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Does the Contract Type Matter? Impact of Marketing and Production Contracts on Cashew Farmers’ Farm Performance in Ghana

Author

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  • Dubbert Caroline

    (Department of Food Economics and Consumption Studies, University of Kiel, Olshausenstraße 40, 24118 Kiel, Germany)

  • Abdulai Awudu

    (Department of Food Economics and Consumption Studies, University of Kiel, Olshausenstraße 40, 24118 Kiel, Germany)

Abstract

Many studies show that participation in contract farming has positive impacts on farm productivity and incomes. Most of the literature, however, does not take into account that contracts vary in their specifications, making empirical evidence scarce on the diverse impacts of different types of contracts. In this study, we investigate the driving forces of participation in marketing and production contracts, relative to spot markets. We also study the extent to which different contract types add additional benefits to smallholder farmers, using recent survey data of 389 cashew farmers in Ghana. To account for selection bias arising from observed and unobserved factors, we apply a multinomial endogenous switching regression method and implement a counterfactual analysis. The empirical results demonstrate that farmers who participate in production contracts obtain significantly higher cashew yields, cashew net revenues, and are more food secure compared to spot market farmers. We also find substantial heterogeneity in the impact of marketing and production contracts across scale of operation. Small sized farms that participate in production contracts tend to benefit the most. Marketing contracts, however, do not appear to benefit cashew farmers.

Suggested Citation

  • Dubbert Caroline & Abdulai Awudu, 2022. "Does the Contract Type Matter? Impact of Marketing and Production Contracts on Cashew Farmers’ Farm Performance in Ghana," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 20(2), pages 119-134, December.
  • Handle: RePEc:bpj:bjafio:v:20:y:2022:i:2:p:119-134:n:1
    DOI: 10.1515/jafio-2020-0040
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    More about this item

    Keywords

    contract farming schemes; farm size; food security; impact assessment;
    All these keywords.

    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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