Productivity and profitability of contract farming over non-contract farming in sugarcane cultivation in Vizianagaram district of Andhra Pradesh

The study has been conducted in Vizianagaram district of Andhra Pradesh with an objective of identifying profitability and productivity of sugarcane under contract and non-contract farming. Decomposition analysis was used for the study. The results shown that the estimated productivity change stood at 8.22%, it was found to slightly underestimate the actual observed change of 10.34%. Further examination of input factors highlights the significant positive impact of input substitution, particularly in human labor and machine labor, contributing 6.91% to contract farming productivity. Machine labor emerged as the major contributor, followed by human labor and fertilizers and manures. This suggests that allocating more resources to human and machine labor enables contract farmers to achieve higher outcomes compared to non-contract counterparts. Conversely, certain inputs such as seed, bullock labor, and irrigation were found to diminish gross returns, highlighting the costs associated with these inputs for non-contract farmers. The findings underscore the intricate interplay of various factors in contract farming productivity dynamics, emphasizing the pivotal role of technological advancements and strategic input allocation in influencing outcomes. This analysis provides valuable insights for policymakers and stakeholders aiming to enhance productivity and efficiency in contract farming systems.