Economic Affairs, Vol. 62, No. 4, pp. 683-690, December 2017 DOI: 10.5958/0976-4666.2017.00083.3 ©2017 New Delhi Publishers. All rights reserved Comparative Economics of Contract and Non-contract Farming of Potato in Gujarat V.K. Gondalia 1 *, Y.C. Zala 2 and Rachana Kumari Bansal 3 Department of Agricultural Economics, B. A. College of Agriculture, Anand Agricultural University, Anand, Gujarat, India *Corresponding author: vkgondalia@gmail.com ABSTRACT To study the comparative economics of contract and non-contract farming of potato in Gujarat state, a sample of 120 potato growers comprising 60 each from contract and non-contract were selected. The Cost Concept (CACP approach) was used to work out various costs and “t” test was used for testing their statistical signifcance. The results revealed that the cost of cultivation (Cost C 2 ) was higher on contract farms (` 185435 per ha) when compared to the non-contract farms, (` 154930 per ha) due to higher cost of labor, manures, seeds and chemical fertilizers. The average production of potato was higher on contract farms (399.92 q/ha) than on the non-contract farms (303.83 q/ha). This might be due to the use of beter variety, proper use of inputs and beter production technology as specifed by the contracting frm. The average price received by the farmers was higher on the contract farms (` 830.29 per quintal) when compared to the non-contract farms (` 808.17 per quintal). The net returns received over Cost C 2 was higher on contract farms (` 146615 per ha) when compared to the non-contract farms (` 90620 per ha). The yield uncertainty ratio was lower on the contract farms (0.1806) than the non-contract farms (0.4588). Similarly, the price uncertainty ratio was lower on contract farms (0.0162) than the non-contract farms (0.1358). In nutshell, these results clearly revealed that the contract farming in potato was economically more proftable and less risky when compared to traditional non-contract farming. Keywords: Cost concept, contract farms, net returns, price uncertainty, yield uncertainty Contract farming is a prominent and growing phenomenon in Indian agriculture. Globalization, liberalization and the growth of organized retail have intensifed the role of the agribusiness frms who are entering into contract with farmers for the purchase of raw materials. Contract farming has been receiving increasing attention from agribusiness frms as well as from the government for more than a decade. The National Agricultural Policy 2000 announced by the Government of India, seeks to promote contract farming by involving the private sector to accelerate technology transfer, capital inflow and assured marketing of farm produce. According to FAO “Contract farming can be defned as an agreement between farmers and processing and/or marketing firms for the production and supply of agricultural products under forward agreements, frequently at predetermined prices. The arrangement also invariably involves the purchaser in providing a degree of production support by, for example, the supply of inputs and the provision of technical advice. The basis of such arrangements is a commitment on the part of the farmer to provide a specifc commodity in quantities and at quality standards determined by the purchaser and a commitment on the part of the company to support the farmer’s production and to purchase the commodity” (www.fao.org/ag/ags/cf). Thus, contract farming is a win-win situation which contributes to both, beter prices and assured market to the farmers and good quality raw-material to agro-processing industries. The contract farming in its new concept has become more popular afer the execution of the Model Act 2003 (The State Agricultural Produce Marketing