IDEAS home Printed from https://ideas.repec.org/p/ags/aaea16/235573.html
   My bibliography  Save this paper

Contract Farming in China: Perspectives of Smallholders in Vegetable Production

Author

Listed:
  • Li, Xiaokang
  • Guo, Hongdong
  • Li, Lin

Abstract

Contract farming in development countries has become popular, and this is the same for vegetable production in China. The purpose of this paper is to investigate the impact of production attributes of different vegetables on farmers’ decision of contract farming participation, as well as examine the impact of marketing contracts on net returns. The results revealed that the harvest and marketing times, perishability, certification of the vegetables, and price fluctuation have significantly positive effect on vegetable farmers’ contract farming participation, respectively. A PSM method is employed to estimate the impact of contract farming on net returns of vegetable production, and find out the effect is insignificant.

Suggested Citation

  • Li, Xiaokang & Guo, Hongdong & Li, Lin, 2016. "Contract Farming in China: Perspectives of Smallholders in Vegetable Production," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235573, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea16:235573
    DOI: 10.22004/ag.econ.235573
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/235573/files/Contract%20Farming%20in%20China_Perspectives%20of%20Smallholders%20in%20Vegetable%20Production.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.235573?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jill E. Hobbs & Linda M. Young, 1999. "Increasing Vertical Linkages in Agrifood Supply Chains: A Conceptual Model and Some Preliminary Evidence," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(4), pages 478-478, December.
    2. David A. Hennessy, 1996. "Information Asymmetry as a Reason for Food Industry Vertical Integration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 1034-1043.
    3. Hope C. Michelson, 2013. "Small Farmers, NGOs, and a Walmart World: Welfare Effects of Supermarkets Operating in Nicaragua," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(3), pages 628-649.
    4. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
    5. Masakure, Oliver & Henson, Spencer, 2005. "Why do small-scale producers choose to produce under contract? Lessons from nontraditional vegetable exports from Zimbabwe," World Development, Elsevier, vol. 33(10), pages 1721-1733, October.
    6. Miyata, Sachiko & Minot, Nicholas & Hu, Dinghuan, 2009. "Impact of Contract Farming on Income: Linking Small Farmers, Packers, and Supermarkets in China," World Development, Elsevier, vol. 37(11), pages 1781-1790, November.
    7. Jia, Xiangping & Huang, Jikun, 2011. "Contractual arrangements between farmer cooperatives and buyers in China," Food Policy, Elsevier, vol. 36(5), pages 656-666.
    8. Ani L. Katchova & Mario J. Miranda, 2004. "Two-Step Econometric Estimation of Farm Characteristics Affecting Marketing Contract Decisions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 88-102.
    9. Hennessy, David A., 1996. "Information Asymmetry As a Reason for Vertical Integration," Staff General Research Papers Archive 10422, Iowa State University, Department of Economics.
    10. Allen, Douglas W & Lueck, Dean, 1998. "The Nature of the Farm," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 343-386, October.
    11. Masten, Scott E & Meehan, James W, Jr & Snyder, Edward A, 1991. "The Costs of Organization," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(1), pages 1-25, Spring.
    12. Steven Tadelis & Oliver E.Williamson, 2012. "Transaction Cost Economics [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    13. Constantine ILIOPOULOS, 2013. "Public Policy Support For Agricultural Cooperatives: An Organizational Economics Approach," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 84(3), pages 241-252, September.
    14. Martin, Laura L., 1997. "Production Contracts, Risk Shifting, and Relative Performance Payments in the Pork Industry," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(2), pages 267-278, December.
    15. Key, Nigel D., 2013. "Production Contracts and Farm Business Growth and Survival," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45(2), pages 1-17, May.
