Contract farming and rural transformation: Evidence from a field experiment in Benin

Fairness and Contractual Performance in Vertical Linkages Within an Uncertain Environment: A Case of a Tomato Value Chain

In developing countries with uncertain institutional environments, ensuring fairness in contractual arrangements within food value chains is crucial to overcome modern challenges. This paper empirically investigates the vertical relationship between tomato growers and canneries in Algerian agriculture to assess the determinants of contractual performances and price fairness implications. The study is based on an analysis of a comprehensive dataset of 9127 tomato growers engaged in contract farming over four years (2018-2021). Three regression methods were estimated, namely logit, tobit, and quantile regressions, alongside exploratory analysis. The main findings shed light on the factors influencing contractual performance among contracting producers, primarily farm scale and distance from the contracting processor. Additionally, the findings highlight the key role of contract enforcement mechanisms in influencing the contractual performances of tomato growers. Several recommendations are made to incentivize tomato growers and improve overall contractual performance within such public policy settings. Contract arrangements, including fair price negotiation and the requirement for tomato processing firms to make specific investments, are advocated to foster self-enforcement and significantly enhance the growers' contractual performance. This is particularly important in many developing countries where the business environment is characterized by an absence of effective public enforcement institutions along with a highly uncertain environment.

Investigating the factors affecting farmers' intention to adopt contract farming

Agricultural endeavors, especially in developing nations, entail inherent risks. Amidst challenges related to capital and agricultural marketing, contract farming emerges as a highly effective strategy. It not only facilitates capital accumulation but also ensures consistent product sales, establishes fair pricing, and contributes to the overall balanced development of the agricultural sector. This concern has been a longstanding global consideration, with Iran now addressing it. Recognizing the paramount importance of implementing contemporary agricultural methodologies, including contract farming, this research systematically investigates factors influencing farmers' intentions in Iran. A survey methodology is employed for systematic information collection from a statistical population of 98,777 farmers in rural Markazi Province, Iran. Using the Karjesi and Morgan table for sample size determination, a representative subset of 383 farmers is selected through stratified random sampling, ensuring proportional assignment within strata. A researcher-made questionnaire, validated by expert panels and confirmed for reliability through Cronbach's alpha coefficient, serves as the research instrument. Data analysis was conducted using SPSS 27, and structural equation modeling was performed with SmartPLS4. The findings reveal that trust (0.528), awareness (0.332), and attitude (0.168), exert the most substantial causal influence on farmers' intention to embrace contract farming. Consequently, the research findings offer practical recommendations for the adoption of contract farming, providing valuable insights to policymakers and stakeholders for implementing targeted interventions aimed at boosting farmers' willingness to participate in contractual agreements.

Does contract farming arrangement improve smallholder tobacco productivity? Evidence from Zimbabwe

Contract Farming Arrangements (CFA) can be viewed as a pro-active response to lack of reliable markets and steeply rising input prices. CFA proponents argue that CFA can enhance technical efficiency of tobacco farming and productivity. Thus, in this study, the paper interrogates the effect of CFA on tobacco productivity in southern Africa: Hurungwe district of Zimbabwe. The study controls for both observable and unobservable factors, like age, education, and ability to use information-unknown to the researchers, explaining farmers decision to participate in CFA. The study uses the Endogenous Switching Regression (ESR) model, which also acts as a robust check for the Propensity Score Matching techniques as it studies both observable and unobservable factors influencing CFA participation. Based on the ESR model, this study finds that CFA improves tobacco productivity by 39%. Nonetheless, CFA is labour-intensive. Hence, women and the elderly are less likely to participate in CFA, suggesting the need to develop gender-sensitive labour-saving technologies. Even though tobacco products kill their users, we would like to explore whether CFA can make farming more productive or not. We hypothesize that if tobacco farming would be more productive, then perhaps farmers will have enough money to buy food so they can be healthier even if the tobacco leaves, they grow can kill people elsewhere. Thus, these results inform CFA-related policies that improve smallholder tobacco productivity in Southern Africa. With existing tobacco controls, these results are equally valid to other cash crops where most developing economies anticipate the majority resource-constrained smallholder farmers to shift their production systems entirely away from tobacco in the immediate future.

Is contract arrangement source of income gain among parboiled rice stakeholders in Benin? A doubly robust analysis

Rice supply remains insufficient for the world's consumption despite the agro-ecological potential, including the sub-Saharan African countries. The organization of the rice sector in Benin aims to a better profitability and above all in the increase in rice income of producers and processors. With this in mind, the objective of this study is to assess the impact of the contractual system on the earnings of parboiled rice stakeholders in the hill departments of Benin. For this reason, a random sample of 650 rice farmers spread over 400 producers and 250 processors made it possible to estimate of the Endogenous Switching Regression (ESR). The results of the estimates revealed that adherence to the agricultural contract as a function of socio-demographic factors such as human capital; gender; membership of an agricultural cooperative; have access to agricultural extension innovations and economic-institutional factors such as free entry into the market; access to quality agricultural products and access to credit. These results also confirm the positive effects of the acceptance of contracts on the parboiled rice income of the two actors. Adherence to agricultural contracts remains an effective agricultural policy likely to increase rice income in developing countries and in particular in the department of Collines which has a very high potential for arable land. The effective exploitation of these lowlands is a real source of increasing the rice supply in the perspective of insurance and guaranteeing better levels of food and nutritional security in Benin.

Stakeholders’ Preferences towards Contract Attributes: Evidence from Rice Production in Vietnam

Contract farming is typically considered an appropriate measure for small-scale farmers to solve their constraints and problems. However, despite positive effects, low participation in and high dropout rates from contract farming schemes remain challenges. Therefore, this study objects to evaluate preferences for contract attributes and attribute levels among contracting buyers, farmers, and government officials through data triangulation from key informant interviews, focus group discussions, and participant observations. Based on Henry Garrett Ranking, Rank Based Quotient, and Rank Based Sum methods, results indicate that the most important attributes were price options, payment, delivery arrangement, input provision, input-use requirements, and product quality standards. Despite a consensus on the ranking of the contract attributes, the preferences for the attribute levels among the stakeholders were heterogeneous. It is recommended that attributes and their levels should be pertinent in contract agreements. Thus, contract design with an adjusted or premium price, 50% of estimated payment before harvesting and the rest after delivery three to five days or lump-sum immediate payment, delivery after harvesting, inputs provision by the contractors through the representative branches or stores located at the local areas or cooperatives, banning active-ingredients or flexible use of inputs from the contractors to produce Good Agricultural Practices or organic products are considerable options.

Personalized digital extension services and agricultural performance: Evidence from smallholder farmers in India

Productivity growth in smallholder agriculture is an important driver of rural economic development and poverty reduction. However, smallholder farmers often have limited access to information, which can be a serious constraint for increasing productivity. One potential mechanism to reduce information constraints is the public agricultural extension service, but its effectiveness has often been low in the past. Digital technologies could enhance the effectiveness of extension by reducing outreach costs and helping to better tailor the information to farmers’ individual needs and conditions. Using primary data from India, this study analyses the association between digital extension services and smallholder agricultural performance. The digital extension services that some of the farmers use provide personalized information on the types of crops to grow, the types and quantities of inputs to use, and other methods of cultivation. Problems of selection bias in the impact evaluation are reduced through propensity score matching (PSM) combined with estimates of farmers’ willingness to pay for digital extension. Results show that use of personalized digital extension services is positively and significantly associated with input intensity, production diversity, crop productivity, and crop income.