Farmers’ behaviour in relation to dynamics in contracts: The case of cassava farmers in Ghana
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Date
2010
Journal Title
Journal ISSN
Volume Title
Publisher
Franklin Business & Law Review Journal
Abstract
In this study we examine the dynamics of farmers’ contract choice in the major and the minor season. Cassava farmers in the Awutu/Effutu/Senya district of the central region of Ghana were examined using a multinomial logit model and we obtained the following results. For the major season; the joint effect of credit and FBO accessibility has shown to positively influence the choice of mixed share contract when the incentive parameter are 20% (by a probability of 115.2) and 80% (by a probability of 31.8). Similarly, the joint effect of household position and marital status positively influence the decision to choose mixed share contract when the incentive parameter is 50% (by a probability of 6.2). Furthermore, farm size (proxy variable for farm income) positively influences the choice of mixed share contract when the incentive parameters are 50% (by a probability of 0.9) and 80% (by a probability of 1.2). Hence it can be deduced that farmers who fit the above characteristics are more risk seeking and likely to embark on a mixed share contract than fixed contract in the major season. On the contrary; the joint effect of household size and size of family labour, and education are reported to negatively influence the choice of contract model when the incentive parameter is 20% by a probability of 5.4 and 38.2 respectively. For the minor season; gender, education, Household position*Marital status, and Household size*Household labour size positively influence the choice of mixed share contracts. The extent of influence (probabilities) are reported as 2.9 for gender (when α=20%); 4.8 and 4.0 for education (when α=20% and 80% respectively); 3.6 and 4.1 for Household position*Marital status (when α=20% and 80% respectively); 138.2 for FBO member*Access to credit (when α=50%); 0.2 for Household size*Size of family labour (when α=20% and 80% respectively). On the contrary; age, education, farm size and FBO member*Access to credit have been reported to have a negative association with the decision to embark on mixed share contracts. The extent of influence reported are 0.3 for age (when α=20% and 80% respectively); 42 for education (when α=50%); 6.8 for FBO member*Access to credit (when α=20%); 6.4 for Household size*Size of family labour (when α=50%).These results have implications for contract design and implementation in food supply chains.
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Keywords
Contract Farming, Fixed Contract, Mexed Share Contract and Willingness to Accept
Citation
Franklin Business & Law Review Journal (3): 51-67