Unravelling Farmer Preferences for Contract Design Attributes in Ghana’s Agricultural Sector: A Discrete Choice Experiment Approach
Contract farming is important for integrating smallholder farmers into agricultural value chains in developing countries. While previous research has explored the impacts of contract farming on welfare and productivity, there remains a gap in understanding how specific contract design attributes influence farmers’ willingness to participate. Existing studies often overlook the heterogeneity of farmer preferences and the interaction between socioeconomic/demographic/institutional factors. This study investigates Ghanaian farmers' preferences for agricultural contract design, examining how socioeconomic, demographic, and institutional willingness to participate in contract farming. A discrete choice experiment was conducted with 279 Ghanaian farmers across four regions. The DCE used a conditional logit model in analyzing farmers' preferences for contract type, pricing mechanism, yield commitments, input support, and partner reliability, and a logit model to identify participation determinants. It offers insights into the dynamics of contract farming by examining farmers' preferences for contract design attributes using a discrete choice experiment. The findings reveal that farmers favor written contracts, quality-based pricing, full yield commitments, limited input support, and openness to new partnerships – underscoring the importance of formalization, autonomy, and market incentives. Importantly, the study highlights that farmers are not a homogeneous group; preferences vary significantly by gender, household size, income, access to extension, and market distance. This study highlights the need for differentiated, farmer-centric contract models that reflect the diverse socioeconomic realities of smallholders. The findings extend contract farming theory by revealing key preference patterns and interaction effects, offering actionable insights for designing flexible, inclusive contracts that improve participation, retention, and long-term sustainability.
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