The role of time preferences in contract breach:Evidence from Chinese poultry farmers participating in contract farming

Farmers’contract breach behavior is cited as one of the major stumbling blocks in the sustainable expansion of contract farming in many developing countries.This paper examines farmers’contract breach decisions from the perspective of time preferences.The empirical analysis is based on a household survey and economic field experiments of poultry households participating in contract farming conducted in Jiangsu Province,China.A discounted utility model and a maximum likelihood technique are applied to estimate farmers’time preferences and the effect of time preferences on contract breach in the production and sales phases are explored with a bivariate probit model.The results show that,on average,the poultry farmers in the sample are generally present biased and impatient regarding future utility.The regression results show that farmers with a higher preference for the present and a higher discount rate are more likely to breach contracts,and time preferences play a greater role in the production phase than in the sales phase.When considering heterogeneity,specific investments and transaction costs promote contract stability only for farmers with a low degree of impatience.Moreover,compared with large-scale farmers,small-scale farmers’contract breach decisions are more significantly affected by their time preferences.These results have implications for contract stability policies and other issues that are impacted by the linking of behavioral preferences to agricultural decisions.

Maize Contract Farming Experience in Delta State,Nigeria

Many reviews and evaluations of contract farming and its importance for small-scale farmers in the developing nations have been conducted. While some scholars opined that contractual terms were unfavourable to farmers, others considerd them as being beneficial to them. These contrasting views were not likely to discourage it since it provided encouragement for farmers＇ involvement in markets. It was therefore worthwhile to investigate previous experiences with the aim of improving on it. This study investigated contract farming entered into by farmers in Delta State of Nigeria and livestock feed companies with the objective of seeking ways to make such contractual agreements beneficial to small-scale farmers. The study utilized convergence of science approach. The study unveiled the constraints experienced by farmers and they included technical and institutional challenges. The technical problem was the planting date, while the institutional problem was the contractual arrangements. It was recommended that all the stakeholders in the contract should converge and negotiate technological adoptions of the improved maize varieties; contract needed to be clearly def＇med and risks and uncertainties should be parts of the contract; scientific investigations should be carded out to determine the best planting date; and there was need for legislation to particularly protect farmers in contract farming.

One size fits all? Contract farming among broiler producers in China

Contract farming has been increasingly found to benefit smallholders in developing countries, yet much less is known about its role in the poultry industry where economies of scale could be more prominent. This study aims to narrow this gap by analysing the choice of contract farming among Chinese broiler producers using a nationally representative survey. Simply cost-benefit analysis and multinomial logit regression modelling are jointly employed to explain contract farming decision making especially among small producers. In contrast to many recent studies, we find that small producers, though not passively excluded, usually opt out of contract farming due to limited profitability when large producers are coexistent. Such relationship is appropriately identified through a control function approach to correct for possible endogeneity. Therefore, contract farming may not help achieve higher welfare goals for small broiler producers who actually instead seek alternative market opportunities that better realise their comparative advantages.