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Smallholder Preferences for Choosing Supply Chains and Output Contracts: Evidence from a Discrete Choice Experiment

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  • Nuthalapati, Chandra
  • Saha, Shree
  • Areef, Mulla

Abstract

This paper presents findings from two discrete choice experiments conducted among 836 vegetable growers across four Indian states during 2020-2021. The study aimed to elucidate farmers’ preferences within evolving food supply chains, particularly amidst the supermarket revolution. The first experiment focused on farmers’ supply chain preferences, and we found interesting results, revealing no preference for a specific place of sale, but rather a preference for credit and input support, while showing a significant aversion to delayed payment methods. The second experiment investigated their contract preferences in modern food supply chains, highlighting nuanced preferences for contract terms that minimize financial and legal risks, as well as favor pricing mechanisms that ensure a minimum base price with quality incentives. Demographic factors, initially influential, exhibited varying impacts across different models, highlighting the complex dynamics that shape farmers' decisions. Understanding these preferences is crucial for shaping effective policies and strategies that enhance market access, promote sustainable agricultural practices, and contribute to global food security and economic development.

Suggested Citation

  • Nuthalapati, Chandra & Saha, Shree & Areef, Mulla, 2025. "Smallholder Preferences for Choosing Supply Chains and Output Contracts: Evidence from a Discrete Choice Experiment," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360604, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea25:360604
    DOI: 10.22004/ag.econ.360604
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    References listed on IDEAS

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    1. Camilla I.M. Andersson & Christine G.K. Chege & Elizaphan J.O. Rao & Matin Qaim, 2015. "Following Up on Smallholder Farmers and Supermarkets in Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(4), pages 1247-1266.
    2. 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.
    3. Fanny Widadie & Jos Bijman & Jacques Trienekens, 2021. "Farmer preferences in contracting with modern retail in Indonesia: A choice experiment," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 371-392, April.
    4. Hudson Darren & Lusk Jayson, 2004. "Risk and Transactions Cost in Contracting: Results from a Choice-Based Experiment," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 2(1), pages 1-19, February.
    5. Rao, N. Chandrasekhara & Sutradhar, Rajib & Reardon, Thomas, 2018. "Inclusiveness, Technology and Profitability in Supermarkets: SUR Model Results from Semi-Arid Region," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 73(03), July.
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