Determining the Attitudes of Farmers Engaged in Livestock Production towards the Contracted Production Model: An Analysis of Risks, Expectations, and Sustainability

Document Type : Original Research

Authors
Adem Aksoy
Ferda Nur Özdemir
Ümit Avcioğlu
Department of Agricultural Economics, Faculty of Agriculture, Atatürk University, Erzurum, Türkiye.
Abstract
The transition of small-scale farmers from traditional production methods to Contract Farming (CF) enhances the potential for increased profits. By offering higher profits to producers, contract farming encourages greater product diversity and provides the opportunity to grow more valuable products. The primary objective of this study was to identify what kind of contract farming model producers are likely to adopt for their continued production. The Analytical Hierarchy Process (AHP) was used as a methodology in the study. In the region, 70% of the producers utilized female animals for fattening purposes. It was found that 73.2% of producers lacked knowledge about contract farming. Livestock operators in production contracts prioritized price guarantees (26.4%), followed by cash prices (24.8%), livestock supply (21.2%), input support (12.5%), advance payments (10.3%), and organized production (4.8%). If contract farming is to be implemented in the region, policymakers should prioritize price guarantees in the model, ensuring that these guarantees are not set below the market price.

Keywords

Subjects

1.       Adabe, K. E., Abbey, A. G., Egyir, I. S., Kuwornu, J. K. and Anim-Somuah, H. 2019. Impact of Contract Farming on Product Quality Upgrading: The Case of Rice in Togo. J. Agribus. Dev. Emerg. Econ., 9(4): 314-332.
2.       Ağır, H. B. 2018. Adana İli Besi Sığırcılığında Uygulanan Sözleşmeli Üretim Modelinin Değerlendirilmesi. Kahramanmaraş Sütçü İmam Üniversitesi Fen Bilimleri Enstitüsü (Doktora Tezi), Kahramanmaraş.
3.       Ağır, H. B. and Akbay, C. 2017. Adana İlinde Sözleşmeli ve Sözleşmesiz Besi Sığırcılığı İşletmelerinin Ekonomik Analizi. Gaziosmanpaşa Üniversitesi Ziraat Fakültesi Dergisi, 34(3): 139-147.
4.       Aksoy, A. 2008. Doğu Anadolu Hayvancılığının Avrupa Birliğine Uyumu ve Rekabet Edebilirliğinin Analizi. Doktora Tezi, Fen Bilimleri Enstitüsü, Tarım Ekonomisi Ababilim Dalı, Atatürk Üniversitesi, Türkiye.
5.       Amanor, K. S. 2012. Global Resource Grabs, Agribusiness Concentration and the Smallholder: Two West African Case Studies. J. Peasant Stud., 39(3-4): 731-749.
6.       Aydın, B. 2007.Tarımda Sözleşmeli Üretim Modeli. Ekonomik Yaklaşım, 18(65): 91-105
7.       Azumah, S. B., Donkoh, S. A. and Ansah, I. G. K. 2017. Contract Farming and the Adoption of Climate Change Coping and Adaptation Strategies in the Northern Region of Ghana. Environ. Dev. Sustain., 19(6): 2275-2295.
8.       Baker, K., Bull, G. Q., Baylis, K. and Barichello, R. 2017. Towards a Theoretical Construct for Modelling Smallholders’ Forestland-Use Decisions: What Can We Learn from Agriculture and Forest Economics? Forests, 8(9): 345.
9.       Ballica, Y. 2020. Savunma Sanayi Projelerinin Analitik Hiyerarşi Süreci Yöntemi Kullanılarak Ӧnceliklendirilmesi. Yüksek Lisans Tezi, Muhasebe-Finans Bilim Dalı, İşletme Anabilim Dalı, Hacettepe Üniversitesi Sosyal Bilimler Enstitüsü.
10.    Barrett, C. B. Bachke, M. E. Bellemare, M. F. Michelson, H. C. Narayanan, S. and Walker, T. F. 2012. Smallholder Participation in Contract Farming: Comparative Evidence from Five Countries. World Dev., 40(4): 715-730.
11.    Bellemare, M. F. 2018. Contract Farming: Opportunity Cost and Trade‐Offs. Agric. Econ., 49(3): 279-288.
12.    Bellemare, M. F. and Bloem, J. R. 2018. Does Contract Farming Improve Welfare? A Review. World Dev., 112: 259-271.
13.    Bijman, J. 2008, Contract Farming in Developing Countries: An Overview. Working Paper, Wageningen University, The Netherlands.
14.    Birthal, P. S. Joshi, P. K. and Gulati, A. 2005. Vertical Coordination in High-Value Food Commodities: Implications for Smallholders. Markets, Trade and Institutions Division Discussion Paper, 85.
