Contractual Arrangements and Enforcement in India: The Case of Organic Basmati Paddy Farming

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