Contract farming and smallholder incentives to produce high quality: Experimental evidence from the Vietnamese dairy sector
In emerging markets for high‐value food products in developing countries, processing companies search for efficient ways to source raw material of high quality. One widely embraced approach is contract farming. But relatively little is known about the appropriate design of financial incentives in a...
| Autores principales: | , , , |
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| Formato: | Journal Article |
| Lenguaje: | Inglés |
| Publicado: |
Wiley
2013
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| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/152948 |
| _version_ | 1855532438392930304 |
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| author | Saenger, Christoph Qaim, Matin Torero, Máximo Viceisza, Angelino |
| author_browse | Qaim, Matin Saenger, Christoph Torero, Máximo Viceisza, Angelino |
| author_facet | Saenger, Christoph Qaim, Matin Torero, Máximo Viceisza, Angelino |
| author_sort | Saenger, Christoph |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | In emerging markets for high‐value food products in developing countries, processing companies search for efficient ways to source raw material of high quality. One widely embraced approach is contract farming. But relatively little is known about the appropriate design of financial incentives 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. |
| format | Journal Article |
| id | CGSpace152948 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2013 |
| publishDateRange | 2013 |
| publishDateSort | 2013 |
| publisher | Wiley |
| publisherStr | Wiley |
| record_format | dspace |
| spelling | CGSpace1529482024-11-15T08:52:49Z Contract farming and smallholder incentives to produce high quality: Experimental evidence from the Vietnamese dairy sector Saenger, Christoph Qaim, Matin Torero, Máximo Viceisza, Angelino smallholders high-value agricultural products contract farming field experimentation agro-industrial sector community development rural development urban development behavioural sciences In emerging markets for high‐value food products in developing countries, processing companies search for efficient ways to source raw material of high quality. One widely embraced approach is contract farming. But relatively little is known about the appropriate design of financial incentives 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. 2013-05 2024-10-01T13:55:23Z 2024-10-01T13:55:23Z Journal Article https://hdl.handle.net/10568/152948 en Limited Access Wiley Saenger, Christoph; Qaim, Matin; Torero, Maximo; and Viceisza, Angelino. 2013. Contract farming and smallholder incentives to produce high quality: Experimental evidence from the Vietnamese dairy sector. Agricultural Economics 44(3): 297-308. https://doi.org/10.1111/agec.12012 |
| spellingShingle | smallholders high-value agricultural products contract farming field experimentation agro-industrial sector community development rural development urban development behavioural sciences Saenger, Christoph Qaim, Matin Torero, Máximo Viceisza, Angelino Contract farming and smallholder incentives to produce high quality: Experimental evidence from the Vietnamese dairy sector |
| title | Contract farming and smallholder incentives to produce high quality: Experimental evidence from the Vietnamese dairy sector |
| title_full | Contract farming and smallholder incentives to produce high quality: Experimental evidence from the Vietnamese dairy sector |
| title_fullStr | Contract farming and smallholder incentives to produce high quality: Experimental evidence from the Vietnamese dairy sector |
| title_full_unstemmed | Contract farming and smallholder incentives to produce high quality: Experimental evidence from the Vietnamese dairy sector |
| title_short | Contract farming and smallholder incentives to produce high quality: Experimental evidence from the Vietnamese dairy sector |
| title_sort | contract farming and smallholder incentives to produce high quality experimental evidence from the vietnamese dairy sector |
| topic | smallholders high-value agricultural products contract farming field experimentation agro-industrial sector community development rural development urban development behavioural sciences |
| url | https://hdl.handle.net/10568/152948 |
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