Baby Corn Production under a Contract Farming System

Abstract

     The objectives of this research were to compare the production costs and returns between contract and non-contract farming systems of baby corn production, and to analyze the procurement costs of the company through contract versus non-contract (open market) channels. The data were collected during the crop year 2005/2006 from 60 farmers in Kanchanaburi and Nakhon Pathom provinces, with 30 contract farmers and 30 non-contract farmers. The results of the study showed no significant difference in the socio-economic situation of contract and non-contract farmers. The comparative analysis of production costs and returns between the two groups demonstrated that the contract farmers had higher costs and higher net incomes than the non-contract farmers. The higher production costs mandated farmers to follow the specifications of the production line to meet the required standard. The investment in baby corn production by contract farming had lower risk than non-contract farming. In addition, the results showed that the procurement cost via the contract channel was higher than the non-contract channel because the contract prices, on average, were higher than non-contract prices. However, the contracting company was willing to accept higher costs for standard quality products, for which the source of origin was known.