomato seed growers was Rs. 41835. The corresponding values expressed per acre worked out to be Rs. 57387.

Ridge gourd

It was evident from the Table 4.12 that 6.67 per cent of the hybrid ridge gourd seed growers had attained upto 50 per cent efficiency, 13.33 per cent of the seed growers operating in the efficiency range of 51.00 to 60.00 per cent, 26.67 per cent of seed growers were operating in the efficiency range of 61.00 to 70.00 per cent. About 16.67 per cent each of the seed growers were operating in the efficiency range between 71.00 to 80.00 per cent as well as 91.00 to 100.00 per cent. Another 20.00 per cent of the seed growers were operating in the efficiency range between 81.00 to 90.00 per cent. The least efficient farm was atleast 47.82 per cent.

It was also observed that on an average the mean efficiency index of hybrid ridge gourd seed growers was (0.73). However, when the mean potential output level attainable by these units was computed by dividing the mean output level with their respective mean efficiency indices, it was apparent that the mean potential returns attainable by tomato seed growers was Rs. 50551. The corresponding value expressed per acre worked out to be Rs. 68404.

4.7 TERMS OF CONTRACT AND MODUS OPERANDI

Contractual arrangements between seed growers and the company are described as follows.

4.7.1 Agreement (terms of contract) for contract farming of hybrid vegetable seed production

Different companies have their own Memorandum of Understanding (MoU) and hence the MoU of the companies are given in Appendix Ia and Appendix Ib for Mahyco, Sungro and Ankur seed companies, respectively.

Company and the contract farmer came into Memorandum of Understanding on the following aspects.

1. First party (Company) is the one who buy F1 hybrid seeds from the second party.

2. Second party (Farmer) is the one who undertakes cultivation of hybrid vegetable seed production.

A. Memorandum of Understanding (MoU) of Mahyco and Sungro seed companies private limited

AGREEMENT FOR HYBRID VEGETABLE SEED PRODUCTION

NOW THIS AGREEMENT FOR SEED PRODUCTION WITNESSETH and it is hereby agreed by and between the parties hereto as follows.

1. The second party shall undertake Hybrid/variety_________________ seed production for the first party, on an area of _____________ acres land reserved for the purpose of Hybrid/Variety Seed production and no other during the ____________season.

2. The land of area reserved for seed production shall have an isolation of at least __________meters on all sides from adjoining fields of any crop other than the Hybrid/variety grown for the purpose of seed production under this agreement.

3. The first party shall charge the second party a sum of Rs. _____________ (Rupees___________________________________________only) per acre of land committed to be undertaken for cultivation as a registration fee. Registration fee which will inter alia include the cost of expenses incurred by First Party in visiting the field to ensure the safety and surety of the crop, to exercise check on the seeds production in terms of quality and safety of the seeds and the output, documentation and administrative expenses, testing charges, if an paid to any external agency.

4. The First Party shall procure processed, cleaned and dry seed at the level of 08% moisture at the rate of Rs. _____________ (Rupees_________________ only) per _____________________subject to the satisfactory genetic purity and germination test report issued by the Quality Control Department of the First Party and subject to any other tests which would be necessary for.

5. The First Party shall pay to the Second Party first payment against the delivery of unprocessed seed (if applicable) on the basis of prevailing commercial market rate of the same crop or at rates as fixed by the First Party.

6. The First Party shall purchase seed produced if the same meets the minimum germination standard of _________% in test conducted by the Quality Control Department of the First Party.

7. The First Party shall purchase seed produced if the same meets the minimum genetic purity standard of _____________% in test conducted by the Quality Control Department of the First Party.

8. The First party shall make the final payment to the Second party within _________days from the date of receipt of seed at the processing plant on receiving a satisfactory report of genetic purity and germination from the Quality Department of the First Party.

9. The foundation seed used for sowing will be male fertile/male sterile seed parent and a pollinator parent. The Second Party shall in no case use any seed other than the that supplied by the First party for sowing purpose in the area reserved for seed production or in any other plot within a distance of ___________meters from the area reserved for seed production.

10. The Foundation Seed issued by the First Party, shall be exclusively used for Seed Production in the same season for which it has been issued as per terms and conditions of this agreement only, and shall not be used for any other purpose, whatsoever by the Second party, not shall the Second Party transfer, sell or part with possession of the same in any manner whatsoever to any third party whatsoever. The foundation Seed issued to the Second Party is the sole intellectual property/proprietary material of the First party and the first party has full ownership right over it. Nothing in this agreement shall be constructed as being a sale of Foundation Seed by the first party to the second party.

11. The second party shall make his/her own arrangement for bagging and transporting (at their own risk and cost) the raw seed from his/her farm(s) to the processing plant designated by the first party, or pay for the cost of gunny bags and transportation charges as fixed by the first party, if the same is provided by the first party.

12. The Harvesting of Hybrid/Variety seed shall be done by the second party with his own labour, land, equipment and any other consumables. The first party reserves the right to reject the whole producer or any part thereof for breach of any of the condition of the

agreement or if the producer does not meet the quality parameters set and communicated to the second party in advance and the decision of the first party shall be final, conclusive and binding on the second party.

13. The second party shall meet the entire cost including that of consumables, such as land preparation, irrigation, sowing, interculture, fertilizer and manure, plant protection measures, rouging, harvesting, emasculation, pollination, picking and all other farm operations connected with the raising of seed crop.

14. The second party shall do rouging of all off-type plant (plants other than the normal type) from total male and female plant population of the seed production area.

15. The second party shall start operations like emasculation/pollination after thorough check and removal of off type plants from female and male population.

16. The second party shall uproot and destroy the plants of pollinators parent from the field immediately after the completion of pollination work. The second party shall not insist on keeping pollinator parent in the field for the purpose of taking commercial yield from the said parent line.

17. FOR VEGETABLE CROP : The picking of vegetable seeds shall be done by the second party and he shall store dry clean seed in a secured place. The second party shall bring total vegetable seeds produced in the area to the designated plant of the first party properly packed in gunny bags.

18. The second party may bring seed in one or two installments/lots. The first party shall have right to fix the maximum number of such installments/lots in which seed will be accepted from the second party. The second party can not sell, keep, retain or use for planting the seeds produced from above said production, nor part with possession thereof except the first party.

19. During the entire operation of production by the second party, the first party shall have all the rights to enter into the field and oversee the activities being carried out by the second party to satisfy itself with the required quality parameters and output levels fixed by the first party.

20. On receipt of seed at processing plant the first party shall have sole and absolute discretion as regards treatment with chemicals and cleaning of seed either manually or mechanically through appropriate types of grading equipment or by both. The screen size for grading the seed will be fixed by the first party and second party shall have no objection to such decision of the first party and agrees to this condition express. The second party shall not raise any objection as regards to seed quantity rejected as remnant during cleaning and grading procedure adopted by the first party.

21. The first party will deduct any/all the charges due to second party under this agreement from the first/final payment to be made to second party.

22. The First party shall be bound to purchase only seeds which comply with the following specifications :

a. The seed production operations, isolation requirement, rouging and all other operations shall confirm to the standards laid down by the first party for this seed production.

b. The seed shall not contain any insect, pest and deleterious matter or more than one percent broken seeds.

c. The first party reserves the right to reject any seed lot on the ground of bad appearance, infestation with fungus, damage and partial germination due to rains, weevil infestation. The decision taken in this regard by the Area Production Officer of the first party shall be binding and final.

23. The second party shall be liable to sell the rejected seed to the first party at the prevailing market price. However, the first party shall have the option/discretion to purchase rejected seed produce at prevailing market price from the second party.

24. In case the first party does not exercise the said option to buy such seed, male parent, remnant at prevailing market price, then the second party may deal with the dispose of the same after obtaining necessary. Fit for Consumption Certificate from the appropriate Government Authority, while returning such rejected seeds remnant to the second party. First party shall be free to use any such measure/treatment for deforming seeds physically and/or physiologically, to make it unuseable as seed in the fields.

25. In case the second party fails to supply seed produced by him as per the above conditions of this agreement, the first party shall be entitled to take legal action, criminal as well as civil at the risk and costs of the second party.

26. The first party has made known to the second party all the characteristics and the pattern of behaviour in respect of the seed herein contracted for production. However, in the event of failure of the crop despite the aforesaid disclosures by the first party and for the reasons beyond first party’s control, the first party stand absolved of any liability for such failure of the crop.

27. In the event of any dispute of difference arising under or in connection with this agreement, the same shall be referred to the sole arbitration of the executive Director of the first party. It will not be open to the parties hereto to object the ground that the arbitrator is the Executive Director of the first party, that he had to deal with matter to which the contract relates or that in the course of his duties as such Executive Director has expressed the views on all or an of the matter in dispute or difference. It is a term of contract that in the event of the Executive Director vacating his office by resignation or otherwise, it shall be lawful for his successor in office to proceed with the reference.

28. Term Nos…………..of this agreement shall not be applicable and binding on the First and Second Party.

IN WITNESS WHEREOF the parties hereto have respective set their hands and seals on the day and date first hereinabove mentioned in the presence of witnesses.

B. Memorandum of understanding (MoU) of Ankur Seeds Pvt. Ltd.

AGREEMENT FOR VEGETABLE SEED PRODUCTION

1. The growers shall set apart for seed production an area of ____________acres of levelled, fertile and well drained land with facilities for clean healthy seed production on his estate or in the estate take by him on lease at_________________________________which shall hereinafter be called the “Reserved Area” for kharif 2004__________________.

2. The reserved area shall be so located that the seed crop will confirm to the isolation requirements prescribed in the Indian Seed Certification Standards, March 1971 as amended from, time to time, falling which crop shall be liable rejected in full or part as may be necessary.

The reserved area shall be isolated and shall be at a distance of ___________ meters on all sides from.

a. Any crop ___________whose variety or code designation is other than the one in Reserved area.

b. Any crop of _________which the same variety or code designation which was rejected or due to poor rouging during flowering and the flowering stage of which coincided with the flowering stage of the crop in the reserved area.

3. The foundation seed shall be supplied by the Producer Company against full advance payment. The grower shall not any event or case use other foundation seeds except than the seed supplied by the Producer Company for sowing in the reserved area or any other party within the distance of ____________meters from the reserved area.

4. The grower shall meet the entire cost of land preparation, sowing, interculture, fertilizers and manures, plant protection measures, rouging, harvesting and all other farm operations connected with the raising of seed crops.

5. The grower agrees to plant the seed production before ____________________ The Company reserves the right to accept or reject the seed produced if it is not planted before the agreed date.

6. The grower shall render all the facilities of the staff of company for towards field inspection at any time of the crop. Any seed crop not confirming to the field standards or found to be sub-standards laid down by the Central Seed committee during the field inspection will be liable to be rejected at the field stage and or at any other stage.

7. The seed grower shall arrange to transport the seeds at his own cost from the field to processing plant assigned by the Company. The cost of processing (cleaning, grading, treating, packing or any other cost in this process) shall be borne by the Company.

8. The grower shall not transfer, sale or otherwise dispose-off the seed in any other manner to whomsoever. He shall also retain any quantity of seed with him. In the event of the Grower Committing, a breach of this condition the producer Company shall be entitled to damage and be indemnified for the same.

9. The company shall also be entitled to reject the seed of grown by the Grower, other than from the reserved area is mixed. The Company shall return the waste material of all the crops (remainants) to the same.

10. The company shall procure the processed seed at the following prices subject to satisfactory physical and germination reports from our seed testing laboratory the kinds multiplied by the unit of packing for the purpose of payment

Kind and variety_________ Rs. _________Rate per kg processed seeds

11. The Company reserves the right to reject the seed if it does not confirm to standards of the grow-out-result test conducted by the company even though the lot has conformed the Standards in field inspection.

12. The Company undertakes to make the payment to the grower only after sixty days of processing and field test, whichever is later, provided that the laboratory and field test reports relating to germination, physical purity etc. are found to be satisfactory.

The Company reserves the right to reject any seed or on the ground of discolour, rain damage, insect damage or any other way affecting the physical appearance irrespective of the fact whether it is confirming to standards referred to in section 8(e) of Seed Act, 1966 or not.

13. All the seed shall be packed for the sale below 10% moisture. Loss in weight on drying or in transit shall be borne by the grower.

14. The grower shall compensate for the loss in weight due to moisture evaporation after treatment as per the practice prevailing in the Seed Industry.

15. The grower agrees and it is understood that the seed growing process is dependent upon, various risk factors such as satisfactory monsoon, proper fertilization and care of the crop, scientific method of sowing and raising, temperature and agro-climatic condition it is agree that the Company shall in no event be held responsible for failure of the seed crop due to whatsoever reasons.

