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Contractual arrangements and enforcement in transition agriculture: Theory and evidence from China

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  • Guo, Hongdong
  • Jolly, Robert W.

Abstract

This paper empirically investigates the relationship between contractual arrangements and their enforcement in Chinese agriculture. Based on an analysis of a survey of 100 agribusiness firms engaged in contract farming in Zhejiang province of China, we find that private contract enforcement mechanisms play an important role in influencing smallholders' decisions to breach or fulfill contracts. Contract arrangements such as floor pricing, or requiring smallholders to make specific investments facilitate self-enforcement and significantly improve the smallholder's contract fulfillment rate. This is particularly important in Chinese agriculture since the business environment is characterized by an absence of effective public enforcement institutions.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jfpoli:v:33:y:2008:i:6:p:570-575
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    References listed on IDEAS

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    Cited by:

    1. Julie Wilk & Mattias Hjerpe & Wei Yang & Hua Fan, 2015. "Farm-scale adaptation under extreme climate and rapid economic transition," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 17(3), pages 393-407, June.
    2. Schipmann, Christin & Qaim, Matin, 2011. "Supply chain differentiation, contract agriculture, and farmers’ marketing preferences: The case of sweet pepper in Thailand," Food Policy, Elsevier, vol. 36(5), pages 667-677.
    3. Wanglin Ma & Awudu Abdulai, 2016. "Linking apple farmers to markets: Determinants and impacts of marketing contracts in China," China Agricultural Economic Review, Emerald Group Publishing, vol. 8(1), pages 2-21, February.
    4. Schipmann, Christin & Qaim, Matin, 2011. "Supply chain differentiation, contract agriculture, and farmers’ marketing preferences: the case of sweet pepper in Thailand," Discussion Papers 108349, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    5. Hoken, Hisatoshi, 2016. "Participation in farmer's cooperatives and its effects on agricultural incomes : evidence from vegetable-producing areas in China," IDE Discussion Papers 578, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    6. Kumar, Shiv & Chandra, Subhash & Singh, D.R. & Chaudhary, Khyali R., 2013. "Contractual Arrangements and Enforcement in India: The Case of Organic Basmati Paddy Farming," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 68(3).
    7. Li, Xiaokang & Guo, Hongdong & Li, Lin, 2016. "Contract Farming in China: Perspectives of Smallholders in Vegetable Production," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235573, Agricultural and Applied Economics Association.
    8. Fertő, Imre & Elek, Sándor & Bakucs, Lajos Zoltán & Forgács, Csaba, 2012. "A szerződések teljesülése a magyar élelmiszerláncban
      [Contract fulfilments in Hungarian food chains]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 63-73.
    9. González-Moralejo, Silvia Andrés & Muñoz, Pablo Muñoz & Miquel, Juan Francisco López, 2015. "Firm Size, Contractual Problems and Organizational Decision-Making: Logistics for Perishable Goods," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 18(4).

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