15.    Blouin, A. and Macchiavello, R. 2019. Strategic Default in the International Coffee Market. Q. J. Econ., 134(2): 895-951.
16.    Cahyadi, E. R. and Waibel, H. 2016. Contract Farming and Vulnerability to Poverty among Oil Palm Smallholders in Indonesia. J. Dev. Stud., 52(5): 681-695.
17.    Calvet, C. Le Coent, P. Napoleone, C. and Quétier, F. 2019. Challenges of Achieving Biodiversity Offset Outcomes through Agri-Environmental Schemes: Evidence from an Empirical Study in Southern France. Ecol. Econ., 163: 113-125.
18.    Çelik, F. 2019. Hayvancılık Sektöründe Sözleşmeli Üretim: Teorik ve Pratik Bir İnceleme. Tarım Araştırma Merkezi Yayınları, İzmir.
19.    Da Silva, C. A. and Ranking, M. 2013. Contract Farming for Inclusive Market Access. Food and Agriculture Organization of the United Nations (FAO).
20.    Dubbert, C. Abdulai, A. and Mohammed, S. 2023. Contract Farming and the Adoption of Sustainable Farm Practices: Empirical Evidence from Cashew Farmers in Ghana. Appl. Econ. Perspect. Policy, 45(1): 487-509.
21.    Eaton, C. and Shepherd, A. 2001. Contract Farming: Partnerships for Growth (No. 145). Food and Agriculture Org.
22.    Erkuş, A. 1977. Tarım Ekonomisinin Bazı Teorik Esasları ve Bunların Tarım İşletmelerine Uygulanması. TZDK Mesleki Yayınları, Miki Matbaası, Ankara.
23.    European Commission. 2017. PEFCR Guidance Document− Guidance for the Development of Product Environmental Footprint Category Rules (PEFCRs), Version 6.3.
24.    Gatto, M. Wollni, M. Asnawi, R. and Qaim, M. 2017. Oil Palm Boom, Contract Farming, and Rural Economic Development: Village-Level Evidence from Indonesia. World Dev., 95: 127-140.
25.    Gelata, F. T. Han, J. and Limo, S. K. 2024. Impact of Dairy Contract Farming Adoption on Household Resilience to Food Insecurity Evidence from Ethiopia. World Dev. Perspect., 33: 100560.
26.    Gibon, A. Sibbald, A. R. Flamant, J. C. Lhoste, P. Revilla, R. Rubino, R. and Sørensen, J. T. 1999. Livestock Farming Systems Research in Europe and Its Potential Contribution for Managing towards Sustainability in Livestock Farming. Livest. Prod. Sci., 61(2-3): 121-137.
27.    Glover, D. and Kusterer, K. 2016. Small Farmers, Big Business: Contract Farming and Rural Development. Springer.
28.    Günden, C. and Miran, B. 2008. Bulanık Analitik Hiyerarşi Süreci Kullanılarak Ciftçi Kararlarının Snalizi. Ege Üniversitesi Ziraat Fakültesi Dergisi, 45(3): 195-206.
29.    Hernandez, R. Reardon, T. and Berdegué, J. 2007. Supermarkets, Wholesalers, and Tomato Growers in Guatemala. Agric. Econ., 36(3): 281-290.
30.    IFAD and UNEP. 2013. Smallholders, Food Security and the Environment. International Fund for Agricultural Development, Rome, 29 PP.
31.    Jagri Binpori, R. Awunyo-Vitor, D. and Wongnaa, C. A. 2021. Does Contract Farming Improve Rice Farmers' Food Security? Empirical Evidence from Ghana. World J. Sci., Technol. Sustain. Dev., 18(2): 130-149.
32.    Jia, X. and Huang, J. 2011. Contractual Arrangements between Farmer Cooperatives and Buyers in China. Food Policy, 36(5): 656-666.
33.    Jing, H. O. U. Li, Z. H. O. U. Jennifer, I. F. F. T. and Yıng, R. Y. 2023. The Role of Time Preferences in Contract Breach: Evidence from Chinese Poultry Farmers Participating in Contract Farming. J. Integr. Agric., 22(2): 623-641.
34.    Key, N. and Runsten, D. 1999. Contract Farming, Smallholders, and Rural Development in Latin America: The Organization of Agroprocessing Firms and the Scale of Outgrower Production. World Dev., 27(2): 381-401.
35.    Kılıçtek, S. and Aksoy, A. 2019. Erzurum İli Süt Sığırcılığı İşletmelerinin Yenilikleri Benimseme Açısından Değerlendirilmesi¥. Türk Tarım ve Doğa Bilimleri Dergisi, 6(3): 424-431.
