Contract Farming Preferences of Smallholder Rice Producers in Benin: A Stated Choice Model Using Mixed Logit Erodibility

Abstract

In developing countries, smallholder farmers face many constraints including lack of information, and lack of access to credit and markets. To overcome these constraints, smallholder farmers can engage in contract farming. However, contract farming needs to meet farmers' preferences in order to be sustainable. This study aimed to analyze rice farmers' preferences for contract farming in Benin. Stated choice data were collected from 574 rice farmers. To account for heterogeneity, data were analyzed using a mixed logit model. Producers preferred contracts with seven major attributes: short term, payment on delivery, collective selling, agreement on quantity, no provision of credit, application of the market price, and no control by the partner. However, there was heterogeneity in the contract preferences of rice farmers. The study suggests that these differences and the preferred attributes are important in the design of best-fit contract farming models by agribusiness firms and policy-makers.

Keywords

• Rice
• Stated preferences
• Contract farming
• Mixed logit
• Benin