The Impact Of Contract Farming On Agricultural Technical Efficiency,Household Income And Food Security

Production and marketing of food crops in Benin face several problems,such as lack of access to agricultural resources,imperfect sale market,and the degradation of the biophysical environment.To remedy this set of circumstances,contract farming has been promoted and implemented in Benin to enhance farmers’ ability to tackle these constraints.But soon,severe problems hinder the development of contract farming as an intensification vector of rice production.After the recorded confrontations,the actors are seen to be uninterested in contract farming.On the other hand,there is a lack of research with compelling results that can enable governments to develop adequate agricultural policies for the development of the agricultural rice sector.Few studies have explored the field of contract farming in general and particularly food crops.Existing studies fail to account for the utilization efficiency of agricultural inputs in contract farming and the negotiation and conflict situation between rice farmers and buyers.As a result,the goals of this study are to examine the technical effectiveness of small holder producers’ involvement in contract farming,the effects affecting increased food security,and the analysis of rice farmers’ and purchasers’ contractual negotiations and disputes.The study use the PSM,the stochastic frontier(SPF),and the Local Average Treatment Effect(LATE)model,and the repeated game theory approach to respectively assess 400 rice farmers technical efficiency,the impact of participation in contract farming on income and food security,the conflict situations and the negotiation between rice producers and purchaser.The findings offer fresh insights into the technical effectiveness of rice production in contract farming.Technically speaking,contract farmers are more productive than non-contract growers;the technical efficiency is influenced by contract farming participation or lack thereof,gender,education,paddy quantity,and paddy income;the sign varies depending on the factor,with only education having a negative impact.Contract rice growers must boost productivity and utilize more fertilizer in order to enhance rice production.Thus,particular emphasis should be placed on fertilizers in establishing contract terms to provide more fertilizer to the contracting rice farmers or allow them to have sufficient purchasing power for fertilizer for their production.We also made an attempt to look into how contract farming affected the income and food security of smallholder farmers.A combination of the PSM and the Local Average Treatment Effect(LATE)methodology revealed significant downsides of contract farming for rice.At a 1% level,we discovered considerable detrimental effects on rice production income.The income of the rice farms declines as more farmers engage in contract farming.With a score of 60.64,potential participants in contract farming consumed less food overall,placing their households in the category of poor food consumption as a result of insufficient dietary intake in terms of both quantity and nutritional quality.The problem faced by contracting producers after participating in the contract is the problem of changing the prices fixed at the base.The contract being for the most part verbal,the contracting buyer comes to lower the price because in a monopoly position would have loaned money to the producer for the production and in return claims the production at a low price at the points the producers no longer realize profit.Therefore,contract farming is not yet a rational policy instrument that may help farmers grow their income and improve their degree of food security if farmers in the Alibori Department of Benin do not diversify their crops.Because the necessary resources and economic conditions are not currently there for contract farming to fully realize its potential advantages,more steps are needed to make it lucrative for contracting players,maintain sustainability,and ensure that a significant number of farmers engage.Finally,it is vital to make an appeal to all parties concerned in contract farming,including buyers and rice farmers as well as the government,to work systematically to promote the establishment of an assessment system based on reputation to link farmers profits.This was demonstrated by the analysis of conflict situations and negotiation between farmers and buyers using the Rubinstein bargaining game theory model.Findings further divulge that the transaction price P of trading volume Q is the focal point of the negotiation on which we must bring both parties to agree to arrive at a win-win contract farming game.In addition,the transaction price is negatively correlated with the logistics transportation costs and logistics losses of the rice produced.The higher the rice produced logistics performance level,the lower the logistics costs and logistics losses will be,then the transaction price negotiated by the rice farmers and the wholesaler is higher.The study results in richer understandings,better scientific proof,and more data that may further help to convey of contract farming.This would make it easier for policymakers to foresee the policies that will be put in place to encourage and enable farmers’ extensive participation in contract farming,increase their productivity,and support the development of the Beninese economy.Technical efficiency measurements revealed a significant gap that might be closed by allocating the right amount of resources.Therefore,it is necessary to examine agricultural policy to increase the output and effectiveness of rice fields.The results of this study have significant implications: i)To reduce the degree of inefficiencies already present,farmers’ technical abilities should be improved.ii)Due to Benin’s limited(political)agrarian reform efforts and the significant land limitations faced by smallholders,,the government should concentrate on increasing the agricultural productivity of currently owned land under contract conditions.iii)The government should safeguard the production of certified seeds and make sure that farmers have access to high-quality seeds.The quality of its seeds is still in doubt given the inconsistent production yields that we witness,despite the fact that many entities generate and sell seeds,including seed companies that distribute seeds to farmers.Producers may be able to pick quality seeds more effectively with a seed certification under quality check circumstances.iv)It is recommended that contract conditions provide operational training for technical production routes and fertilizer application methods.The operation training will improve the farmer’s abilities regarding fertilizer application and production routes to finally produce a high yield.v)Increase agricultural research funding and provide farmers with agricultural insurance services to increase the production and drought resilience of rice cultivars.Farmers will be able to avoid these problems thanks to resistant cultivars and access to insurance services.vi)There should be a conflict-resolution procedure in the contract provisions that may be used by both contractual parties.vii)It is recommended to define a policy specific to each region for contract farming implementation.viii)It is suggested to focus on market development and road networks in rural areas.The input(seed,pesticide sprays,and fertilizers)prices and quality should be controlled and monitored.