Contract farming and smallholder incentives to produce high quality: experimental evidence from the Vietnamese dairy sector

Arbeitspapier

In emerging markets for high-value food products in developing countries, processing companies search for efficient ways to source raw material of consistent quality. One widely embraced approach is contract farming. But relatively little is known about the appropriate design of contracts, especially in a small farm context. We use the example of the Vietnamese dairy sector to analyze the effectiveness of existing contracts between a processor and smallholder farmers in terms of incentivizing the production of high quality milk. A framed field experiment is conducted to evaluate the impact of two incentive instruments, a price penalty for low quality and a bonus for consistent high quality milk, on farmers’ investment in quality-improving inputs. Statistical analysis suggests that the penalty drives farmers into higher input use, resulting in better output quality. The bonus payment generates even higher quality milk. We also find that input choice levels depend on farmers’ socio- economic characteristics such as wealth, while individual risk preferences seem to be less important. Implications for the design of contracts with smallholders are discussed.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: GlobalFood Discussion Papers ; No. 10

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Field Experiments ; Firm Behavior: Empirical Analysis ; Transactional Relationships; Contracts and Reputation; Networks ; Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products ; Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets ; Agricultural Markets and Marketing; Cooperatives; Agribusiness
• Thema: Agribusiness ; Community/rural/urban development ; Institutional and behavioral economics ; Demand and price analysis

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Saenger, Christoph ; Qaim, Matin ; Torero, Maximo ; Viceisza, Angelino
• Ereignis: Veröffentlichung
• (wer): Georg-August-Universität Göttingen, Research Training Group (RTG) 1666 - GlobalFood
• (wo): Göttingen
• (wann): 2012

Weitere Informationen

• DOI: doi:10.22004/ag.econ.122614
• Handle: http://hdl.handle.net/10419/90610
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