36.    Konak, K. Armağan, G. and Cankurt, M. 2000. Aydın İlinde Tarım Sanayi İlişkilerinde Sözleşmeli Tarımın Etkinliği. Tarıma Dayalı Sanayi. IV. Ulusal Tarım Ekonomisi Kongresi, 6-8 Eylül 2000, Tekirdağ.
37.    Kuhfuss, L. and Subervie, J. 2018. Do European Agri-Environment Measures Help Reduce Herbicide Use? Evidence from Viticulture in France. Ecol. Econ., 149: 202-211.
38.    Kumar, J. and Kumar, K. P. 2008. Contract Farming: Problems, Prospects and Its Effect on Income and Employment. Agric. Econ. Res. Rev., 21(2): 243-250.
39.    Lambrecht, I. B. and Ragasa, C. 2018. Do Development Projects Crowd-out Private Sector Activities? Evidence from Contract Farming Participation in Northern Ghana. Food Policy, 74: 9-22.
40.    Lebacq, T. Baret, P. V. and Stilmant, D. 2013. Sustainability Indicators for Livestock Farming. A Review. Agron. Sustain. Dev., 33: 311-327.
41.    Lee, H. Bogner, C. Lee, S. and Koellner, T. 2016. Crop Selection under Price and Yield Fluctuation: Analysis of Agro-Economic Time Series from South Korea. Agric. Syst., 148: 1-11.
42.    Lovarelli, D. Bacenetti, J. and Guarino, M. 2020. A Review on Dairy Cattle Farming: Is Precision Livestock Farming the Compromise for an Environmental, Economic and Social Sustainable Production? J. Clean. Prod., 262: 121409.
43.    Macchiavello, R. and Morjaria, A. 2015. The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports. Am. Econ. Rev., 105(9): 2911-2945.
44.    MacDonald, J. M. 2011. Agricultural Contracting Update: Contracts in 2008. DIANE Publishing.
45.    Mack, G. Ritzel, C. and Jan, P. 2020. Determinants for the Implementation of Action-, Result-and Multi-Actor-Oriented Agri-Environment Schemes in Switzerland. Ecol. Econ., 176: 106715.
46.    Madani, N. A., Tengah, K. A. and Prahmana, R. C. I. 2018. Using Bar Model to Solve Word Problems on Profit, Loss and Discount. J. Phys. Conf. Series, 1097(1): 012103.
47.    Martinez, S. W. 2002. Vertical Coordination of Marketing Systems: Lessons from the Poultry, Egg, and Pork Industries. Agricultural Economic Report No. 807, United States Department of Agriculture, 45 PP.
48.    Michelson, H. C. 2013. Small Farmers, NGOs, and a Walmart World: Welfare Effects of Supermarkets Operating in Nicaragua. Am. J. Agric. Econ., 95(3): 628-649.
49.    Minot, N. and Ronchi, L. 2015. Contract farming: Risks and Benefits of Partnership between Farmers and Firms. Viewpoint: Public Policy for the Private Sector No. 344, World Bank, Washington, DC.
50.    Miran, B. 2010, Temel İstatistik. ISBN: 975-93088-00, Ders Kitabı, İzmir.
51.    Mishra, A. K. Bairagi, S. Velasco, M. L. and Mohanty, S. 2018. Impact of Access to Capital and Abiotic Stress on Production Efficiency: Evidence from Rice Farming in Cambodia. Land Use Policy, 79: 215-222.
52.    Mishra, A. K. Kumar, A. Joshi, P. K. and D’souza, A. 2018. Production Risks, Risk Preference and Contract Farming: Impact on Food Security in India. Appl. Econ. Perspect. Policy, 40(3): 353-378.
53.    Narayanan, S. 2014. Profits from Participation in High Value Agriculture: Evidence of Heterogeneous Benefits in Contract Farming Schemes in Southern India. Food Policy, 44: 142-157.
54.    Newbold, P. 1995. Statistics for Business and Economics. Prentice-Hall İnternational, New Jersey.
55.    Nguyen, A. T. Dzator, J. and Nadolny, A. 2015. Does Contract Farming Improve Productivity and Income of Farmers?: A Review of Theory and Evidence. J. Dev. Areas, 49(6): 531-538.
56.    Otsuka, K. Nakano, Y. and Takahashi, K. 2016. Contract Farming in Developed and Developing Countries. Ann. Rev. Resour. Econ., 8: 353-376.
57.    Öztürk, S. 2020. Hayvancılıkta Sözleşmeli Üretim ve Ekonomik Etkileri. Akademik Yayınlar, İstanbul.