16. In case of no production or less production the company shall not be held responsible and shall not be liable to pay any compensation to the grower.

17. The seed shall be processed on the standard screens as prescribed from time to time, by the Company’s staff.

18. Notwithstanding the place where this agreement is executed or is to be implemented it is mutually agreed by the parties that this contract shall be deemed to have been

entered in to by the parties concerned at Nagpur and court of law at Nagpur alone shall have Jurisdiction to Adjudicate thereon.

19. The grower shall take back at his expense from the processing plant the remainants, waste gunnies, discards after cleaning and seed lots rejected on the basis of test reports within 5 days from the date of intimation to the grower. If the grower fails to take the delivery, rent at the rate of ________ paise per quintal on reminants rejected materials, shall be charged after the expiry of the prescribed period. The company reserves the right to dispose off the produce in the manner, fit-after or on the expiry of the prescribed period and recover from the Grower’s Account.

20. In the event of any question, dispute or difference arising under on in connection with this agreement, its implementation or satisfaction, the same shall be referred to the sole arbitrator, who may be appointed by the Managing Director, Ankur Seeds Limited, Nagpur. It shall be competent for them to act as sole arbitrator himself. The parties to this agreement shall have no objection to nominate any other person as the arbitrator. The venue and cost of arbitrator shall be at the discretion of the arbitrator. It is agreed by the parties that the arbitrator may in the interest of Justice and proper determination of the dispute extend the time for making the award by an order in writing conveyed to the parties.

IN WITNESS THEREOF, the parties have set their hands on the day and year first above mentioned.

4.7.2 Modus Operandi in hybrid vegetables seed production

The company had selected the contract farmers through facilitator based on the locality of the farm, size of the holdings, field history, economic conditions of the farmers, source of irrigation, willingness to cultivate and his level of commitment to the contract. The contractual arrangement between company and farmer is presented in Table 4.13 for hybrid tomato, brinjal, okra and ridge gourd seed production.

Tomato

In hybrid tomato seed production, it was observed that 66.67 per cent of the farmers were introduced to the crop by the company staff, 30.00 per cent by fellow farmers, 3.33 per cent farmers took up the crop cultivation due to the advise of friends and relatives. The farmer after his willingness to undertake contract farming has to sign the agreement along with witness. The agreement will be with firm until the termination of contract. Invariably, the agreement between cultivators and the company was written with all the farmers. The area to be cultivated under farmer was decided by the firm itself. All the farmers were allotted 20 guntas area for cultivation, which was considered as one plot by the company. The number of plots allotted for cultivation were based on farmers capacity and previous years crop experience. The firm supplies seeds per each seed plot. The charges towards seeds were deducted at the time of payment by the company. No other inputs like FYM, chemical fertilizers were extended by the firm. Only technical guidance regarding the nursery preparation/sowing, weeding, rouging, emasculation and pollination, harvesting, extraction of seed, drying and grading was given in the form of field visits by the technical staff of the firm. It was observed that 10 per cent of the farmers field were visited daily by the field officer, while 40 per cent of the farmers field were visited once in two days by field officers and 50 per cent of the farms were visited twice in a week.

The farmer transport the seeds extracted from the farm to the firm. On an average hybrid tomato seed growers paid at single installment. In hybrid tomato seed production contract, majority of farmer’s accounts 66.67 per cent were settled in a span of 90 to 105 days. About 26.67 per cent of the farmer’s accounts were settled in 105 to 120 days, 3.33 per cent of the farmer’s accounts were settled in 120 to 135 days each and 3.33 per cent by 130 to 150 days. However, the settling of the account was cleared within 150 days after the final harvest by the contracting firms.

In respect of other crops, the major payments were settled between 105 to 135 days. Interestingly in case of ridge gourd, the payments were settled after 150 days for 3.33 per

Table 4.13: Modus Operandi Prevailing in Contract Farming

Percentage Sl. No.

Particulars Tomato Brinjal Okra

Ridge gourd

1. Total sample (number) 30 30 30 30

2. Introduced to the crop by

a. Company staff 66.67 73.33 63.33 83.33

b. Fellow farmers 30.00 16.67 26.67 10.00

c. Friends and relatives 3.33 10.00 10.00 6.67

3. Type of agreement

a. Written 100.00 100.00 100.00 100.00

b. Oral 0.00 0.00 0.00 0.00

4. Frequency of field visits by field officers of the company

a. Daily 10.00 3.33 6.66 10.00

b. Once in 2 days 40.00 73.33 66.67 63.33

c. Twice in a week 50.00 23.34 26.67 26.67

5. Number of times of installment payment made to the farmers (average)

1.00 1.00 1.00 1.00

6. Days of settlement from the date of final harvest

a. 90-105 days 66.67 26.67 43.33 20.00

b. 105-120 days 26.67 40.00 43.34 33.33

c. 120-135 days 3.33 30.00 10.00 43.34

d. 135-150 days 3.33 3.33 3.33 0.00

e. After 150 days 0.00 0.00 0.00 3.33

cent of the farmers. Except the variations in field visits rest of the Modus operandi remained the same for brinjal, okra and ridge gourd crops.

4.8 PROBLEMS FACED BY THE CONTRACT SEED GROWERS AND CONTRACT FIRMS

4.8.1 Problems faced by the contract seed growers

In the present study, opinion survey was conducted regarding the production, financial and contractual constraints of seed growers and the results are presented in Table 4.14.

Table 4.14: Problems Faced by Seed Growers in Hybrid Vegetable Seed Production

Percentage Sl. No.

Particulars Tomato Brinjal Okra

Ridge gourd

I Production problems

1 Non-availability of foundation seed on time

26.67 3.33 13.33 20.00

2 Admixture in foundation seeds 13.33 6.67 3.33 13.33

3 Non-availability of trained labour 90.00 46.67 30.00 46.67

4 High wage rate 80.00 43.33 83.33 50.00

5 Indiscriminate use of fertilizers 53.33 60.00 53.33 36.67

6 Improper identification of pests and diseases

36.67 36.67 53.33 10.00

7 Inability to take effective control measures due to indiscriminate use of plant protection chemicals

26.67 33.33 56.67 16.67

8 Inadequacy of irrigation water 60.00 26.67 60.00 36.67

9 Isolation trouble 33.33 33.33 36.67 16.67

10 Difficulties in technical operations 30.00 43.33 60.00 13.33

11 Climatic factors 86.67 83.33 90.00 86.67

II Financial problems

1 Adequate and timely capital for purchase of inputs

80.00 70.00 60.00 53.33

2 Non-availability of crop loan 76.67 76.67 66.67 40.00

3 Non prevalence of crop insurance 50.00 46.67 53.33 40.00

4 Higher investment requirement 73.33 80.00 40.00 30.00

III Contractual problems

1 Poor technical assistance 6.67 13.33 3.33 13.33

2 Irregular payment 0.00 13.33 6.67 10.00

3 Manipulations of norms by firm 10.00 16.67 6.67 30.00

4 Higher rejection rate 43.33 43.33 76.67 30.00

5 Unawareness of potentiality of crop 60.00 33.33 16.67 33.33

6 Low contract price 36.67 13.33 33.33 13.33

7 Breach of contract 13.33 33.33 33.33 26.67

The opinions of the seed growers on the problem of growing hybrid tomato seed were gathered right from the procurement of inputs in seed production process till the crop was harvested. It was observed that nearly 26.67 per cent of the seed growers of hybrid tomato complained about non-availability of foundation seeds on-time. Around 13.33 per cent of the seed growers observed admixture in foundation seeds. It was reported that nearly 90 per cent of seed growers experienced the problem of non-availability of trained labour in crossing operations. Nearly 80 per cent of seed growers were expressed that wage rate was high in

the study area. It was reported that 53.33 per cent of the seed growers were unable to identify the nature and damage caused by pests and diseases. The resulted in inefficient control measures taken in controlling pests and diseases due to indiscriminate use of plant protection chemicals by nearly 26.67 per cent of the seed growers. Nearly 60 per cent faced the problem of inadequacy of irrigation water and 33.33 per cent of seed growers faced the problem of isolation trouble. Nearly 30 per cent of the seed growers complained on technical difficulties on operations such as rouging, emasculation and pollination and nearly 86.67 per cent of seed growers climatic factors is the main constraint in production aspects of hybrid tomato seed.

So for as the financial problems were concerned, 80 per cent of seed growers experienced problem with the adequate and timely availability of capital for purchase of inputs. Around 76.67 per cent of seed growers felt the problem of availability of crop loan. Nearly 50 per cent of seed growers suggested for the coverage of crop insurance facility for seed production and around 73.33 per cent of the seed growers felt the problem of higher investment in seed production.

The major contractual problems faced by the tomato seed grower with contract firm were lack of technical assistance (6.67%), manipulation of norms by firm (10%), high rejection rate by firm (43.33%), unawareness of potentiality of crop (60%), low contract price (36.67%) and breach of contract (13.33%), respectively.

Brinjal

In the case of hybrid brinjal seed production, it was observed that only few (3.33%) of seed growers complained about non-availability of seed on-time, 6.67 per cent of the seed growers observed admixture in foundation seeds. It was reported that nearly 46.67 per cent of the seed growers experienced the problem of non-availability of trained labour in crossing operations. Nearly 43.33 per cent of seed growers expressed the wage rate was high in the study area. It was reported 60 per cent of the seed growers complained about indiscriminate use of fertilizers, 36.67 per cent were unable to identify the nature and damage caused by pests and diseases, 33.33 per cent seed growers expressed inefficient control measures taken in controlling pests and diseases, nearly 26.67 per cent faced the problem of adequacy of irrigation water and 33.33 per cent of seed growers faced the problem of isolation trouble. About 43.33 per cent of the seed growers expressed difficulties faced in technical operations and majority of seed growers, 83.33 per cent opinioned climatic factors was the major problem. The financial problems faced by the hybrid brinjal seed growers were adequate and timely capital for purchase of inputs (70%), non-availability of crop loan (76.67%), around 46.67 per cent seed growers suggested for the coverage of crop insurance and around 80 per cent of the seed growers felt the problems in higher investment in seed production.

Around 13.33 per cent of farmers faced the problem of poor technical assistance, irregular payment and low contract price, 16.67 per cent were faced with the problem of manipulation of norms by the firm. Whereas, 33.33 per cent of the farmers expressed the problems relating to unawareness of potentiality of crop and breach of contract. Higher rejection rate as a problem was experienced by 43.33 per cent of the farmers.

Okra

In the case of hybrid okra seed production, it was observed that only few (13.33%) of seed growers complained about non-availability of seed in-time, 3.33 per cent of the seed growers observed admixture in foundation seeds. It was reported that nearly 30 per cent of the seed growers experienced the problem of non-availability of trained labour in crossing operations. Nearly 83.33 per cent of seed growers expressed the wage rate was high in the study area. It was reported 53.33 per cent of the seed growers that they were unable to identify the nature and damage caused by pests and diseases and inefficient control measures taken in controlling pests and diseases. Nearly 60 per cent faced the problem of inadequacy of irrigation water as well as difficulty in technical operations and 36.67 per cent of seed growers faced the problem of isolation trouble. The majority of seed growers (90%) opined climatic factor was the major problem. The financial problems faced by the hybrid okra seed growers were adequate and timely capital for purchase of input (60%), non-availability of crop loan (66.67%), around 53.33 per cent seed growers suggested for the coverage of crop

insurance and around 40 per cent of the seed growers felt the problems in higher investment in seed production.

The contractual problems faced by hybrid okra seed grower with contract firm were lack of technical assistance (3.33%), irregular payment and manipulation of norms by firm (6.67%), high rejection rate by firm (76.67%), unawareness of potentiality of crop (16.67%), low contract price and breach of contract (33.33%), respectively.

Ridge gourd

In the case of hybrid ridge gourd seed production, it was observed that only few (20%) of seed growers complained about non-availability of seed on-time, 13.33 per cent of the seed growers observed admixture in foundation seeds and difficulties in technical operations. It was reported that nearly 46.67 per cent of the seed growers experienced the problem of non-availability of trained labour in crossing operations. Nearly 50 per cent of seed growers expressed the wage rate was high in the study area. It was reported that 10 per cent of the seed growers were unable to identify the nature and damage caused by pests and diseases, 16.67 per cent seed growers expressed inefficient control measures taken in controlling pests and diseases as well as isolation trouble. Nearly 36.67 per cent faced the problem of inadequacy of irrigation water. Around 86.67 per cent opined climatic factors was the major problem. The financial problems faced by the hybrid okra seed growers were adequate and timely capital for purchase of input (53.33%), non-availability of crop loan and coverage of crop insurance (40%). Around 30 per cent of the seed growers felt the problem of higher investment in seed production.

