This study examines the moral economy of firm-farmer contracts in contract farming schemes in India,
bringing together data from field surveys, conducted between 2007 and 2010, of 42 agribusinesses and
484 contract farmers from multiple commodity sectors. The central argument of this paper is that
contract farming relationships in India are seen more as relationships and less as contracts, with formal
enforcement mechanisms playing only a peripheral role in maintaining and supporting transactions.
This is related only in part to the costs and inefficacy of formal enforcement mechanisms. Both firms
and farmers prefer to operate outside the prescribed legal-institutional structure whenever these
structures are perceived to undermine the handshake ethic. The findings indicate that state policies that
presume legal institutional development to be necessary and sufficient for promoting agribusiness
interaction with farmers might be misplaced if not merely ineffective.
