Improving Market Access Through Contract Farming

Author : Thi Ngoc Anh Hoang
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (15 download)

DOWNLOAD NOW!

Download or read book Improving Market Access Through Contract Farming written by Thi Ngoc Anh Hoang and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Agriculture has made an invaluable contribution to poverty reduction. Commercially viable farmer-enterprise relationships are seen as a way to accelerate agricultural commercialization to benefit the poor (Konishi & Yi, 2015). Contract farming (CF) is considered as one of the ways to maintain the relationships (Nguyen et al., 2016). However, the viability of CF in poverty reduction is controversial. The paper will dissect the issue through examining CF in the case of Shantea, Olong tea, and eco-ginger in the northern parts of Vietnam. Its emphasis is put on the CF access of ethnic minorities (EM) who are vulnerable and marginalized groups. The first part of the paper seeks to figure out the particular characteristics of people who are accessible to CF. It is found out that they are EM in mountainous highlands with poor access to public services, a low level of endowment in land and capital, limited education, and lack of experiences in cash crops. At first sight, the factors seem to hinder them from CF access because of high transaction costs involved in the schemes. In reality, the access is not completely determined by the factors. It significantly depends on some advantages that EM possess. Firstly, landholding rights are officially awarded to EM and public land resources for agricultural development have become exhausted. Hence, there is no chance for enterprises to grab land or rent land to set up their plantation or out-growing schemes. Secondly, although the production land of EM is small and scattered on steep hills and mountains, it is fertile as the result of the less exposure to chemical fertilizers and pesticides. Together with the increasing demand of organic and ecological products, the good land attributes in EM areas are appreciated, attracting the interest of enterprises in cooperation with EM through CF schemes. Moreover, the geographical distribution of land requires intensive and manual labour instead of mechanization. Meanwhile, the labour resources in the areas are abundant with cheap price. These are the reasons why CF with EM is preferred by enterprises. The second part tries to examine local institutions surrounding EM and shaping their CF access. There are three local institutions including gender, social networks and ethnicity which are referred most in the interviews. While social networks and ethnicity have positive influence on CF access, gender norms causes CF access unequal among men and women. In terms of social networks, people usually believe that the poor is usually marginalized and has less connection to the society. It has impeded them from CF access. In contrast, the research findings show that EM are connected together by their kin and long-standing neighbourhood relationships in each community. Hence, the poor are less likely deprived of the chance of CF access. Similarly, the impact of ethnicity on CF access is positive. On the surface, EM communities are known as having the high rate of illiteracy so they are unable to capture the requirements of CF. It will cause high transaction costs for enterprises to work with EM because more training is needed to provide for EM. However, the research findings are opposite to the assumption. Ha Giang company reported that EM have limited education and information access so they strictly follow the technical advices given (Ha Giang, interview, 2 June 2017). They dont spontaneously apply fertilizers and pesticides which are not provided by the enterprise (Ha Giang, interview, 2 August 2017). Contrary to the positive influence of social relations and ethnicity, gender norms have caused some obstacles for women in CF access. The most serious impediment is that gender norms have caused women the low level of self-esteem which in turn makes them deprive themselves land- or asset- holding rights and access to economic chances like CF. The third issue that the paper dissects is material and non-material benefits from CF. The findings show that CF contributes to the increase of smallholder income. The life quality seems to be heightened with the various choices of products. Besides, CF creates the chance for farmers to exchange production experiences. As part of CF, the grouping of growers has help them better access to the authority. Their voice is raised and heard in decision-making arenas. Enterprises find it convenient to work with groups instead of individuals. The spill-over effect of CF engagement can be seen in the ability of farmers to carry out the production and trading of traditional produces thanks to their increased skills and knowledge about market. Fourthly, it is obvious that CF access is not straightforwardly to transfer benefits from enterprises to farmers. There particularly exist market flaws. Hence, it gives the room for the participation of the government and NGOs. However, people have a doubt that the engagement of external actors will distort and destroy market and putting farmers at risk. In contrast, the findings stress that it is important to have their participation. The case of Shantea shows that the government should take the macro management role to support the operation of CF. Meanwhile, NGOs facilitate the actors to link to each other to upgrade the products and functions. In the case of eco-ginger, the government is responsible for signing the contracts and organisation production in the community. The same principle applied to the case of Olong tea in which the government initiated CF schemes. The following policy initiatives are recommended: (1) The government should issue specific regulations and disseminate the information and legal knowledge to farmers. (2) The NGOs and government should have adequate information and research about local institutions which are positive or negative (3) The government and NGOs should take the role to reduce transaction costs regulations and supportive policy for CF schemes should be evaluated to ensure there are no impediments to small-scale farmers participating in the chains