The contractual problems faced by hybrid ridge gourd seed grower with contract firm were lack of technical assistance and low contract price (13.33%), irregular payment (10%), manipulation of norms by firm and high rejection rate by firm (30%), unawareness of potentiality of crop (33.33%) and breach of contract (26.67%), respectively.

4.8.2 Problems faced by the contract firms

The opinion survey conducted regarding problems of contract firms and results are presented in Table 4.15.

It was reported that 33.33 per cent of the firms expressed problems in fixing contract price, mixing of low grade with high grade by farmers, holding up of vehicles, seeds cross purchase and breach of contract. And 66.66 per cent of the firms expressed variation in climatic factors was the major problem in hybrid vegetable seed production.

Table 4.15: Problems Faced by the Contract Firms

(N=3)

Sl No. Particulars Percentage

1 Fixing of contract prices 33.33

2 Mixing of low grade with high grades by farmers 33.33

3 Holding up of vehicles 33.33

4 Land constraint 0.00

5 Seeds cross purchase 33.33

6 Shortage of competent and elegant farmers 0.00

7 Inability of farmers to undertake farm operations 0.00

8 Government regulations 0.00

9 Climatic factors 66.66

10 Breach of contract 33.33

V. DISCUSSION

The results of the study are discussed in this chapter under the following headings.

5.1 Socio-economic characteristics of the farmers

5.2 Pattern of employment in the cultivation of hybrid vegetables seed production

5.3 Input use pattern in hybrid vegetables seed production

5.4 Cost and returns in hybrid vegetables seed production

5.5 Resource use and allocative efficiency in hybrid vegetables seed production

5.6 Technical efficiency in hybrid vegetables seed production

5.7 Terms of contracts and modus operandi

5.8 Problems faced by the contract seed growers and the contract firms

5.1 SOCIO-ECONOMIC CHARACTERISTICS OF THE FARMERS

The socio-economic characteristics of the respondents include general features, details of land holdings and cropping pattern of the sample farmers.

5.1.1 General features of contract farmers

The results revealed that almost all the contract farmers (100.00%) were educated. As most of the farmers were educated they were able to find the source where the required information was available. It was also interesting to note that most of the farmers were young aged indicating better awareness regarding modern farm concepts, when youth are included in farm activities. Young age coupled with better education has mostly made the farmers to increase their farm income by adopting hybrid seed production. Hence, they might have gone for a contract farming by joining hands with the several private seed companies involved in cultivation.

5.1.2 Pattern of land holdings of the sample farmers

The figures presented in Table 4.1 showed that the percentage of area under rainfed was more compared to irrigated land, hybrid seed production was taken up in irrigated land.

On an average area under contract farming in hybrid vegetable seed production constituted around 5.34 per cent, purely under irrigated conditions. However, the private seed companies given permission to few number of farmers of 20 guntas plot to cultivate hybrid vegetable seed production. This practice may be mainly to protect quality of the seeds.

5.1.3 Cropping pattern of the sample farmers

The area devoted to different crops by the farmers for the agriculture year are presented in Table 4.2.

About 29.74 per cent of the gross cropped area was occupied by maize crop alone in kharif season. And vegetable occupied only 4.65 per cent of the total gross cropped area.

About 10.04 per cent of the gross cropped area was occupied by jowar crop alone in rabi season, which was staple food crop in the study area. It was found from the table that farmers were found to diversify their cropping pattern mainly because of minimizing the risk of crop failures, since major proportion of their operational holdings was under dryland conditions. As they have taken up labour intensive and highly risk oriented seed production activity on their farm, they were not in a position to include other crop enterprises, which require higher investment. As a result, the cropping pattern was mainly dominated by cereals, followed by commercial crops like cotton and sunflower.

5.2 PATTERN OF EMPLOYMENT IN HYBRID VEGETABLES SEED PRODUCTION

Tomato

It was found from the Table 4.3 that the total labour employed in hybrid tomato seed production was about 580.20 mandays of human labour. Out of which, the proportion of hired labour was more (505.05 mandays) as compared to family labour (75.15 mandays). Among the various activities, higher number of mandays of labour was used for pollen collection and crossing, followed by harvesting, seed extraction, irrigation and weeding. More or less similar trend was observed in respect to family and hired labour employment. From the foregoing discussion, it is clear that tomato seed production was a highly labour intensive activity and among the activities, pollen collection and crossing, harvesting, seed extraction and weeding were found to be most important. The activity pollen collection and crossing requires skilled as well as training, so that higher efficiency would be achieved in labour utilization. The wet process of seed extraction requires more labour in hybrid tomato seed production.

Brinjal

It was found from the Table 4.4 that the total labour employed in hybrid brinjal seed production was about 333.50 mandays of human labour. Out of which, the proportion of hired labour was more (272.76 mandays) as compared to family labour (60.74 mandays). Among the various activities higher number of mandays of labour was used for pollen collection and crossing followed by seed extraction, irrigation, harvesting and weeding. More or less similar trend was observed in resect of family and hired labour employment. From the foregoing discussion it is clear that brinjal seed production is a labour intensive activity and among the activities pollen collection and crossing, seed extraction and harvesting were found to be most important. The activity pollen collection and crossing required skilled and trained labour to achieve higher labour efficiency. The wet process of seed extraction requires more labour in brinjal seed extraction process.

Okra

The figures presented in Table 4.5 showed that the total labour employed in hybrid okra seed production was about 264.98 mandays of human labour. The proportion of hired labour was more (233.48 mandays) as compared to family labour (31.5 mandays). Among the various activities, higher mandays of labour was used for pollen collection and crossing followed by weeding, seed extraction, FYM transportation and application. The activity of pollen collection and crossing requires skilled and technical labour for achieving better labour efficiency. The dry process of seed extraction was practiced in okra, which consumes more labour.

Ridge gourd

It was found from the Table 4.6 that the total labour employed in hybrid ridge gourd seed production was about 267.73 mandays of human labour. The proportion of hired labour was more (221.66 mandays) as compared to family labour (46.07 mandays). Among the activities, higher number of mandays of labour was used for pollen collection and crossing followed by weeding, irrigation, FYM application and seed extraction. From the foregoing discussion, it was clear that hybrid ridge gourd seed production is a labour intensive activity and among the activities pollen collection and crossing requires skilled labour. Dry process of seed extraction was practiced in ridge gourd seed production which consumes more labour.

5.3 INPUT USE PATTERN IN HYBRID VEGETABLES SEED PRODUCTION

Tomato

Among the physical inputs used in hybrid tomato seed production (Table 4.7) human labour formed a major component. As crossing (emasculation and pollination) operation was

specialized operation which involve greater care and patience, more of human labour were employed. The total mandays required for the hybrid tomato seed production was 580.20.

In case of bullock labour use, the seed growers used 4.8 pairdays of bullock labour, 3.33 machine hours, same as of package of practice in the production of hybrid tomato seeds. It was found that the seed growers used the recommended quantity of foundation seeds which were supplied by the companies.

It was observed that the seed growers applied 13.46 tonnes of FYM, marginally less than that of recommended dose of 15.2 tonnes. The seed growers used less quantity of nitrogen (63.79 kg), phosphorus (48.53 kg) and potassium (45.22 kg) as against the recommended dose of 100:100:100 kg of N:P:K. The seed growers used 21 kg of micronutrients per acre and 6.4 litres of PPC were extensively used to control pests and diseases per acre.

Further, the seed growers using of staking sticks and gunny thread varied depending upon the intensity of flowering and plant population.

It was observed from the discussion that there is a scope to increase the use of fertilizers to enhance the yield of crop. This would result in higher income to the seed growers.

Brinjal

Among the physical inputs used in hybrid brinjal seed production human labour formed a major component. As crossing (emasculation and pollination) operation was specialized operation which involve greater care and patience, more of human labour were employed. The total mandays required for the hybrid brinjal seed production was 333.50.

In the case of bullock labour use, the seed growers used 1.53 pairdays of bullock labour, 3.67 machine hours, same as of package of practice in the production of hybrid brinjal seeds. It was found that the seed growers used the recommended quantity of foundation seeds which were supplied by the companies.

It was observed that the seed growers applied 10.30 tonnes of FYM, almost same as that of recommended dose of 10.00 tonnes. The seed growers applied nitrogen (51.77 kg), phosphorus (45.61 kg) and potassium (24.79 kg) same as that of the recommended dose of 50:40:25 kg of N:P:K. The seed growers used 25.67 kg of micronutrients per acre and 12.42 litres of PPC were extensively used to control pests and diseases per acre.

It is observed from the discussion that the farmers are using the inputs almost on par with the recommendations and reached the saturation point, where in a further increase in the inputs may adversely affect their productivity and profitability.

Okra

Among the physical inputs used in hybrid okra seed production human labour formed a major component. As crossing (emasculation and pollination) operation was specialized operation which involve greater care and patience, more of women labour were employed. The total mandays required for the hybrid okra seed production was 264.98.

In the case of bullock labour use, the seed growers used 1.57 pairdays of bullock labour, 2.46 machine hours, same as that of package of practice in the production of hybrid okra seeds. It was found that the seed growers used the recommended quantity of foundation seeds which were supplied by the companies.

It was observed that the seed growers applied 9.52 tonnes of FYM, almost same as that of recommended dose of 10.00 tonnes. The seed growers used more quantity of nitrogen (37.22 kg), phosphorus (28.32 kg) and potassium (26.39 kg) as against the recommended dose of 25:15:12.5 kg of N:P:K. The seed growers used 17.17 kg of micronutrients per acre and 11.13 litres of PPC were extensively used to control pests and diseases per acre.

Based on the discussion, it is crystal clear that the okra seed growers used double of recommended quantity of fertilizers in seed production. There is a need to educate the

farmers to reduce the use of fertilizers which would help to save the cost and also safeguard the soil health.

Ridge gourd

Among the physical inputs used in hybrid ridge gourd seed production human labour formed a major component. As crossing (emasculation and pollination) operation was specialized operation which involve greater care and patience, more of women labour were employed. The total mandays required for the hybrid ridge gourd seed production was 267.73.

In the case of bullock labour use, the seed growers used 1.93 pairdays of bullock labour, 3.53 machine hours, same as of package of practice in the production of hybrid ridge gourd seeds. It was found that the seed growers used the recommended quantity of foundation seeds which were supplied by the companies.

It was observed that the seed growers applied 11.28 tonnes of FYM, which was higher as that of recommended dose of 8.00 tonnes. The seed growers used more quantity of nitrogen (47.51 kg), phosphorus (30.98 kg) and potassium (33.68 kg) as against the recommended dose of 12.5:12.5:0 kg of N:P:K. The seed growers used 18.20 kg of micronutrients per acre and 4.93 litres of PPC were extensively used to control pests and diseases per acre.

Further, the seed growers using of staking sticks and gunny thread varied depending upon the intensity of flowering and plant population.

It was observed from the discussion that seed growers were used marginally high dose of FYM and almost double the chemical fertilizers. Hence, there is a need to educate the farmers to reduce the use of fertilizers, which would help to save the cost and conserve soil health.

5.4 COST AND RETURNS STRUCTURE IN HYBRID VEGETABLE SEED PRODUCTION

5.4.1 Cost structure in hybrid vegetable seed production

Tomato

It was observed from the Table 4.8 that the total cost of hybrid tomato seed production per acre was Rs. 54893. The average total variable cost incurred in contract farming was Rs. 49839. Among the various cost items, maximum cost (Rs. 29010) was found on human labour i.e., 52.85 per cent of the total cost. This was one of the important aspects of hybrid seed production, which incurs maximum cost on labour and provides employment to the human labour. The hybrid seed production involves technically trained labour, whose wage rate is higher as compared to other labour, the cost on this items was found to be higher. There is a need to improve the efficiency of labour by imparting further training and also offering some incentives to the labourers in ordered to reduce the cost of labour. This was followed by cost on staking sticks and thread (Rs. 5331) 9.71 per cent of the total cost, since staking sticks and gunny threads were used only once in seed production season, which forms other important cost. There is a need to evolve durable staking sticks and thread materials which can be used for more number of production processes. Thus, the recurring cost on these items could be reduced. Cost on fertilizers and micronutrients accounts (Rs. 4073) 7.42 per cent of the total cost, cost on FYM (Rs. 2692) 4.90 per cent and cost on seed accounts (Rs. 633) 1.15 per cent of the total cost. The average total fixed cost incurred in hybrid tomato seed production was (Rs. 5054) 9.21 per cent of the total cost.

