Transcription

1

2

3

4

5

6

7 Value chain survey Household survey Appendix 4Appendix 5 Appendix 6

8 Source: Authors Estimate the impact of CF on household income using Difference in difference analysis and Propensity score matching method (for rice sector)

9 Difference in difference analysis Propensity score matching method

10

11 Estimate determinants of CF participation using Probit (for pig and rice sector) Assess productivity efficiency using Data envelopment analysis-dea (for pig and green bean sector)

12

13 CF is a contractual arrangement for a fixed term between a farmer and a firm, agreed verbally and in writing before production begins, which provides resources to the farmers and/or specifies one or more conditions of production, in addition to one or more marketing conditions, for agricultural production on land owned or controlled by the farmers, which is non-transferable and gives the firm, not the farmer, exclusive rights title to the crop. (Prowse 2012) non-transferable forward agreementpredeterminedprices prior agreemen volume, quality, and timing of delivery nontransferable forward agreement price price volumequality timing of delivery

14 intermediate mode of coordination legallybinding agreement risk-sharing fixed termland is owned or controlled by the producersproducer has no legal title to crop or livestockproducer is an independent intermediate mode of vertical coordination legally binding risk-sharing fixed term legal title independence Source: Catelo and Costales (2001), based on Peterson and Wysocki (1997)

15 Spot market Vertical integration spot marketvertical integration. Specification Contract Strategic Alliance Formal Bilateral Cooperation Firstmarket specification specification contract)second resource providing Third production management how strategic allianceformal bilateral cooperation The centralized model:

16 The nucleus estate model: The multipartite model The intermediary model The informal model:

17 Model 4+1: spot market Model 1+4: Model 2+3 and model 3+2: Strategic Alliance Formal Bilateral Cooperation Formal Bilateral Cooperation Centralized model Nucleus Estate Model Multipartite Model Intermediary model Informal model

18 On the one hand CF is beneficial for engaging stakeholders For farmers

19 For the firms, For the macro-economic level,

20 On the other handthere is criticism that CF also brings bad effects First Second, Third, Fourth Last but not least

21

22 Household characteristics

23 Specific Asset Scale complementary Access to target market Access to input market (or household resource endowments)

24 Others Trust and scope of negotiation: CF arrangements and risks Contract enforcement:

25 , Economic viability and incentives Selective participation Balancing traders and investors Appropriate enabling environment: Farmer groups/organizations or other associative form: 3 rd party support

26 Certified production systemsand investors prize quality over price: Market information, Technology transfer and innovation Sound analysis and planning In short

27

28 CF regulating policies

29 stakeholder policies supporting policies Contract Law Law on Notary offices Law on Secured Transactions

30 The Law on Civil Procedure) The Law on Resolution of Economic Disputes) The Law on the Handling of Petitions. The Law on Judgment Enforcement). - The Law on Resolution of Economic Disputes - The Law on Civil Procedure - The Law on the Handling of Petitions - The Law on Judgment Enforcement

31

32 Law on Enterprise The Law on the Processing Industry The Law on the Promotion of Foreign Investment The Law on the Promotion of Domestic Investment For rice For livestock

33

34 Firstly Secondly, Thirdly, - - -

35 - - -

36 Source: IRRI, 2012 (updated with FAOSTAT data, 2016).

37 Unit: thousand ton Source: Eliste and Santos (20212) MAF, NBS

38 Source: IRRI, 2012

39 Source: Author

40 horizontal arrangement of stakeholders Intermediary model and Centralized model Farmer and farmer groups: Rice miller groups:

41 Khammouan Pathana Pathana Phou Doiy Pathana Xoumxon Songseum lae pathana xonnabot Thakhak Pathana Source: A summary report on rice commodity promotion activities of the rice mill groups in Khammouan province in , and the future plan. (By head of Department of Extension and Commodity Development) In vertical coordination, Strategic Alliance Formal Bilateral Cooperation

42 Source: Catelo and Costales (2001), based on Peterson and Wysoki (1997) Descriptive analyses

43 Source: Author calculation from PRC-CAP survey, Econometric model

44 Coef. Std. Err. P> z dy/dx Std. Err. Dependent variable: contract participation dummy Source: Author calculation from PRC-CAP survey, 2016