58.    Pakdemirli, B. 2020. Sözleşmeli Tarımsal Üretim: DİTAP Modeli. Tarım Ekonomisi Dergisi, 26(1): 81-88.
59.    Prasetyo, A. Prasetyowati, K. Irawan, N. C. Hartoyo, E. and Aulia, N. N. 2022. Intercropping and Farmer Income: A Case Study of Onion Farmers in Tawangmangu. J. Ilmiah Agrineca, 22(2): 58-66.
60.    Ragasa, C. Lambrecht, I. and Kufoalor, D. S. 2018. Limitations of Contract Farming as a Pro-Poor Strategy: The Case of Maize Outgrower Schemes in Upper West Ghana. World Dev., 102: 30-56.
61.    Ray, N. Clarke, G. and Waley, P. 2021. The Impact of Contract Farming on the Welfare and Livelihoods of Farmers: A Village Case Study from West Bengal. J. Rural Stud., 86: 127-135.
62.    Reardon, T. and Berdegué, J. 2003. The Rapid Rise of Supermarkets in Latin America: Challenges and Opportunities for Development. Available at SSRN 333872.
63.    Rueda, X. Paz, A. Gibbs‐Plessl, T. Leon, R. Moyano, B. and Lambin, E. F. 2018. Smallholders at a Crossroad: Intensify or Fall Behind? Exploring Alternative Livelihood Strategies in a Globalized World. Bus. Strateg. Environ., 27(2): 215-229.
64.    Ruml, A. and Qaim, M. 2021. New Evidence Regarding the Effects of Contract Farming on Agricultural Labor Use. Agric. Econ., 52(1): 51-66.
65.    Runsten, D. 1992. March Transaction Costs in Mexican Fruit and Vegetable Contracting: Implications for Association and Participation. In XVIII International Congress of the Latin American Studies Association, Atlanta.
66.    Schipmann, C. and Qaim, M. 2010. Spillovers from Modern Supply Chains to Traditional Markets: Product Innovation and Adoption by Smallholders. Agric. Econo., 41(3‐4): 361-371.
67.    Sharma, N. 2014. Contract Farming Practice in Indian Punjab: Farmers’ Perspective. Int. J. Food Agric. Econ., 2(1): 65-76.
68.    Simmons, P. Winters, P. and Patrick, I. 2005. An Analysis of Contract Farming in East Java, Bali, and Lombok, Indonesia. Agric. Econ., 33: 513-525.
69.    Sudha, N. 2013. Smallholder Attrition in Contract Farming Schemes in India: Extent, Causes and Concerns. Food Chain, 3(3):155-170.
70.    Swinnen, J. F. M. and Maertens, M. 2007. Globalization, Privatization, and Vertical Coordination in Food Value Chains in Developing and Transition Countries. Agric. Econ., 37(s1): 89-102.
71.    Takahashi, Y. Nomura, H. Son, C. T. Kusudo, T. and Yabe, M. 2020. Manure Management and Pollution Levels of Contract and Non-Contract Livestock Farming in Vietnam. Sci. Total Environ., 710: 136200.
72.    Ton, G., Vellema, W., Desiere, S., Weituschat, S. and D'Haese, M. 2018. Contract Farming for Improving Smallholder Incomes: What Can We Learn from Effectiveness Studies?. World Dev., 104: 46-64.
73.    Vaidya, O. S. and Kumar, S. 2006. Analytic Hierarchy Process: An Overview of Applications. Eur. J. Operat. Res., s. 1-29.
74.    Vamuloh, V. V. Kozak, R. A. and Panwar, R. 2020. Voices Unheard: Barriers to and Opportunities for Small Farmers’ Participation in Oil Palm Contract Farming. J. Clean. Prod., 275: 121955.
75.    Wang, H. H. Wang, Y. and Delgado, M. S. 2014. The Transition to Modern Agriculture: Contract Farming in Developing Economies. Am. J. Agric. Econ., 96(5): 1257-1271.
76.    Wang, H. Moustier, P. and Loc, N. T. T. 2014. Economic Impact of Direct Marketing and Contracts: The Case of Safe Vegetable Chains in Northern Vietnam. Food Policy, 47: 13-23.
77.    Warning, M. and Key, N. 2002. The Social Performance and Distributional Consequences of Contract Farming: An Equilibrium Analysis of the Arachide de Bouche Program in Senegal. World Dev., 30(2): 255-263.
78.    Yaralıoğlu, K. 2001. Performans Değerlendirmede Analitik Hiyerarşi Proses. Dokuz Eylül Üniversitesi İktisadi İdari Bilimler Fakültesi Dergisi, 16(1): 129-142.
Journal of Agricultural Science and Technology
Volume 28, Issue 2
March and April 2026
Pages 269-283