Brinjal

It was observed from the Table 4.8 that the total cost of hybrid brinjal seed production per acre was Rs. 36688. The average total variable cost incurred in contract farming was Rs. 31470. Among the various cost items, maximum cost (Rs. 16675) was found in human labour i.e., 45.45 per cent of the total cost. The hybrid seed production involves technically trained

labour, whose wage rate is higher as compared to other labour, the cost on this items was found to be higher. There is a need to improve the efficiency of labour by imparting further training and also offering some incentives to the labourers in ordered to reduce the cost of labour. The cost on fertilizers and micronutrients accounts (Rs. 4442) 12.12 per cent of the total cost, cost of plant protection chemicals accounts (Rs. 3105) 8.47 per cent of the total cost, cost on FYM (Rs. 2060) 5.61 per cent and cost on seed accounts (Rs. 680) 1.86 per cent of the total cost. The average total fixed cost incurred in hybrid brinjal seed production was (Rs. 5217) 14.22 per cent of the total cost.

Okra

It was observed from the Table 4.8 that the total cost of hybrid okra seed production per acre was Rs. 29288. The average total variable cost incurred in contract farming was Rs. 24317. Among the various cost items, maximum cost (Rs. 13249) was found on human labour i.e., 45.24 per cent of the total cost. The hybrid seed production involves technically trained labour, whose wage rate is higher as compared to other labour, the cost on this items was found to be higher. There is a need to improve the efficiency of labour by imparting further training and also offering some incentives to the labourers in ordered to reduce the cost of labour. The cost on plant protection chemicals accounts (Rs. 2782) 9.5 per cent of the total cost, fertilizers and micronutrients accounts (Rs. 2465) 8.42 per cent of the total cost, cost on FYM (Rs. 1904) 6.50 per cent and cost on seed accounts (Rs. 550) 1.88 per cent of the total cost. The average total fixed cost incurred in hybrid okra seed production was (Rs. 4947) 16.91 per cent of the total cost.

Ridge gourd

It was observed from the Table 4.8 that the total cost of hybrid ridge gourd seed production per acre was Rs. 35868. The average total variable cost incurred in contract farming was Rs. 31383. Among the various cost items, maximum cost (Rs. 13386) was found on human labour i.e., 37.32 per cent of the total cost. The hybrid seed production involves technically trained labour, whose wage rate is higher as compared to other labour, the cost on this items was found to be higher. There is a need to improve the efficiency of labour by imparting further training and also offering some incentives to the labourers in ordered to reduce the cost of labour. This was followed by cost on staking sticks and gunny threads, which forms (Rs. 6039) 16.84 per cent of the total cost. The staking sticks and gunny thread were used only once in seed production season, which forms other important cost. There is a need to evolve durable staking sticks and thread materials which can be used for more number of production processes. Thus, the recurring cost on these items could be reduced. Cost on fertilizers and micronutrients accounts (Rs. 3196) 8.91 per cent of the total cost, cost on FYM (Rs. 2256) 6.29 per cent and cost on seed accounts (Rs. 666) 1.86 per cent of the total cost. The average total fixed cost incurred in hybrid ridge gourd seed production was (Rs. 4485) 12.50 per cent of the total cost.

Among the various items of cost, cost of seed was one, which the company used to fix. This will maintain the quality of product and avoid crop failure. Cost on FYM is fixed based on the locality. In the present study, the rental value of land was very high due to the crop which was grown as irrigated crop and for hybrid seed production purpose, which forms major chunk in fixed cost item in all the crops.

5.4.2 Returns structure in hybrid vegetable seed production

Tomato

The returns structure in hybrid tomato seed production was found to be profitable and beneficial to the farmers in relation to the total cost incurred by them. The gross returns and net returns were found to be much higher than their cost structure. In all, the farmers realized a net returns of Rs. 96611 over total cost. Further, the net returns over variable cost was worked out to be Rs. 101665. The returns was worked out per kg basis farmers realized a net returns of Rs. 1226.03 per kg. Then the returns were worked out per each rupee of expenditure, it was found that farmers obtained Rs. 2.76 which was much higher than the expenditure.

It was found that the farmers were using less quantity of fertilizers, as a result the yield obtained might be less than the potential yield. If the farmers increase the use of fertilizers, then a still higher level of returns would be obtained through increased yield. This would lead to a further increase in the net returns and average returns per rupee of expenditure.

Brinjal

The returns structure in hybrid brinjal seed production was found to be profitable to the farmers in relation to the total cost incurred by them. The gross returns and net returns were found to be higher than their cost structure. The farmers realized a net returns of Rs. 63615 over total cost. Further, the net returns over variable cost was found to be Rs. 68833. The returns was worked out on per kg basis, farmers realized a net return of Rs. 191.80 per kg, then the returns were worked per each rupee of expenditure, it was found that farmers obtained Rs. 2.73 which was much higher than the expenditure.

Okra

The returns structure in hybrid okra seed production was found to profitable to the farmers in relation to the total cost incurred by them. The gross returns was found to be higher than the cost structure. The farmers realized the net returns of Rs. 12598 over total cost. Further, net returns over variable cost was found to be Rs. 17569. The returns was worked out on per kg basis, farmers realized a net returns of Rs. 42.26 per kg. The returns per rupee of expenditure obtained was Rs. 1.42, which was higher than the expenditure.

It was found from the study that the farmers are using much more quantity of fertilizers as a result the cost was high. Hence, to increase the returns there is a need to educate the farmers to reduce the use of fertilizers in hybrid okra seed production.

Ridge gourd

The returns structure in hybrid ridge gourd seed production was found to be profitable to the farmer in relation to the total cost incurred by them. The gross returns was found to be much higher than the cost structure. In all, the farmers realized a net return of Rs. 14628 over total cost. Further, the net returns over variable cost was found to be Rs. 19113. The returns was worked out on per kg basis, farmers realized a net returns of Rs. 41.05 per kg. Then the returns were worked out for each rupee of expenditure, it was found that farmers obtained Rs. 1.40 which was higher than the expenditure.

It was found from the study that the farmers were using more than the recommended quantity of fertilizers as a result the cost was high. In order to increase the returns, there is a need to educate the farmers to reduce the use of fertilizers in seed production activities.

5.5 RESOURCE USE AND ALLOCATIVE EFFICIENCY IN HYBRID VEGETABLES SEED PRODUCTION

Regression equations were estimated separately using total gross returns as the dependent variable and the amount of seeds, FYM, human labour, bullock and tractor charges, fertilizers and micronutrients, plant protection chemicals, irrigation, staking sticks and gunny thread as independent variables for tomato, brinjal, okra and ridge gourd seed growers category (Table 4.9 and 4.10). The regression equation was estimated in order to capture the nature and magnitude of the effects of the independent variables on the productivity of hybrid vegetable seeds. The coefficients were estimated by employing the Cobb-Douglas production function.

The output elasticity coefficients for seeds, human labour, fertilizer and micronutrients were positive and found to be significant. This showed that increase in the use of these inputs would result in increase in efficiency of hybrid tomato seed production, contributing significantly towards gross returns. Elasticity coefficients for plant protection chemicals, irrigation were positive but non-significant. Hence, it would not be profitable to further increase in the expenses on these resources. The elasticity coefficients for bullock and tractor charges and farmyard manure were negative and found to be non-significant indicating that the bullock

and tractor charges and FYM were over used but this is because FYM application has a long-term effect on output and its effect is not clear on gross returns. Moreover, the soils might have become organically rich due to the continuous application of FYM to the seed production plots.

The sum of elasticity coefficients was 6.18 which indicated an increasing returns to scale. A one per cent increase in all the factors of production simultaneously would result in an average increase of gross returns by 6.18 per cent. The value of coefficient of multiple determination (R

2) was 0.64 which implied that 64 per cent of total variation in gross returns

was explained by the variables included in the model.

Brinjal

The out put elasticity coefficients for seeds and human labour were positive and found to be significant. This showed that increase in the use of these inputs would result in increase in efficiency of hybrid brinjal seed production, contributing significantly towards gross returns. Elasticity coefficients for bullock and tractor charges, farmyard manure and plant protection chemicals were positive but non-significant. Hence, it would not be profitable to further increase in the expenses on these resources. The elasticity coefficients for irrigation, fertilizer and micronutrients were negative and found to be non-significant indicating that the irrigation, fertilizer and micronutrients were over used.

The sum of elasticity coefficients was 4.75 which indicated an increasing returns to scale. A one per cent increase in all the factors of production simultaneously would result in an average increase of gross returns by 4.75 per cent. The value of coefficient of multiple determination (R

2) was 0.80 which implied that 80 per cent of total variation in gross return

was explained by the variables included in the model.

Okra

The out put elasticity coefficients for FYM and bullock and tractor charges were positive and found to be significant. This showed that increase in the use of these inputs would results in efficiency of hybrid okra seed production, contributing significantly towards gross returns. Elasticity coefficients for human labour, fertilizer and micronutrients were positive but non-significant. Hence, it would not be profitable to further increase in the expenses on these resources. The elasticity coefficients for seeds and plant protection chemicals were negative and non-significant indicating that these resources were over used. The elasticity coefficient for irrigation was negative and significant indicating that this resource influence gross returns negatively.

The sum of elasticity of coefficients was 2.76 which indicated an increasing returns to scale. A one per cent increase in all the factors of production simultaneously would result in an average increase of gross returns by 2.76 per cent. The value of coefficient of multiple determination (R

2) was 0.61 which implied that 61 per cent of total variation in gross return

was explained by the variables included in the model.

Ridge gourd

The out put elasticity coefficients for FYM, irrigation, fertilizer and micronutrients were positive and found to be significant. This showed that increase in the use of these inputs would result in efficiency of hybrid ridge gourd seed production, contributing significantly towards gross returns. Elasticity coefficients for seeds and bullock and tractor charges were positive but non-significant. Hence, it would not be profitable to further increase in the expenses on these resources. The elasticity coefficients for human labour, plant protection chemicals, staking sticks and gunny thread were negative and non-significant indicating that these resources were over used. The elasticity coefficient for irrigation was negative and significant indicating that this resource influence gross returns negatively.

The sum of elasticity coefficients was 3.12 which indicated an increasing returns to scale. A one per cent increase in all the factors of production simultaneously would result in an average increase of gross returns by 3.12 per cent. The value of coefficient of multiple determination (R

2) was 0.88 which implied that 88 per cent of total variation in gross return

was explained by the variables included in the model.

Allocative efficiency of hybrid vegetables seed production

The efficiency in resource allocation in respect of selected vegetable seed production has been explained as under.

Tomato

The Marginal Value Product (MVP) to Marginal factor Cost (MFC) ratios for seeds, human labour, fertilizer and micronutrients, PPC, irrigation and staking sticks and gunny thread were more than one indicating that still there is scope to use these inputs and increase the gross returns of hybrid tomato seed production. The MVP to MFC ratio for FYM and bullock and tractor charges is less than one and negative. It indicated that expenditure on these inputs were more than the optimum level. Hence, withdrawal of some units of these resources is profitable in the short-run.

Brinjal

The MVP to MFC ratios for seeds, human labour, bullock and tractor charges and farm yard manure were more than one indicating that still there is scope to use these inputs and increase the gross returns of hybrid brinjal seed production. The MVP to MFC ratio for plant protection chemicals was less than one and positive and indicated that the expenditure on this resource is more than the optimum level. The MVP to MFC ratio for irrigation, fertilizer and micronutrients is less than one and negative indicated that expenditure on these inputs were more than the optimum level. Hence, withdrawal of some units of these resources is profitable in the short run.

Okra

The MVP to MFC ratios for farm yard manure, bullock and tractor charges, human labour, fertilizer and micronutrients were more than one indicating that still there is scope to use these inputs and increase the gross returns of hybrid okra seed production. The MVP to MFC ratio for seeds, plant protection chemicals and irrigation were less than one and negative and indicated that expenditure on these inputs were more than the optimum level. Hence, withdrawal of some units of these resources is profitable in the short run.

Ridge gourd

The MVP to MFC ratios for farm yard manure, irrigation, fertilizer and micronutrients, seeds and bullock and tractor charges were more than one indicating that still there is scope to use these inputs and increase the gross returns of hybrid ridge gourd seed production. The MVP to MFC ratio for human labour, plant protection chemicals, staking sticks and gunny thread were less than one and negative and indicated that expenditure on these inputs were more than the optimum level. Hence, withdrawal of some units of these resources is profitable in the short run.

