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Contractual Arrangements in Agriculture (Northern and Central Luzon Component)

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  • Alma M. dela Cruz

    (PIDS)

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    Abstract

    This study aimed to characterize and analyze the various contractual arrangements in selected agricultural commodities in parts of Central and Northern Luzon. Specifically, the objectives are to : i) characterize the nature, process and degree of various agricultural contracts involved in the production and marketing of mangoes, hogs, rice and selected vegetables and, ii) analyze the implications of the various contracting arrangements in these commodities in terms of efficiency and equity. The research sites for this study consist of major producing provinces of the four specified commodities in selected parts of Northern and Central Luzon regions. For mango, Calasiao and San Carlos in Pangasinan, Iba and Masinloc in Zambales and Munoz in Nueva Ecija served as the study areas. For lowland vegetables, the municipalities of Talavera, Aliaga and San Jose City in Nueva Ecija, were primarily selected as study sites being major producers of eggplant, tomato, okra, onions and other vegetables. For hogs, Talavera, Munoz and San Jose City in Nueva Ecija where integrators and key informants are located constitute the sites of the study. The nature, process and degree of the different contracting systems in the four selected agricultural commodities have been diverse. In most cases, however, the different contracts were outcomes of the farmers need to adjust to the different production and market conditions surrounding the agricultural sector. The pervasiveness of sharecropping in many agricultural crops such as mango, rice and vegetables underscore the farmers difficulty in raising capital, due to missing credit and insurance markets. The associated risks, seasonality and specialized nature of agricultural production have likewise complicated the production processes and patterns of contracts in these commodities. Access to credit and marketing institutions and functioning of insurance markets are essential for the transformation of subsistence-oriented asset-poor farmers.

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    Bibliographic Info

    Paper provided by East Asian Bureau of Economic Research in its series Development Economics Working Papers with number 22626.

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    Date of creation: Jan 2007
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    Handle: RePEc:eab:develo:22626

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    Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
    Web page: http://www.eaber.org
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    Related research

    Keywords: Agricultural contracts; marketing; agricultural production; rice and mango production; contractual arrangements; agriculture sector;

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    References

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    1. H. Peyton Young & Mary A. Burke, 2001. "Competition and Custom in Economic Contracts: A Case Study of Illinois Agriculture," American Economic Review, American Economic Association, vol. 91(3), pages 559-573, June.
    2. Gavian, Sarah & Ehui, Simeon, 1999. "Measuring the production efficiency of alternative land tenure contracts in a mixed crop-livestock system in Ethiopia," Agricultural Economics, Blackwell, vol. 20(1), pages 37-49, January.
    3. Ghatak, Maitreesh & Pandey, Priyanka, 2000. "Contract choice in agriculture with joint moral hazard in effort and risk," Journal of Development Economics, Elsevier, vol. 63(2), pages 303-326, December.
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    8. Hueth, Brent & Ligon, Ethan, 1999. "Producer Price Risk and Quality Measurement," Staff General Research Papers 5037, Iowa State University, Department of Economics.
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    11. Alston, Lee J. & Higgs, Robert, 1982. "Contractual Mix in Southern Agriculture since the Civil War: Facts, Hypotheses, and Tests," The Journal of Economic History, Cambridge University Press, vol. 42(02), pages 327-353, June.
    12. Schmitz, Patrick & Dirk Sliwka, 1999. "On Synergies and Vertical Integration," Discussion Paper Serie A 602, University of Bonn, Germany.
    13. Arnab K. Basu, 2002. "Oligopsonistic Landlords, Segmented Labor Markets, and the Persistence of Tied-Labor Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 438-453.
    14. Stanley, Denise L., 2002. "Efficiency and equity tradeoffs: incentive-compatible contracts revisited," Journal of Development Economics, Elsevier, vol. 67(2), pages 309-331, April.
    15. Ahmed, Mohamed M. & Gebremedhin, Berhanu & Benin, Samuel & Ehui, Simeon, 2002. "Measurement and sources of technical efficiency of land tenure contracts in Ethiopia," Environment and Development Economics, Cambridge University Press, vol. 7(03), pages 507-527, July.
    16. Michael E. Sykuta & Michael L. Cook, 2001. "A New Institutional Economics Approach to Contracts and Cooperatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1273-1279.
    17. Gavian, Sarah & Ehui, Simeon, 1999. "Measuring the production efficiency of alternative land tenure contracts in a mixed crop-livestock system in Ethiopia," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 20(1), January.
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