Farmers’ behaviour in relation to dynamics in contracts: The case of cassava farmers in Ghana

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.