5.6 TECHNICAL EFFICIENCY IN HYBRID VEGETABLES SEED PRODUCTION

Tomato

In the hybrid tomato seed growers category (Table 4.12), only 3.33 per cent of the seed growers attained less than 50 per cent relative efficiency. The remaining seed growers attained more than 50 per cent efficiency. The farm specific frequency distribution revealed that the technical efficiencies of farms were in the range of 44.95 and 100.00 per cent. This was due to differences in utilization of resources and management.

The average level of technical efficiency was found to be 0.7529 (75.29%) from hybrid tomato seed growers category. This would mean that there was about 24.71 per cent potential for increasing seed growers gross income in the short-run at the existing level of their resources from the average levels already achieved. This suggested lot of scope for improvement in the productivity of the farms through strengthening of better resource utilization and better services to exploit the above mentioned potential.

Brinjal

In the case of hybrid brinjal seed growers category all the growers attained more than 60 per cent relative efficiency. The technical efficiencies of farms were in the range of 63.55 to 100.00 per cent. This was due to differences in utilization of resources and management.

The average level of technical efficiency was found to be 0.7673 (76.73%) from hybrid brinjal seed growers category. This would mean that there was about 23.27 per cent potential for increasing income in the short-run at their existing level of their resources.

Okra

In the case of hybrid okra seed growers category (Table 4.12) nearly 20 per cent of the seed growers attained the range between 51 to 60 per cent relative efficiency. The remaining seed growers attained more than 61 per cent efficiency. The technical efficiency of the farms were in the range of 54.74 to 100.00 per cent. This was due to differences in utilization of resources and management.

The average level of technical efficiency was found to be 0.7293 (72.93%) from hybrid okra seed growers category. This would mean that there was about 27.07 per cent potential for increasing income in the short-run at their existing level of their resources.

Ridge gourd

In the case of hybrid ridge gourd seed growers category (Table 4.12) nearly 6.16 of the seed growers attained less than 50 per cent relative efficiency. The remaining seed growers attained more than 50 per cent efficiency. The technical efficiencies of the farms were in the range of 47.82 to 100.00 per cent. This was due to differences in utilization of resources and management.

The average level of technical efficiency was found to be 0.7390 (73.90%) from hybrid ridge gourd seed growers category. This would mean that there was about 26.10 per cent potential for increasing income through better resource utilization and better management practices with the existing level of their resources.

5.7 TERMS OF CONTRACT AND MODUS OPERANDI

The terms of contract and Modus Operandi are discussed hereunder.

5.7.1 Terms of contract

The agreements in the form of written contracts covered the responsibilities and obligations of each party, the manner in which the agreement was enforced and the remedies taken if the contract breaks down. Agreements were made between the company and farmer.

The written agreement referred to a signed confirmation from the farmer that he/she wished the company to reserve a contract for him/her. The contract written agreement was used in hybrid vegetables seed production. The technical aspects of the agreement were drafted in short, simple terms, clarifying the responsibilities of both farmer and firms. Pricing formulae in the financial sections was designed to encourage the farmers to produce maximum yields. Result of breach of contract was included in order to control the possibility of extra-contractual marketing. Agreements for many farmers were only a formality or perhaps, involved just a change of name of a family member. The firms’ field extension staff must also have a clear understanding of the terms of the agreement. These findings of the study are in conformity with the findings of Roy (1963) and Verhulst (1949).

Farmers expressed that when making written agreements the firms must consider the possibilities of abnormal situations occurring that were beyond their control, such as drought, floods, cyclones, plant diseases. In these contracts it was necessary to include “Acts of God”. Farmers expressed that although contract firms and the contractors were of the necessity catalyst of the contract, farmers and their representatives must be given the opportunity to contribute to the drafting of the agreement and assist in the wording of specifications in terms farmers can understand. Any contract, however brief, should represent a mutual

understanding between the contracting parties. Management must ensure that agreements are fully understood by all farmers.

The firms expressed that in contract farming, it was highly unlikely that a firm will take legal action against contract seed grower for a breach of contract. The costs involved were inclined to be far excess of the amount claimed, and legal action threatened the relationship between the firm and all farmers, not just those against whom action was taken. Action by a farmer against a company was similarly improbable. However, the improbability that a contract or agreement will be used as the basis for legal action does not mean that contract agreements should not be used. They can benefit both parties by clearly spelling out the rules of relationship similar with the findings of Sporleder (1992) and Barry et al. (1992). However, the terms of contract seems bonding on the part of farmer and not the company.

5.7.2 Modus operandi in hybrid vegetable seed production

Tomato

The success of contract farming was determined by the contractual relationship between the farmer and the company. The results relating to various aspects of contractual arrangements are presented in Table 4.13.

A majority of the farmers (66.67%) took up cultivation of hybrid tomato seed production due to persuasion of company staff. The influence of fellow farmers (30%) was the second major force. The influence of friends and relatives was 3.33 per cent. The agreement between farmers and company was written in the case of hybrid tomato seed production. The farmers indicated satisfaction with the company in regard to arrangement for seed, their opinion on other hand revealed that it was question of purity. In hybrid tomato seed production contract farming produce had to be made available to the appointed place. The arrangements were suitable to all the farmers in handing the produce to the appointed place. For terms of contract, farmers expressed that the contract should be of written agreements. Similar results were observed by Roy (1963), Williamson (1979) and Glover (1990).

The staff strength of the company dependent on number of factors like the field officers visit to the fields. In terms of frequency of field visits, farmers had very regular contact with the officer.

An in-depth analysis of settlement pattern threw a light on the settlement practices followed in different contacts. On an average, the farmer of hybrid tomato seed production received settlement in single installment. The final settlement from the date of harvest varied, for instance 66.67 per cent of the farmers realized full payment within 90 to 105 days. About 30.00 per cent of the farmers received within 105 to 135 days from the date of harvest. Here companies made regular payment without any problem for the farmers.

Brinjal

A majority of the farmers (73.33%) took up cultivation of hybrid brinjal seed production due to persuasion of company staff. The influence of fellow farmers was the second major force in case 16.67 per cent of farmers. The influence of friends and relatives (10.00%) was the least. The agreement between farmers and company was written in the case of hybrid brinjal seed production. The farmers indicated satisfaction with the company in regard to arrangement for seed, their opinion on other hand revealed that it was question of purity. In hybrid brinjal seed production contract farming produce had to be made available to the appointed place. The arrangements were suitable to all the farmers in handing the produce to the appointed place. For terms of contract, farmers expressed that the contract should be of written agreements as observed by Roy (1963), Williamson (1979) and Glover (1990)

In terms of frequency of field visits, farmers had very regular contact with the officer.

On an average, the farmer of hybrid brinjal seed production received settlement in single installment. The final settlement from the date of harvest varied, for instance 26.67 per cent of the farmers realized full payment within 90 to 105 days. About 70.00 per cent of the

farmers received within 105 to 135 days from the date of harvest. Here companies made regular payment without any problem for the farmers.

Okra

A majority of the farmers (63.33%) took up cultivation of hybrid okra seed production due to persuasion of company staff. The influence of fellow farmers was the second major force in the case 26.67 per cent of farmers. The influence of friends and relatives was 10.00 per cent. The agreement between farmers and company was written in the case of hybrid okra seed production. The farmers indicated satisfaction with the company in regard to arrangement of seed. Their opinion on the other hand revealed that it was question of purity. In hybrid okra seed production contract farming produce had to be made available to the appointed place. The arrangements were suitable to all the farmers in handing over the produce to the appointed place. For terms of contract, farmers expressed that the contract should be of written agreements and same observations were elicited by Roy (1963), Williamson (1979) and Glover (1990)

The staff strength of the company dependent on number of factors like the frequency of field officers visit to the fields. In terms of frequency of field visits, farmers had very frequent contact with the officer.

On an average, the farmers of hybrid okra seed production received settlement in single installment. The final settlement from the date of harvest varied, for instance 43.33 per cent of the farmers realized full payment within 90 to 105 days. About 53.34 per cent of the farmers received within 105 to 135 days from the date of harvest. Here the companies made prompt payment without any problem to the farmers.

Ridge gourd

A majority of the farmers (83.33%) took up cultivation of hybrid ridge gourd seed production due to persuasion of company staff. The influence of fellow farmers was the second major force in the case 10.00 per cent of farmers. The influence of friends and relatives was 6.67 per cent. The agreement between farmers and company was written in the case of hybrid ridge gourd seed production. The farmers indicated satisfaction with the company in regard to arrangement of seed. Their opinion on other hand revealed that it was question of purity. In hybrid ridge gourd seed production contract farming produce had to be made available to the appointed place. The arrangements were suitable to all the farmers in handing over the produce to the appointed place. For terms of contract, farmers expressed that the contract should be of written agreements and similar facts were observed by Roy (1963), Williamson (1979) and Glover (1990)

The staff strength of the company dependent on number of factors like the frequency of field officers visit to the fields. In terms of frequency of field visits, farmers had very frequent contact with the officer.

On an average, the farmers of hybrid ridge gourd seed production received settlement in single installment. The final settlement from the date of harvest varied, for instance 20.00 per cent of the farmers realized full payment within 90 to 105 days. About 76.67 per cent of the farmers received within 105 to 135 days from the date of harvest. Here firms made prompt payment without any problem to the farmers.

5.8 PROBLEMS FACED BY CONTRACT SEED GROWERS AND CONTRACT FIRMS

The results pertaining to problems faced by the seed growers are discussed in the light of views expressed by the seed growers and some facts observed by the researcher at the time of survey.

5.8.1 Problems faced by the contract seed growers

It was evident from the results (Table 4.14) that majority of the seed growers expressed the non-availability of trained labourers and prevalence of higher wage rate. Hybrid

tomato seed production is a labour intensive enterprise which requires more number of labourers during the crossing and harvesting seasons. Many seed growers had to pay advance wages to the labourers especially during critical stages of operations like crossing and harvesting.

Nearly 26.67 per cent of the seed growers complained about the non-availability of foundation seed on-time and few had observed admixtures in foundation seed. Hence, concerned company should take necessary steps to provide good quality seeds and at the right time. Similarly, the State Department of Agriculture, Karnataka should educate seed growers on the importance of soil testing and induce them to apply fertilizers based on soil test results, which help in economic use of fertilizers.

Further, 36.67 per cent of seed growers expressed their apprehension on pests and diseases. Hybrid tomato is proned to pests and diseases, the cost of seed production would rise due to spraying of different combinations of pesticides and insecticides to control the pest and disease menace. Therefore, seed growers may be properly educated and trained in the management of controlling pests and diseases to reduce the cost of production. In this direction, an integrated disease and pest management campaign may be conducted by the companies in collaboration with agricultural universities.

One of the important problems of the seed industry is isolation distance. Only few seed growers faced the problem of isolation distance (33.33%). To overcome the isolation problem seed growers in the area may arrive at a decision on co-operative basis. Similarly, the other important problems faced by the seed growers was inadequacy of irrigation water. To overcome the inadequacy problem seed growers in the area may practice conjunctive use of surface and ground water, as majority of seed growers are irrigating the plots with borewell water.

Thirty per cent of the seed growers complained about technical difficulties on operations such as rouging, emasculation and pollination. As emasculation and rouging are highly technical and the ultimate yield is based on these operations, it is highly necessary to educate the seed growers regarding these operations which make them get higher yield levels.

Among the financial problems, 80 per cent of the seed growers experienced the problem with the adequate and timely availability of capital for the purchase of inputs. Hence, the agencies have to simplify the lending procedure and allocate more funds to seed growers. As the tomato seed production is highly capital intensive, good amount of capital is required to purchase the inputs. Because of the this capital intensive nature and high degree of risk involvement, seed growers were taken up this enterprise on a small scale i.e., to the extent of half an acre per farmer. Therefore, Mahyco, Sungro and Ankur seed companies may assist the financial needs of its contract seed growers to some extent. Around 76.67 per cent of the seed growers felt the problem of availability of crop loans. At presently, there is no provision of credit exclusively for seed production in the financial institutions. Hence, there is a need to fix the scale of finance for seed production activities of different crops to encourage the seed growers. Nearly 50 per cent of the seed growers demanded for the crop insurance facility on account of high degree of risk involved in hybrid seed production. Among the contractual problems nearly 60 per cent of the seed growers expressed the unawareness of potentiality of crop in the study area followed by 43.33 per cent expressed the problem of higher rejection rate.

Similar problems were expressed by the brinjal, okra and ridge seed growers.