    16. Bellemare, Marc F., 2012. "As You Sow, So Shall You Reap: The Welfare Impacts of Contract Farming," World Development, Elsevier, vol. 40(7), pages 1418-1434.
    17. Guo, Hongdong & Jolly, Robert W., 2008. "Contractual arrangements and enforcement in transition agriculture: Theory and evidence from China," Food Policy, Elsevier, vol. 33(6), pages 570-575, December.
    18. Martinez, Stephen W., 2002. "A Comparison of Vertical Coordination in the U.S. Poultry, Egg, and Pork Industries," Agricultural Information Bulletins 33773, United States Department of Agriculture, Economic Research Service.
    19. Key, Nigel & Runsten, David, 1999. "Contract Farming, Smallholders, and Rural Development in Latin America: The Organization of Agroprocessing Firms and the Scale of Outgrower Production," World Development, Elsevier, vol. 27(2), pages 381-401, February.
    20. Hu, Wu-Yueh, 2012. "Effect of Contract Farming on the Farmers' Average Return - The Case of the Grain Industry in the U.S.A," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124659, Agricultural and Applied Economics Association.
    21. Ito, Junichi & Bao, Zongshun & Su, Qun, 2012. "Distributional effects of agricultural cooperatives in China: Exclusion of smallholders and potential gains on participation," Food Policy, Elsevier, vol. 37(6), pages 700-709.
    22. Schulze, Birgit & Spiller, Achim & Theuvsen, Ludwig, 2006. "More Trust Instead of More Vertical Integration in the German Pork Production? Empirical Evidence and Theoretical Considerations," 99th Seminar, February 8-10, 2006, Bonn, Germany 7756, European Association of Agricultural Economists.
    23. H. Holly Wang & Yanbing Wang & Michael S. Delgado, 2014. "The Transition to Modern Agriculture: Contract Farming in Developing Economies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1257-1271.
    24. Phil Simmons & Paul Winters & Ian Patrick, 2005. "An analysis of contract farming in East Java, Bali, and Lombok, Indonesia," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 513-525, November.
    25. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
    26. Arumugam, Nalini & Arshad, Fatimah Mohamed & Chiew, Fook C. Eddie & Mohamed, Zainalabidin, 2011. "Determinants of Fresh Fruits and Vegetables (FFV) Farmers’ Participation in Contract Farming in Peninsular Malaysia," International Journal of Agricultural Management and Development (IJAMAD), Iranian Association of Agricultural Economics, vol. 1(2), pages 1-7, June.
    27. Martinez, Stephen W., 2002. "Vertical Coordination Of Marketing Systems: Lessons From The Poultry, Egg, And Pork Industries," Agricultural Economic Reports 34051, United States Department of Agriculture, Economic Research Service.
    28. Martin, Laura L., 1997. "Production Contracts, Risk Shifting, And Relative Performance Payments In The Pork Industry," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(2), pages 1-12, December.
    29. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Viet Hoang, 2021. "Impact of Contract Farming on Farmers’ Income in the Food Value Chain: A Theoretical Analysis and Empirical Study in Vietnam," Agriculture, MDPI, vol. 11(8), pages 1-16, August.
    2. Viet Hoang & Vinh Nguyen, 2023. "Determinants of small farmers' participation in contract farming in developing countries: A study in Vietnam," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 836-853, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, X. & Guo, H. & Li, L., 2018. "Do Product Attributes affect Farmer's Contract Farming Participation? Evidence from Vegetable Production in China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277154, International Association of Agricultural Economists.
    2. Anjani Kumar & Devesh Roy & Gaurav Tripathi, 2016. "Contracting by Small Farmers in Commodities with Export Potential: Assessing Farm Profits of Lentil Growers in Nepal," Working Papers id:10899, eSocialSciences.
    3. repec:oup:apecpp:v:40:y:2018:i:3:p:379-401. is not listed on IDEAS
    4. Ba, Hélène A. & de Mey, Yann & Thoron, Sylvie & Demont, Matty, 2019. "Inclusiveness of contract farming along the vertical coordination continuum: Evidence from the Vietnamese rice sector," Land Use Policy, Elsevier, vol. 87(C).
    5. Tripathi, G. & Kumar, A. & Roy, D. & Joshi, P., 2018. "Profits from participation in contract farming: Evidence from cultivators of onion, okra and pomegranate in Maharashtra, India," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277106, International Association of Agricultural Economists.