45 Impact on income per capita Rice CF helps increase farmers income significantly. beforecf after CF before CF after CF before CF after CF before CF after CF before CF after CF Source: Author calculation from PRC-CAP survey, 2016

46 Note (a): using bootstrap method to calculate standard error of ATT value and related t- statistics: *** t>2.576; ** t>1.96; * t>1.645 Source: Author calculation from PRC-CAP survey, Impact on production technology Rice CF enables farmers to better access to inputs and technical guidance but almost no change in technology

47 Other impacts Rice CF enables risks to be shared between the millers and farmers but the farmers still bear most of risks. The rice CF encourages the development of farmer groups but at the same time creates rent seeking behavior by farmer group leaders.

48 The so-called strategy of one village-one miller in doing rice CF helps reduce side selling but can easily lead to monopoly in rice CF and rent seeking behavior by local officers if not well managed. one village-one miller firstly there is trust and openness for negotiation. favorable CF arrangement for farmers. selective participation farmer groups miller groupsthe 3 rd parties participation

49 The enabling environment

50

51 Source: FAOSTAT, 2016

52 Unit: Million USD Source: UNCOMTRADE, 2016

53 Source: Authors foreign companieslarge farmers

54 The wholesalers The retailers Small traders The agricultural stores horizontal arrangement of stakeholders,

55 In vertical coordination, Formal Bilateral Cooperation Descriptive analyses

56 Source: Authors calculation from PRC-CAP survey

57 2.2.2 Econometric model Dependent variable: Farmer participation in CF (1=Yes; 0=No) Source: Authors calculation from PRC-CAP survey

58 Impacts on households income Impact of production technology Pig CF helps upgrade sector technology and enables the farmers to have better access to new technology.

59

60 Source: Authors calculation from PRC-CAP survey, Other impacts Pig CF on the one hand pushes the process of commercialization and upscale of the pig sector but on the other hand may exclude small farmers.

61 * 1 sow is equivalent to 3 fattening pigs (Vietnam farm standard) Source: Author calculation from PRC-CAP survey Pig CF arrangement helps share risks for CF farmers, especially disease and price risks. CF helps attract investment, especially foreign investment into the sector, but consideration need to be taken to avoid monopsony.

62 CF in pigs has not caused any recorded negative impacts on the environment yet the CF arrangement allows for quite good risk sharing for farmers. selective participation contract enforcement technology transfer and innovation

63

64 horizontal arrangement of stakeholders,

65 Source: Xingtha Company vertical coordination Formal Bilateral Cooperation

66 Descriptive analysis

67 selective participation contracted area land and stable irrigation source CF creates employments for the farmers in the dry season, thus improves the farmers income. CF helps introduce new products and new technology to the farmers.

68 Figure Average = 0.68 Average=0.75 Source: Author calculation using PRC-CAP survey, 2016

69 Internal factors Trust and close relationship Open and transparent contract arrangement: Clear risk sharing mechanism: Clear contract enforcement: External factors Profitable market:

70 True farmer organization representatives: The support of 3 rd parties

71

72

73 Legal framework for contract farming Institutional arrangement

74 Farmer group development Domestic enterprise development

75 Agricultural market development Social values

76

77

78

79 Northern Smallholder Livestock Commercialization Project. International Journal of Agricultural Management and Development, European Journal of Operational, World Development, Micro Report Module, International Journal of Scientific Research, IZA European Journal of Operational Research, Management Science, World Development, Journal of the Royal Statistical Society Agrekon,

80 Journal of African Economies, Food Policy, Development in Practice, 2014 Vol. 24, No. 2 American Journal of Agricultural Economics, World Development Laos Statistical Year Book 2014 Greater Mekong Subregion Phnom Penh Plan for Development Management Research Report Series. World Development, Micro report module 3 of component, International Journal of Agricultural Sustainability 6 MSU International Development Papers

81 World Development, Journal of the Operational Research Society, Geography, World Development, Contract Farming,

82 China Agricultural Economic Review, Contract farming handbook Review of Agricultural Economics, Chinese Rural Economy,

83 Source: Maphill Source: Maphill

84 Source: Maphill

85

86

87 Source: Collected by authors

88