5.8.2 Problems faced by the contract firm

The contract firms opinioned that the major problems were fixing of contract price (33.33%), mixing of low grade with high grade (33.33%) and it was difficult check, as the seed size is very small. The firms also revealed that farmers held-up vehicles (33.33%) demanding higher price above the agreement price. The firms expressed the cross purchase of seeds (33.33%) by the intermediaries other than the company people. The firms expressed that climatic factors (66.66%) was the major hindrance in the seed production activities and also expressed the problems of breach of contract (33.33%) by the firms.

The companies never resorted to legal actions against any farmer in the case of breach of contract, because it was uneconomical and time consuming. Moreover, the legal complications may spoil the social relationship the society in which both the company and farmers live.

VI. SUMMARY AND POLICY IMPLICATIONS

The globalization of Indian agriculture in recent years resulted in the need for the production of export oriented quality products having comparative advantage. In this context, contract farming could be one of the best solutions which may decrease the polarization of rich and poor and thus encourage Indian farmers to compete with the very large, rich and highly indirect subsidized western farmers. Contract farming can indeed to be a vehicle for the modernization of agriculture in India. It basically involves four things, pre-agreed price, quantity or acreage (minimum/maximum) quality and time. Contract farming is a case for bringing the market to the farmers, which is navigated by agribusiness farms. The production, marketing and distribution of agricultural products are becoming increasingly sophisticated for i). Modern advances in technology have made it feasible for agricultural products to be produced to specifications and preserved in fresh condition. ii). The optimum scale of operations has been increasing, especially in processing and distribution. This provides a strong rationale, from the demand side for the contract farming as a means of raw material supply.

The process of modernizing agriculture primarily involves intensive use of non-conventional inputs such as quality seeds, chemical fertilizers, pesticides, herbicides, irrigation, farm machinery and a network of research and extension infrastructure. The seed is a trigger point which sets in motion the process of technological change. Superior planting materials and high quality seed is a single most important factor enabling a country to make its agriculture more productive and cost competitive especially in the changing scenario of world agricultural trade under WTO. Seed is very vital input and dynamic instrument for increasing agricultural production. It has been recognized that genetically good quality seed alone can increase crop production upto 20 per cent.

The overall objective of the study is to work out economics of production and modus operandi in hybrid vegetable seed production in Haveri district of Northern Karnataka.

OBJECTIVES OF THE STUDY

1. To estimate the cost and returns in selected hybrid vegetables seed production.

2. To analyse the resource use efficiency in selected hybrid vegetables seed production.

3. To document the terms of contract and modus operandi in hybrid vegetables seed production.

4. To analyse the problems encountered by the contract seed growers in the production of hybrid vegetable seeds and

5. To suggest appropriate policy measures

METHODOLOGY

The predominant hybrid vegetable seed producing district of Haveri of Karnataka State has been chosen for the present study. Both secondary and primary data were used. The relevant secondary data were collected from Mahyco, Sungro and Ankur seed companies. The primary data were collected from the sample seed growers by adopting a multi-stage sampling design. In all 120 seed growers growing hybrid vegetables seed were randomly selected at the rate of 8 seed growers from each of the 15 selected villages of four vegetable crops viz., tomato, brinjal, okra and ridge gourd spread over the selected district. The data relate to the crop year 2004-05. In addition, the leading contract firms were also interviewed for eliciting the required information.

Statistical techniques employed

The technique of tabular analysis was employed for estimating the cost, returns, terms of contract, modus operandi and problems faced by the contract seed growers and contract firms using averages, means and percentages. Cobb-Douglas type of production function was fitted to estimate the productivities of the resources used in hybrid vegetables

seed production. Timmer’s output based measure of technical efficiency was fitted separately to examine the technical efficiency of seed growers.

THE SALIENT FINDINGS OF THE STUDY

The average area allotted to the cultivation of hybrid vegetable seed production though was stagnant, indicated that there is still scope for bringing some more additional area under hybrid vegetable seed production to augment farm income. The private seed companies selected only few farmers and supplied seeds to them. This practice was mainly to protect the quality of the produce.

Socio-economic features of contract farmers

The average family size of contract seed growers was around 9 members and all the contract seed growers (100.00%) were educated. They were able to find the source where the required information was available. Average age of the respondents was 41 years and young age coupled with better education has made the farmers to increase their farm income by adopting hybrid vegetable seed production.

Pattern of land holdings of sample farmers

The average size of the land holdings of the contract farmer was 9.35 acres. The average area under hybrid vegetable seed production accounted for about 0.50 acres, which worked out to be 5.34 per cent of total land holding. The companies allotted very small sized land to cultivators mainly to maintain the quality of seeds.

Cropping pattern of sample farmers

Major proportion of the area in kharif was devoted for maize crop followed by cotton. In the rabi season, jowar occupied a lion share followed by sunflower. Over all, it was observed that farmers tried to diversify their cropping pattern to minimize risks and seed production was taken up on a plot of 0.5 acres only.

Pattern of employment in hybrid vegetables seed production

In the case of hybrid tomato seed production, it was found from the study that the labour employed was about 580.20 mandays of human labour. More mandays of human labour was found in pollen collection and crossing activity followed by harvesting and irrigation. It was clear that tomato seed production was highly labour intensive activity. The pollen collection and crossing requires skilled personnel to perform the operations to achieve higher labour efficiency.

In the case of hybrid brinjal seed production, it was found from the study that the labour employed was about 333.50 mandays of human labour. More mandays of human labour was found in pollen collection and crossing followed by seed extraction and irrigation. It was clear that pollen collection and crossing requires skilled personnel to achieve higher labour efficiency.

In the case of hybrid okra seed production, the labour employed was about 264.98 mandays of human labour. More mandays of human labour was found in pollen collection and crossing followed by weeding and seed extraction. It was clear that pollen collection and crossing, seed extraction requires skilled and trained labour to achieve higher labour efficiency.

In the case of hybrid ridge gourd seed production, the labour employed was about 267.73 mandays of human labour. More mandays of human labour was found in pollen collection and crossing followed by weeding and irrigation. It was observed that pollen collection and crossing operation requires skilled labour to achieve higher labour efficiency.

Input use pattern in hybrid vegetable seed production

It was found from the study that the contract seed growers used about 13.33 grams of male and 30 grams of female seed, 580.20 mandays of human labour, 13.46 tonnes of

farmyard manure and 157.54 kg of fertilizer. Around 5800 number staking sticks were used for supporting plants and 6.4 litres of PPC were used in hybrid tomato seed production.

It was found from the study that the brinjal contract seed growers used about 13.33 grams of male and 30 grams of female seed, 333.50 mandays of human labour, 10.30 tonnes of farmyard manure and 122.57 kg of fertilizer. Around 12.42 litres of PPC were used in hybrid brinjal seed production.

It was found from the study that the okra contract seed growers used about 250 grams of male and 1000 grams of female seed, 264.98 mandays of human labour, 9.52 tonnes of farmyard manure and 91.93 kg of fertilizer. Around 11.13 litres of PPC were used in hybrid okra seed production.

It was found from the study that the ridge gourd contract seed growers used about 133.33 grams of male and 400 grams of female seed, 267.73 mandays of human labour, 11.28 tonnes of farmyard manure and 112.17 kg of fertilizer. Around 1171 number of staking sticks were used for supporting plants and 4.93 litres of PPC were used in hybrid ridge gourd seed production.

Cost structure in hybrid vegetable seed production

The results revealed that the total cost of hybrid tomato seed production per acre was found Rs. 54893. The average total variable cost incurred in contact farming was Rs. 49839 (90.79%). Among the various cost items, the maximum cost (Rs. 29010) was found on human labour i.e., 52.85 per cent of the total cost, since it involves technical labour whose wage rate was high. This was one of the important aspects of hybrid tomato seed production which incurs maximum cost on labour use and provides employment to the human labour followed by staking sticks and gunny thread, fertilizer and micronutrients and farmyard manure. The average total fixed cost incurred in contract farming was Rs. 5054 (9.21%) of the total cost.

In the case of hybrid brinjal seed production, the total cost per acre was found Rs. 36688. The average total variable cost incurred in contact farming was Rs. 31470 (85.78%). Among the various cost items, the maximum cost (Rs. 16675) was found on human labour i.e., 45.45 per cent of the total cost, since seed production requires technical labour whose wage rate was high. This was one of the important aspects of hybrid brinjal seed production which incurs maximum cost on labour use and provides employment to the human labour followed by fertilizer and micronutrients, farmyard manure and seeds. The average total fixed cost incurred in contract farming was Rs. 5217 (14.22%) of the total cost.

In the case of hybrid okra seed production, the total cost per acre was found Rs. 29288. The average total variable cost incurred in contact farming was Rs. 24317 (83.03%). Among the various cost items, the maximum cost (Rs. 13249) was found on human labour i.e., 45.24 per cent of the total cost, since seed production requires technical labour whose wage rate was high. This was one of the important aspects of hybrid okra seed production which incurs maximum cost on labour use and provides employment to the human labour, followed by plant protection chemicals, fertilizer and micronutrients and farmyard manure. The average total fixed cost incurred in contract farming was Rs. 4947 (16.91%) of the total cost.

In the case of hybrid ridge gourd seed production, the total cost per acre was found Rs. 35849. The average total variable cost incurred in contact farming was Rs. 31384 (87.55%). Among the various cost items, the maximum cost (Rs. 13386) was found on human labour i.e., 37.32 per cent of the total cost, since seed production requires technical labour whose wage rate was high. This was one of the important aspects of hybrid ridge gourd seed production which incurs maximum cost on labour use and provides employment to the human labour, followed by staking sticks and gunny thread, fertilizer and micronutrients and farmyard manure. The average total fixed cost incurred in contract farming was Rs. 4485 (12.50%) of the total cost.

Returns structure in hybrid vegetable seed production

The results revealed that the farmers realized the net returns of Rs. 96611 over total cost in hybrid tomato seed production. The net returns over variable cost was Rs. 101665. The net returns on per kg basis was Rs. 1226.03 per kg and the returns per rupee of

investment was Rs. 2.76. The returns structure was found to be profitable and beneficial to the farmers.

The results revealed that the farmers realized the net returns of Rs. 63615 over total cost in hybrid brinjal seed production. The net returns over variable cost was Rs. 68833. The net returns on per kg basis was Rs. 191.80 per kg and the returns per rupee of investment was Rs. 2.73. The returns structure was found to be profitable and beneficial to the farmers.

The results revealed that the farmers realized the net returns of Rs. 12598 over total cost in hybrid okra seed production. The net returns over variable cost was Rs. 17569. The net returns on per kg basis was Rs. 42.26 per kg and the returns per rupee of investment was Rs. 1.43. The returns structure was found to be profitable and beneficial to the farmers.

The results revealed that the farmers realized the net returns of Rs. 14628 over total cost in hybrid ridge gourd seed production. The net returns over variable cost was Rs. 19113. The net returns on per kg basis was Rs. 41.05 per kg and the returns per rupee of investment was Rs. 1.40. The returns structure was found to be profitable and beneficial to the farmers.

Resource use and Allocative efficiency in hybrid vegetables seed production

The results of production function analysis indicated that with the coefficient of multiple determination (R

2) value of 0.64 for hybrid tomato seed growers, the inputs included

in the model were able to explain 64 per cent of the variation in hybrid tomato seed production of sampled seed growers.

The elasticity coefficients of regression estimates of human labour, fertilizer and micronutrient had a positive significant influence on the gross returns of hybrid tomato seed production. Whereas, bullock and tractor charges and farmyard manure were found to

influence the gross returns negatively. The sum of elasticities (Σbi) was found to be 6.1859 implying increasing returns to scale.

The MVP to MFC ratios of human labour, fertilizer and micronutrients, seeds, plant protection chemicals, irrigation and staking sticks, gunny thread were substantially greater than unity implying under utilization of these resources. In the case of farmyard manure and bullock and tractor charges, the MVP to MFC ratio was less than unity, indicating excess use of these resources in hybrid tomato seed growers group.

In the case of hybrid brinjal seed growers group, seeds and human labour showed a significant positive influence on gross returns. Whereas, irrigation, fertilizer and micronutrients had a significant negative influence on gross returns.

The results of production function analysis indicated that with the coefficient of multiple determination (R

2) value of 0.80 for hybrid brinjal seed growers, the inputs included in

the model were able to explain 80 per cent of the variation in hybrid brinjal seed production of sampled seed growers.

The MVP to MFC ratios of seeds, human labour, bullock and tractor charges and farmyard manure were substantially greater than unity implying under utilization of resources used. In the case of fertilizers and micronutrients, irrigation the MVP to MFC ratios were less than unity, indicating excess use of these resources in hybrid brinjal seed growers group.