    6. Kumar, Anjani & Roy, Devesh & Joshi, Pramod K. & Tripathi, Gaurav & Adhikari, Rajendra P., 2016. "Impact of Contract Farming on Profits and Yield of Smallholder Farms in Nepal: An Evidence from Lentil Cultivation," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235848, Agricultural and Applied Economics Association.
    7. Thomas Kopp & Ashok K. Mishra, 2022. "Perishability and market power in Nepalese food crop production," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(2), pages 518-540, June.
    8. Bellemare, Marc F. & Bloem, Jeffrey R., 2018. "Does contract farming improve welfare? A review," World Development, Elsevier, vol. 112(C), pages 259-271.
    9. Kumar, Anjani & Roy, Devesh & Trapathi, Gaurav & Joshi, Pramod Kumar & Adhikari, Rajendra Prasad, 2016. "Can contract farming increase farmers’ income and enhance adoption of food safety practices?: Evidence from remote areas of Nepal:," IFPRI discussion papers 1524, International Food Policy Research Institute (IFPRI).
    10. Nguyen Hung Anh & Wolfgang Bokelmann & Ngo Thi Thuan & Do Thi Nga & Nguyen Van Minh, 2019. "Smallholders’ Preferences for Different Contract Farming Models: Empirical Evidence from Sustainable Certified Coffee Production in Vietnam," Sustainability, MDPI, vol. 11(14), pages 1-26, July.
    11. Adu-Gyamfi Poku & Regina Birner & Saurabh Gupta, 2018. "Making Contract Farming Arrangements Work in Africa’s Bioeconomy: Evidence from Cassava Outgrower Schemes in Ghana," Sustainability, MDPI, vol. 10(5), pages 1-21, May.
    12. Briones, Roehlano M., 2015. "Small Farmers in High-Value Chains: Binding or Relaxing Constraints to Inclusive Growth?," World Development, Elsevier, vol. 72(C), pages 43-52.
    13. Viet Hoang & Vinh Nguyen, 2023. "Determinants of small farmers' participation in contract farming in developing countries: A study in Vietnam," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 836-853, July.
    14. Maertens, Miet & Vande Velde, Katrien, 2017. "Contract-farming in Staple Food Chains: The Case of Rice in Benin," World Development, Elsevier, vol. 95(C), pages 73-87.
    15. Minot, Nicholas & Sawyer, Bradley, 2016. "Contract farming in developing countries: Theory, practice, and policy implications," IFPRI book chapters, in: Devaux, André & Torero, Maximo & Donovan, Jason & Horton, Douglas E. (ed.), Innovation for inclusive value-chain development: Successes and challenges, chapter 4, pages 127-158, International Food Policy Research Institute (IFPRI).
    16. Mao, Hui & Zhou, Li & Ifft, Jennifer, 2017. "Risk Preferences, Contracts and Technology Adoption by Broiler Farmers in China," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 257248, Agricultural and Applied Economics Association.
    17. Kumar, Anjani & Mishra, Ashok K. & Saroj, Sunil & Joshi, P.K., 2019. "Impact of traditional versus modern dairy value chains on food security: Evidence from India’s dairy sector," Food Policy, Elsevier, vol. 83(C), pages 260-270.
    18. Ton, Giel & Vellema, Wytse & Desiere, Sam & Weituschat, Sophia & D'Haese, Marijke, 2018. "Contract farming for improving smallholder incomes: What can we learn from effectiveness studies?," World Development, Elsevier, vol. 104(C), pages 46-64.
    19. Ruml, Anette & Qaim, Matin, 2020. "Effects of marketing contracts and resource-providing contracts in the African small farm sector: Insights from oil palm production in Ghana," World Development, Elsevier, vol. 136(C).
    20. Ashok K. Mishra & Anjani Kumar & Pramod K. Joshi & Alwin D'Souza, 2018. "Impact of contract farming on yield, costs and profitability in low‐value crop: evidence from a low‐income country," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 62(4), pages 589-607, October.
    21. Susanne Väth & Michael Kirk, 2014. "Do property rights and contract farming matter for rural development? Evidence from a large-scale investment in Ghana," MAGKS Papers on Economics 201416, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

    More about this item

    Keywords

    Agricultural and Food Policy; Crop Production/Industries;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea16:235573. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.