Vertical integration and contracting in the Indian Poultry Sector: A study of broiler farming in Maharashtra Kalamkar S. S.1, Atkare A.G.2 1Agro-Economic Research Centre, Sardar Patel University, Vallabh Vidyanagar, Anand 2Dept. of Animal Husbandry and Dairy Science, College of Agriculture, Nagpur Online published on 23 October, 2017. Abstract In the recent years, the interest of policy makers, researcher and development planners in contract farming (CF) as a mechanism to govern linkages between farmers and agribusiness firms has increased considerably. The agri-business proponents advocate CF as a key strategy for rural transformation based on a dynamic partnership between small holders and agroindustrial enterprises. It provides opportunities to both the parties to benefit from modern technology, marketing facilities and other services to boost their incomes. However, there is a counter argument regarding the benefits of CF to the small holders and reject the idea of equal partnership. They argue that CF may subjugate the peasantry to increased control and exploitation by capital, leading to a peculiar form of proletarianization. CF in poultry has been successful in India due to the presence of strong backward linkages. However, in many parts of the India, poultry value chains are still not fully developed, leading to high costs and inefficiencies. The present study found that average net return/kg of live weight as well as per bird was higher in non-contract than contract group. However, variation in net profit/kg of bird was lower for contract than of independent broiler farmer. As company had provided inputs and purchased the produce, contract farmers had to only rear the birds and faced less risk, where as independent/non-contract farmer had to face all kinds of risks in operation and received the prevailing market price for the output. Thus, there is clear cut tradeoff between risk transfer and profitability. Despite of contract for supply of inputs and sale of output, contract farmers faced problems like delay in supply of inputs, high feed prices, delay in lifting the produce, delay in payment, low price, and sometime rejection of output. Beside, low growing charges, delay in providing chicks and veterinary services, and deduction of tax were other problems faced by the contract farmers. They also experienced problem in execution of contract as all rights were in the hand of the company and sometimes there was a delay in providing chicks leading to less number of batches in a year. The less financial requirement, no marketing problem and reduction in risk were major motivating factors to enter into CBF, whereas limited income/less profit, high initial cost and contract formalities were major factors de-motivating them. Therefore, these bottlenecks need to be removed for positive growth of broiler sector. Top Keywords Broiler, organization of production, contract, production and market risk. Top |