Smallholders’ Preferences for Different Contract Farming Models: Empirical Evidence from Sustainable Certified Coffee Production in Vietnam

Abstract

Contract farming is considered as institutional arrangements that manage the coordination of production and distribution between smallholder farmers and agro-industrial firms. Under the market reforms and industrialization process, contract farming links smallholder farmers to a better market through effective farming management and high-quality products. Despite the many benefits attributed to participation, the existing literature addresses the main issues that result in the opposing attitudes and motivations toward contract farming. This study therefore aims to analyze factors that influence the choices of smallholder farmers for different contract faming models using multinomial logistic (MNL) regression. Different contract attributes and socio-economic characteristics of farmer households are used as endogenous variables in the MNL model. Based on a research sample of 183 smallholder farmers involved in certified coffee production in Dak Lak province, Vietnam, the study revealed that there are different typologies of production contract including the informal model, intermediary model, and nucleus estate model. Significant factors that affect smallholders’ preferences for different contract farming models are gender, farm size, the provision of inputs, price option, technical assistance, delivery schedule, and monitoring. Main issues that induce failures of contract farming are farmer’s overdependence and the monopolistic power of industrial coffee firms in the nucleus estate model, as well as the information asymmetry in the informal model. In addition, a cost-benefit analysis symbolizes the role of the cooperative in the intermediary model, which is essential for augmenting win-win outcomes for smallholder farmers and industrial coffee firms.

Determinants of Participation in Contract Farming Among Smallholder Dairy Farmers: The Case of North Shewa Zone of Oromia National Regional State, Ethiopia

“…Contrary to this, female-headed households are usually occupied with core domestic activities and have little time on activities outside home management which might have led them to low participation in dairy contract farming in the study area. This result is consistent with the findings of Anh et al (2019).…”

Contracts to Govern the Transition towards Sustainable Production: Evidence from a Discrete Choice Analysis in the Durum Wheat Sector in Italy

“…Due to several food scandals worldwide, consumers became increasingly suspicious and reacted with alarm to reports of diseases, or potential diseases, related to food [2,3]. Against this growing demand for transparency of productions related not only to food quality but also to the socio-environmental impact of food production, there is increasing evidence from the literature that firms have started to embed sustainability in their corporate strategy in many different ways, especially in the interaction with other supply chain actors [4,5]. As a consequence, the need for coordination and adaptation along the modern agri-food value chain further arose, and under these circumstances, transactions usually shifted from traditional spot markets to more complex contractual or hierarchical arrangements [6].…”

Contract farming as an alternative to large‐scale land acquisition and promoting inclusive and responsible agricultural investment: Evidences from Ethiopia

“…Depending on the objectives and resources of the contractor, the product type, the strength of the linkages between farmers and contractors, the number of stakeholders involved in the arrangement, and other factors, different contract farming modalities could be built (USAID, 2012). Five types of contract farming modalities are identified by (Eaton & Shepherd, 2001) and further discussed by (Anh et al, 2019; Ayelech, 2012; Will, 2013). These five contract farming models are centralized, nucleus estate, multi‐party, informal and intermediary models.…”