In the case of hybrid okra seed growers group farmyard manure and bullock and tractor charges had a positive significant influence on gross returns of hybrid okra seed production. Whereas, irrigation had a significant negative influence on gross returns. The contribution of seeds and plant protection chemicals were negative and non-significant.

The results of production function analysis indicated that with the coefficient of multiple determination (R

2) value of 0.61 for hybrid okra seed growers, the inputs included in

the model were able to explain 61 per cent of the variation in hybrid okra seed production of sampled seed growers.

The MVP to MFC ratios of farmyard manure, bullock and tractor charges, human labour, fertilizers and micronutrients were substantially greater than unity implying under utilization of resources used. In the case of seeds, plant protection chemicals and irrigation,

the MVP to MFC ratio were less than unity indicating excess use of these resources in hybrid okra seed growers group.

In the case of hybrid ridge gourd seed growers group, farmyard manure, irrigation and fertilizer and micronutrients had a significant positive influence on gross returns, whereas the elasticity coefficients of human labour, plant protection chemicals and staking sticks, gunny thread and covers were negative and non-significant.

The results of production function analysis indicated that with the coefficient of multiple determination (R

2) value of 0.88 for hybrid ridge gourd seed growers, the inputs

included in the model were able to explain 88 per cent of the variation in hybrid ridge gourd seed production of sampled seed growers.

The MVP to MFC ratio of farmyard manure, irrigation, fertilizer and micronutrients, seeds, bullock and tractor charges were substantially greater than unity implying under utilization of these resources used. In the case of human labour, plant protection chemicals, staking sticks and gunny thread, the MVP to MFC ratio were less than unity indicating that excess use of these resources in hybrid ridge gourd seed growers group.

Technical efficiency in hybrid vegetables seed production

The estimated technical efficiencies for the hybrid tomato seed growers category ranged from 0.44 to 1.00, with mean technical efficiency of 0.75. Whereas, for the hybrid brinjal seed growers category it ranged from 0.63 to 1.00, with the mean technical efficiency of 0.76. The estimated technical efficiency for the hybrid okra seed growers category ranged from 0.54 to 1.00, with mean technical efficiency of 0.72. Whereas, for hybrid ridge gourd seed growers it ranged from 0.47 to 1.00, with the mean technical efficiency of 0.73. This clearly showed that their existed a 24.71, 23.27, 27.07 and 26.10 per cent potential for increasing gross returns of farms at the existing level of resources and technology for hybrid tomato, brinjal, okra and ridge gourd seed growers, respectively. A wider efficiency gap was observed between the least and most efficient seed growers in all the category of seed growers.

The frequency distribution of the farm specific technical efficiency segregated into two groups indicated that the 63.34 per cent of hybrid tomato seed growers, 70 per cent of the hybrid brinjal seed growers, 53.33 per cent of hybrid okra seed growers and 53.34 per cent of the hybrid ridge gourd seed growers were clustered above 71 per cent of technical efficiency level. On the other hand, only 3.33, 0.00, 0.00 and 6.66 per cent of the hybrid tomato, brinjal, okra and ridge gourd seed growers, respectively attained less than 50 per cent of technical efficiency.

Terms of contract

The results revealed that the written agreement refers to assigned confirmation from the farmer that he/she wishes the company to reserve a contract for him/her. The technical aspect of the agreement was drafted in short, simple terms, clarifying the responsibilities of both farmer and firms. Pricing formulae in the financial section was designed to encourage the farmers to produce maximum yields. Result of breach of contract was included in order to control the possibility of extra-contractual marketing. The agreements were effective from the time of handing over the seeds to the farmer and terminated upon the farmer handing over entire yield of produce.

Modus operandi

The hybrid tomato seed growers took up cultivation due to persuasion of company staff (66%). The agreement between farmers and company was written. In terms of frequency of field visits, hybrid tomato seed growers had frequent contact with officers. The settlement practices followed on an average, the seed growers of hybrid tomato receive settlement in single installment, on the other hand about 93.34 per cent of the seed growers received payment in 90 to 120 days time.

In the case of hybrid brinjal, seed growers took up cultivation due to persuasion of company staff (73.33%). The agreement between farmers and company was written. In terms

of frequency of field visits, hybrid brinjal seed growers had frequent contact with officers. The settlement practices followed on an average, the seed growers of hybrid brinjal received settlement in single installment, on the other hand about 66.67 per cent of the seed growers received payment in 90 to 120 days time.

In the case of hybrid okra, seed growers took up cultivation due to persuasion of company staff (63.33%). The agreement between farmers and company was written. In terms of frequency of field visits, hybrid okra seed growers had frequent contact with officers. The settlement practices followed on an average, the seed growers of hybrid okra received settlement in single installment, on the other hand about 86.66 per cent of the seed growers received payment in 90 to 120 days time.

In the case of hybrid ridge gourd, seed growers took up cultivation due to persuasion of company staff (83.33%). The agreement between farmers and company was written. In terms of frequency of field visits, hybrid ridge gourd seed growers had frequent contact with officers. The settlement practices followed on an average, the seed growers of hybrid ridge gourd received settlement in single installment, on the other hand about 53.33 per cent of the seed growers received payment in 90 to 120 days time.

Problems faced by the contract seed growers and contract firm

The major problems in production of hybrid tomato seed production were non-availability of skilled labour (90%) and 80 per cent complained about high wage rate, around 60 per cent of the seed growers faced the problems of irrigation water. Around 80 per cent of the seed growers complained about adequate and timely capital for the purchase of inputs and non-availability of crop loan (76.67%). About 86.67 per cent of the seed growers faced the problem of climatic factors in production of hybrid tomato seeds and non-prevalence of crop insurance (50.00%).

The major contractual problems were unawareness of potentiality of crop (60%) and complained about higher rejection rate (43.33%).

The major problems in hybrid brinjal seed production were indiscriminate use of fertilizers (60%). Major financial problems were inadequate and untimely capital for purchase of inputs (80%) and non-availability of crop loan (76.67%) followed by non-prevalence of crop insurance (46.67%). More than 80 per cent of the seed growers faced the problem of climatic factors in the production of hybrid brinjal seed production. The major contractual problem were higher rejection rate (43.33%).

The major problems in hybrid okra seed production were inadequacy of irrigation water (60%) and problems in technical operations (emasculation and pollination) was 60 per cent and majority of seed growers (90%) faced the problem of climatic factor. The financial problems were adequate and timely capital for purchase of inputs (60%) and seed growers complained about non-availability of crop loan (66.67%). The contractual problems were higher rejection rate (76.67%) and low contract price (33.33%).

The major problems in hybrid ridge gourd seed production were non-availability of skilled labour (46.67%) and climatic factors (86.67%). The financial problems were inadequate and untimely capital for purchase of inputs (53.33%). The major contractual problems were unawareness of potentiality of crops (33.33%) and breach of contract (26.67%).

The firm expressed that the contract farmers try to put lower grade with higher grades (33.33%) and climatic factors (66.66%) were the major problems faced by the contracting firms.

POLICY IMPLICATIONS

Based on the findings of the study, the following policy implications are worth considering while framing policy for hybrid vegetable seed production in Karnataka.

1. The input-output relationship and the functional analysis revealed that there is a scope for reorganizing the expenditure on resources like farmyard manure and bullock labour in

hybrid tomato seed production, irrigation, fertilizer and micronutrients in hybrid brinjal seed production, plant protection chemicals, seeds and irrigation in hybrid okra seed production. Human labour, plant protection chemicals, staking sticks and gunny thread in hybrid ridge gourd seed production for profit maximization as these inputs being used more than the recommended quantity. Hence, there is a need to educate the seed growers on the optimum use of these resources.

2. The technical efficiency analysis indicated that the output of the hybrid vegetable seeds on an average could be increased by 25 per cent without spending on additional resources but by following the practices of most efficient seed growers. This would be attained through specific skill improving training programmes for less efficient seed growers from most efficient seed growers with the help of agricultural departments.

3. Contract farming may be made legally obligatory on the part of the contract farmers and contract companies to strictly adhere to the contract. Hence, suitable legislative measures and timely intervention of the government are to be made as there were cases of breach of contract.

4. To minimize higher rejection rate of seeds by the firms a predetermined quality specification may be given to the farmers in the beginning of the season. This would enable the farmers to produce the better seeds with the help of Agricultural Scientists.

5. At present, there is no provision of credit exclusively for seed production in the financial institutions. Hence, there is a need to fix the scale of finance for seed production activities of different crops to encourage the farmers.

6. The scheme of crop insurance may be introduced to cover the seed production activity which involves climatic risks.

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APPENDIX Ia: AGREEMENT FOR VEGETABLE SEED PRODUCTION (MAHYCO AND SUNGRO SEEDS PRIVATE LIMITED)

Agreement made this ________________day of __________ between ____________ M/s._________________ a company registered under the Companies Act, 1956 having its Head Office at ______________________________ hereinafter called the First Party (which expression unless repugnant to the context would mean and include its successors, legal representatives and assigns) of the ONE PART _______________________________________AND_______________ r/o________________ hereinafter called the Second Party (which expression unless repugnant to the context would mean and include his/her heirs, executors, successors, legal representatives and assigns) of the OTHER PART.

Whereas, the First Party and Second Party have agreed to a scheme of seed production and supply of ______________Variety/Hybrid Seeds________________ under following terms and conditions.

NOW THIS AGREEMENT FOR SEED PRODUCTION WITNESSETH and it is hereby agreed by and between the parties hereto as follows.

1. The second party shall undertake Hybrid/variety_________________ seed production for the first party, on an area of _____________ acres land reserved for the purpose of Hybrid/Variety Seed production and no other during the ____________season.

2. The land of area reserved for seed production shall have an isolation of at least __________meters on all sides from adjoining fields of any crop other than the Hybrid/variety grown for the purpose of seed production under this agreement.

3. The first party shall charge the second party a sum of Rs. ______________ (Rupees___________________________________________only) per acre of land committed to be undertaken for cultivation as a registration fee. Registration fee which will inter alia include the cost of expenses incurred by First Party in visiting the field to ensure the safety and surety of the crop, to exercise check on the seeds production in terms of quality and safety of the seeds and the output, documentation and administrative expenses, testing charges, if an paid to any external agency.

4. The First Party shall procure processed, cleaned and dry seed at the level of 08% moisture at the rate of Rs. _____________ (Rupees_________________ only) per _____________________subject to the satisfactory genetic purity and germination test report issued by the Quality Control Department of the First Party and subject to any other tests which would be necessary for.

5. The First Party shall pay to the Second Party first payment against the delivery of unprocessed seed (if applicable) on the basis of prevailing commercial market rate of the same crop or at rates as fixed by the First Party.

6. The First Party shall purchase seed produced if the same meets the minimum germination standard of _________% in test conducted by the Quality Control Department of the First Party.

7. The First Party shall purchase seed produced if the same meets the minimum genetic purity standard of _____________% in test conducted by the Quality Control Department of the First Party.

8. The First party shall make the final payment to the Second party within _________days from the date of receipt of seed at the processing plant on receiving a satisfactory report of genetic purity and germination from the Quality Department of the First Party.

9. The foundation seed used for sowing will be male fertile/male sterile seed parent and a pollinator parent. The Second Party shall in no case use any seed other than the that supplied by the First party for sowing purpose in the area reserved for seed production or in any other plot within a distance of ___________meters from the area reserved for seed production.

10. The Foundation Seed issued by the First Party, shall be exclusively used for Seed Production in the same season for which it has been issued as per terms and conditions of this agreement only, and shall not be used for any other purpose, whatsoever by the Second party, not shall the Second Party transfer, sell or part with possession of the same in any manner whatsoever to any third party whatsoever. The foundation Seed issued to the Second Party is the sole intellectual property/proprietary material of the First party and the first party has full ownership right over it. Nothing in this agreement shall be constructed as being a sale of Foundation Seed by the first party to the second party.

11. The second party shall make his/her own arrangement for bagging and transporting (at their own risk and cost) the raw seed from his/her farm(s) to the processing plant designated by the first party, or pay for the cost of gunny bags and transportation charges as fixed by the first party, if the same is provided by the first party.

12. The Harvesting of Hybrid/Variety seed shall be done by the second party with his own labour, land, equipment and any other consumables. The first party reserves the right to reject the whole producer or any part thereof for breach of any of the condition of the agreement or if the producer does not meet the quality parameters set and communicated to the second party in advance and the decision of the first party shall be final, conclusive and binding on the second party.

