Socio Economic Impact of Contract Farming on Medicinal Plant Farmers in Kerala

Abstract

Medicinal plants are primary raw materials for industrial production of Ayurvedic medicines and other herbal products. Hence, the global demand for medicinal plants is increasing day by day. After China, India is the second largest supplier of medicinal plants to the global industry. (Ganesan et al., 2016). The rise in demand for medicinal plants, both at the local and international markets, open up new avenues for India s international trade prospects. Compared to China, India has not been able to take advantage of this remarkable boost in global trade of medicinal plants. This is evident from the declining trend in India s export value of medicinal plant trade during the period, 2017-2020 (Statista Research Department, 2021). There is a huge gap in demand-supply ratio of medicinal plants in domestic and international markets. Small scale cultivation of medicinal plants is a more viable solution to address many of these issues. This requires only low inputs which will boost up the production rate of plants and will give back high returns to small holder farmers. In the past, many agreements have been signed to buy some of the plant genotypes, between the Ayurvedic companies and medicinal plants cultivators, mostly in the unorganized sector. Farmers found it difficult to cultivate certain genotypes of medicinal plants under these agreements, as it either turned out to be too costly, or there was a sudden fall in the demand for that version. In certain cases, companies offered prices less than what was agreed upon initially. These situations have made the medicinal plant cultivation in India risky. Therefore, sustainable, and controlled farming of medicinal plants will certainly improve continued supply of plants and the socio-economic status of farmers by providing them regular income and employment. Contract farming of medicinal plants can ensure sustainability. It is an emerging concept and practiced widely by medicinal plant cultivators in Kerala. There is certainly a scope for studying the potential social...