Impact of contracts on vertical integration of rice farmers in the rice value chain in Senegal River Valley

Rice farmers in SSA faced an increasing market weakness driven by many constraints such as lack access to market, information on price, input, credit and other one. Face to that, farmers are powerless to exert a total control on the final product. In addition, actors be operating separately inducing low coordination of the sector. The rice value chain is facing this problem in the Senegal River Valley. Therefore, controlling those constraints through different types of contracts allow better integration in the rice sector. Vertical integration is a means to overcome these problems and achieve economies of scale. This paper aims to analysis the level on integration of farmers and how the contracts can impact their integration. The level of integration is defined according to the number of activities performed in addition to the initial activity, mainly rice production. More farmers involved in addition activities over the chain, higher is their integration. Data used to perform those analysis were collected on 1214 rice farmers households selected using the two-degree randomly sampling technique. A multinomial logit model is used to estimate the impact of the contracts on the vertical integration. Results show that agricultural insurance represents the important contract encourage farmers to be involving in all levels of vertical integration. In addition, the total integration is less preferred level of vertical integration. The study recommends to policy makers to support, improve, and promote the current contracts to increase the national production by reaching sustainably self-sufficient in rice in Senegal.