13. The second party shall meet the entire cost including that of consumables, such as land preparation, irrigation, sowing, interculture, fertilizer and manure, plant protection measures, rouging, harvesting, emasculation, pollination, picking and all other farm operations connected with the raising of seed crop.

14. The second party shall do rouging of all off-type plant (plants other than the normal type) from total male and female plant population of the seed production area.

15. The second party shall start operations like emasculation/polination after thorough check and removal of off type plants from female and male population.

16. The second party shall uproot and destroy the plants of pollinators parent from the field immediately after the completion of pollination work. The second party shall not insist on keeping pollinator parent in the field for the purpose of taking commercial yield from the said parent line.

17. FOR VEGETABLE CROP : The picking of vegetable seeds shall be done by the second party and he shall store dry clean seed in a secured place. The second party shall bring total vegetable seeds produced in the area to the designated plant of the first party properly packed in gunny bags.

18. The second party may bring seed in one or two installments/lots. The first party shall have right to fix the maximum number of such installments/lots in which seed will be accepted from the second party. The second party can not sell, keep, retain or use for planting the seeds produced from above said production, nor part with possession thereof except the first party.

19. During the entire operation of production by the second party, the first party shall have all the rights to enter into the field and oversee the activities being carried out by the second party to satisfy itself with the required quality parameters and output levels fixed by the first party.

20. On receipt of seed at processing plant the first party shall have sole and absolute discretion as regards treatment with chemicals and cleaning of seed either manually or mechanically through appropriate types of grading equipment or by both. The screen size for grading the seed will be fixed by the first party and second party shall have no objection to such decision of the first party and agrees to this condition express. The second party shall not raise any objection as regards to seed quantity rejected as remnant during cleaning and grading procedure adopted by the first party.

21. The first party will deduct any/all the charges due to second party under this agreement from the first/final payment to be made to second party.

22. The First party shall be bound to purchase only seeds which comply with the following specifications :

a. The seed production operations, isolation requirement, roguing and all other operations shall confirm to the standards laid down by the first party for this seed production.

b. The seed shall not contain any insect, pest and deleterious matter or more than one percent broken seeds.

c. The first party reserves the right to reject any seed lot on the ground of bad appearance, infestation with fungus, damage and partial germination due to rains, weevil infestation. The decision taken in this regard by the Area Production Officer of the first party shall be binding and final.

23. The second party shall be liable to sell the rejected seed to the first party at the prevailing market price. However, the first party shall have the option/discretion to purchase rejected seed produce at prevailing market price from the second party.

24. In case the first party does not exercise the said option to buy such seed, male parent, remnant at prevailing market price, then the second party may deal with the dispose of the same after obtaining necessary. Fit for Consumption Certificate from the appropriate Government Authority, while returning such rejected seeds remnant to the second party. First party shall be free to use any such measure/treatment for deforming seeds physically and/or physiologically, to make it unuseable as seed in the fields.

25. In case the second party fails to supply seed produced by him as per the above conditions of this agreement, the first party shall be entitled to take legal action, criminal as well as civil at the risk and costs of the second party.

26. The first party has made known to the second party all the characteristics and the pattern of behaviour in respect of the seed herein contracted for production. However, in the event of failure of the crop despite the aforesaid disclosures by the first party and for the reasons beyond first party’s control, the first party stand absolved of any liability for such failure of the crop.

27. In the event of any dispute of difference arising under or in connection with this agreement, the same shall be referred to the sole arbitration of the executive Director of the first party. It will not be open to the parties hereto to object the ground that the arbitrator is the Executive Director of the first party, that he had to deal with matter to which the contract relates or that in the course of his duties as such Executive Director has expressed the views on all or an of the matter in dispute or difference. It is a term of contract that in the event of the Executive Director vacating his office by resignation or otherwise, it shall be lawful for his successor in office to proceed with the reference.

28. Term Nos…………..of this agreement shall not be applicable and binding on the First and Second Party.

IN WITNESS WHEREOF the parties hereto have respective set their hands and seals on the day and date first hereinabove mentioned in the presence of witnesses.

Signature of the representative Signature of the second party of the first party Name :_____________________________ Name :____________________________

Address :___________________________ Address :___________________________

Village :_____________________________ Village :_____________________________

Tq. & Dist. :_________________________ Tq. & Dist. :________________________

Signature of witness (1) Signature of witness (2)

Name :_____________________________ Name :____________________________

Address :___________________________ Address :___________________________

Village :_____________________________ Village :_____________________________

Tq. & Dist. :_________________________ Tq. & Dist. :________________________

Before execution I have explained and interpreted the entire agreement to Mr./Ms. ___________________________________________

Advocate : _________________________________________

APPENDIX Ib: AGREEMENT FOR HYBRID VEGETABLE SEED PRODUCTION (ANKUR SEEDS PRIVATE LIMITED)

Agreement made this __________day of _________2004_________ between ANKUR SEEDS LIMITED a company registered under the Indian Companies Act, 1956 and having its Registered Officer at 27-New Cotton Market Layout, Nagpur (hereinafter called the “Company” which expression unless repugnant to the context would mean and include its legal heirs, executors and assigns) of the one part and _____________________________________________________________ ______________________________________________________________________________

(Name and address of the farmer)

(hereinafter called the “Grower” which expression unless repugnant to the context would mean and include its legal heirs, executors and assigns) of the other part.

NOW THIS AGREEMENT, WITNESSETH, and it is hereby mutually declared as under.

1. The growers shall set apart for seed production an area of ____________acres of levelled, fertile and well drained land with facilities for clean healthy seed production on his estate or in the estate take by him on lease at _____________________________________________________which shall hereinafter be called the “Reserved Area” for kharif 2004__________________.

2. The reserved area shall be so located that the seed crop will confirm to the isolation requirements prescribed in the Indian Seed Certification Standards, March 1971 as amended from, time to time, falling which crop shall be liable rejected in full or part as may be necessary.

The reserved area shall be isolated and shall be at a distance of ___________ meters on all sides from.

a. Any crop ___________whose variety or code designation is other than the one in Reserved area.

b. Any crop of _________which the same variety or code designation which was rejected or due to poor rouging during flowering and the flowering stage of which coincided with the flowering stage of the crop in the reserved area.

3. The foundation seed shall be supplied by the Producer Company against full advance payment. The grower shall not any event or case use other foundation seeds except than the seed supplied by the Producer Company for sowing in the reserved area or any other party within the distance of ____________meters from the reserved area.

4. The grower shall meet the entire cost of land preparation, sowing, interculture, fertilizers and manures, plant protection measures, rouging, harvesting and all other farm operations connected with the raising of seed crops.

5. The grower agrees to plant the seed production before ____________________ The Company reserves the right to accept or reject the seed produced if it is not planted before the agreed date.

6. The grower shall render all the facilities of the staff of company for towards field inspection at any time of the crop. Any seed crop not confirming to the field standards or found to be sub-standards laid down by the Central Seed committee during the field inspection will be liable to be rejected at the field stage and or at any other stage.

7. The seed grower shall arrange to transport the seeds at his own cost from the field to processing plant assigned by the Company. The cost of processing (cleaning, grading, treating, packing or any other cost in this process) shall be borne by the Company.

8. The grower shall not transfer, sale or otherwise dispose-off the seed in any other manner to whomsoever. He shall also retain any quantity of seed with him. In the event

of the Grower Committing, a breach of this condition the producer Company shall be entitled to damage and be indemnified for the same.

9. The company shall also be entitled to reject the seed of grown by the Grower, other than from the reserved area is mixed. The Company shall return the waste material of all the crops (remainants) to the same.

10. The company shall procure the processed seed at the following prices subject to satisfactory physical and germination reports from our seed testing laboratory the kinds multiplied by the unit of packing for the purpose of payment

Kind and variety Rs. Rate per kg processed seeds

11. The Company reserves the right to reject the seed if it does not confirm to standards of the grow-out-result test conducted by the company even though the lot has conformed the Standards in field inspection.

12. The Company undertakes to make the payment to the grower only after sixty days of processing and field test, whichever is later, provided that the laboratory and field test reports relating to germination, physical purity etc. are found to be satisfactory.

The Company reserves the right to reject any seed or on the ground of discolour, rain damage, insect damage or any other way affecting the physical appearance irrespective of the fact whether it is confirming to standards referred to in section 8(e) of Seed Act, 1966 or not.

13. All the seed shall be packed for the sale below 10% moisture. Loss in weight on drying or in transit shall be borne by the grower.

14. The grower shall compensate for the loss in weight due to moisture evaporation after treatment as per the practice prevailing in the Seed Industry.

15. The grower agrees and it is understood that the seed growing process is dependent upon, various risk factors such as satisfactory monsoon, proper fertilization and care of the crop, scientific method of sowing and raising, temperature and agro-climatic condition it is agree that the Company shall in no event be held responsible for failure of the seed crop due to whatsoever reasons.

16. In case of no production or less production the company shall not be held responsible and shall not be liable to pay any compensation to the grower.

17. The seed shall be processed on the standard screens as prescribed from time to time, by the Company’s staff.

18. Notwithstanding the place where this agreement is executed or is to be implemented it is mutually agreed by the parties that this contract shall be deemed to have been entered in to by the parties concerned at Nagpur and court of law at Nagpur alone shall have Jurisdiction to Adjudicate thereon.

19. The grower shall take back at his expense from the processing plant the reminants, waste gunnies, discards after cleaning and seed lots rejected on the basis of test reports within 5 days from the date of intimation to the grower. If the grower fails to take the delivery, rent at the rate of ________ paise per quintal on reminants rejected materials, shall be charged after the expiry of the prescribed period. The company reserves the right to dispose off the produce in the manner, fit-after or on the expiry of the prescribed period and recover from the Grower’s Account.

20. In the event of any question, dispute or difference arising under on in connection with this agreement, its implementation, or satisfaction, the same shall be referred to the sole arbitrator, who may be appointed by the Managing Director, Ankur Seeds Limited, Nagpur. It shall be competent for them to act as sole arbitrator himself. The parties to this agreement shall have no objection to nominate any other person as the arbitrator. The venue and cost of arbitrator shall be at the discretion of the arbitrator. It is agreed by the parties that the arbitrator may in the interest of Justice and proper determination

of the dispute extend the time for making the award by an order in writing conveyed to the parties.

IN WITNESS THEREOF, the parties have set their hands on the day and year first above mentioned.

____________________

_______________________ (Signature of the grower) (Signature of producer Company’s

Authorized representative)

WITNESSES 1. Signature______________ 2. ________________

(Signature) (Signature)

2. Name _______________ Name _______________ Address _______________ Address _______________ _______________ ______________

Order No. :

Centre :

CONTRACT FARMING IN HYBRID VEGETABLE SEED PRODUCTION IN NORTHERN KARNATAKA – AN

ECONOMIC ANALYSIS

ASHOK KUMAR H. A. 2005 Dr. S. B. HOSAMANI Major Advisor

ABSTRACT

Contract farming can be described as half-way house between farm production and corporate farming. It involves contractual relation between farmers and central processing or exporting unit/firms.

Seed is a vital input and dynamic instrument for increasing agricultural production. The study analyzed the costs, returns, production efficiency and modus operandi of private seed firms in hybrid vegetable seed producing taluks viz., Ranebennur, Hirekerur and Byadagi in Haveri district of Karnataka

The primary data were collected (during 2004-05) from 120 seed growers comprising 30 each for tomato, brinjal, okra and ridge gourd from private seed firms. The data subjected to Cobb-Douglas and frontier production function analysis besides tabular presentation.

The results revealed per acre seed production cost estimated to be Rs. 54893, Rs. 36688, Rs. 29288 and Rs. 35868 in tomato, brinjal, okra and ridge gourd, respectively. The per acre yields of seed obtained were 78, 302, 298 and 140 kgs in tomato, brinjal, okra and ridge gourd seed growers group.

The marginal productivity analysis indicated that seed, human labour, fertilizer and micronutrients, plant protection chemicals, irrigation, staking sticks and gunny thread in tomato, seeds, human labour, bullock and tractor charges, FYM in brinjal, FYM, bullock and tractor charges, human labour, fertilizers and micronutrients in okra and FYM, irrigation, fertilizer and micronutrients, seeds, bullock and tractor charges in ridge gourd were under utilized.

The mean technical efficiency index was 79, 76, 72 and 73 for tomato, brinjal, okra and ridge gourd seed growers, respectively.

Written agreement was used in contract. The technical aspect of agreement was drafted in short, simple terms, clarifying the responsibilities of farmers and firms.

Availability of skilled labour, adequate and timely capital, non-existence of crop insurance were the problems confronting the seed growers.

Fixing scale of finance, crop insurance and government intervention were the suggestions.