Contract Farming in China: Influential Factors of Participation Essay

1 Introduction and background

Contract agriculture is a signifier of agricultural production with a contract between husbandman s and buyers established before the turning season for a specific measure, quality, and day of the month of bringing of an agricultural end product at a monetary value or monetary value expression fixed in progress ( Setboonsarng, 2008 ). The contract provides the husbandman with the assured sale of the harvest and at times provides for proficient aid, recognition, services, or inputs from the buyer, and it is by and large accepted that sustainable, well-organized, and equitably implemented contract farming can convey benefits to both husbandmans and the endeavors and specifically contending poorness and advancing nutrient security in developing states. In the international context, contract agriculture that is widely practiced in many states and developing quickly. Harmonizing to MacDonald ( 2011 ), contract agriculture governed merely 12 % of the entire value of U.S. agricultural production in 1969, and increased to 39 % in 2008 and there is no grounds that this tendency will decelerate down.

The quickly development of contract farming in China is a affair of the past 20 old ages. Ever since China entry into the WTO in 1998, increasing competition from foreign import merchandises are faced by Chinese agribusiness. To better the quality and fight of Chinese agricultural merchandises and advance rural development, contract agriculture has been extended by Chinese authorities, meanwhile as a portion of agricultural industrialisation plan. Unlike successful instances in the USA, European, or even other developing states, the farming area per family in China is excess little, most less than 1 acre, while the mean Thai family agriculture land is 10 estates and 6 estates in Lao ( Setboonsarng, 2008 ). Some surveies show that companies will prefer to work with medium- and large-scale husbandmans ( Prowse, 2012 ).

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In China, the authorities frequently plays a important function in contract agriculture agreement, contacts small-scale husbandmans and large-scale nutrient processing houses expeditiously and therefore in bend promotes the incorporate of little husbandmans ( Guo et al., 2005 ). The rise of supermarkets in nutrient retailing in the urban countries in late 1990s to early 2000s is besides supposed as a driving force of the rapid enlargement of contract farming in China. Supermarkets have procurement patterns that favor centralised buying, specialised jobbers, preferred provider systems and private quality criterions. These features require more perpendicular coordination among manufacturers, jobbers and retail merchants, therefore prefering the debut of contract agriculture ( Da Silva & A ; Ranking, 2013 ).

In malice of the benefits of contract agriculture and the quickly developing in China, the ratio of undertaking agriculture of entire agribusiness production is still low. For farther promoting, it is necessary to derive cognition of history and current state of affairs of contract farming in China, happen out the influence and restriction factors of engagement.

The overall aim of this survey is foregrounding the advancement of contract farming in China. More specifically, the chief aims of the survey are:

  1. To depict development procedure of contract farming in China ;
  2. To explicate the assorted types of contract farming in China ;
  3. To sum up the grounds of advantage and restriction of contract agriculture ;
  4. To analyse the influence factors of farmers’ purpose to take part in contract-farming ;
  5. To give some recommendation for farther contract farming publicity in China.

2 Methodological attacks

2.1 Data beginning

This survey depends entirely on secondary informations. Secondary informations are collected from assorted studies published by ( Guo et al., 2005 ; Ma & A ; Abdulai, 2015 ; Mao & A ; Huo, 2010 ; Miyata et al., 2009 ) and other research documents on contract agriculture.

2.2 The theory of planned behaviour ( TPB )

The TPB was set up by Ajzen in 1985. It was really developed to foretell human purposes to exhibit certain behaviour and is an extension to the ‘theory of reasoned action ( Ajzen & A ; Fishbein, 1980 ). As shown in Figure 1, the TPB postulates three conceptually independent constituents of purpose.

2.3 Logit theoretical account

The bulk of contract farming acceptance surveies have relied on logit theoretical accounts to analyse dichotomous acceptance determinations in which the dependant variable is binary ( Mao & A ; Huo, 2010 ). In peculiar, it permits the reading of the dependent dichotomous variable as a chance. In these theoretical accounts, husbandmans are assumed to do acceptance determinations based upon an aim of public-service corporation maximization.

The statistical analysis technique of logit arrested development employed in this survey is supposed as follow:

PhosphorusI=F (?+?TenI) = ( 1 )

Its log opposite number takes the signifier:

Ln () =?+?TenI ( 2 )

Could besides write as:

Ln () =?0+??ITenI+µ ( 3 )

Where,PhosphorusIis the chance of husbandman participate in contract agriculture ;TenIis theIThursdayexplanatory variable ;?Iis the arrested development coefficients ofIThursdayvariable and?0is the arrested development intercept, i.e. the invariable of the arrested development.

The variables included in the estimating equation are listed in Table 1.

Datas analysis with SPSS or R.

Table 1 The definitions of the variables used in the analysis

Variable Description
Farmer family features
Age Farmer ‘s age
Education Farmer ‘s instruction degree ( at least secondary school ) no=0, yes=1
Structural and fiscal features
Size Size of farm ( acre )
Income Entire family income after revenue enhancements ( kwai )
Specialization Share of entire household income from agricultural production %
Market Properties
Monetary value Fluctuation 0-10 % =1, 10-20 % =2, 20-50 % =3, beyond 50 % =4
Government support no=0, yes=1
Traffic bad/far from market=0, good/near market=1
Merchandise Classs
Fruit Dummy variable no=0, yes=1
Vegetable Dummy variable no=0, yes=1

3 Expected consequences from the research and its deduction

3.1 The development procedure of contract farming in China

3.2 Types of contract farming in China ( Wang, 2007 )

3.3 Benefits and restriction of contract farming

Benefits of contract farming

The chief benefits that arise from contract farming understandings for the endeavor are: ( I ) some step of warrant of regular and dependable supplies of natural stuffs ; ( two ) natural stuffs grown to run into the specific demands of the processing endeavors ; ( three ) chance to guarantee the necessary sum of natural stuffs are available as needed ; and ( four ) chance for contract husbandmans to turn early, chief, and tardily season assortments, widening the period when fresh green goods is available for processing.

For husbandmans, chief benefits will include: ( I ) the chance to cognize in progress that they have a guaranteed purchaser for their green goods ; ( two ) some progress cognition of the monetary value that they will have ; ( three ) support from the endeavor in the signifier of short-run recognition, either in hard currency or in sort ( e.g., seeds, fertiliser, etc. ) ; and ( four ) agronomic advice and counsel from thebuyer. ( Konishi & A ; Yi, 2015 )

Factors Common to successful Contract Farming operations

Internationally, a broad scope of theoretical accounts and mechanisms for contract agriculture can be identified. However, several factors can be identified that are common to all successful contract farming operations. These are: ( I ) market orientation of endeavors, ( two ) value-added specialised merchandises, ( three ) an export focal point of endeavors, ( four ) larger commercially oriented husbandmans, and ( V ) contractual understanding on pricing. ( Konishi & A ; Yi, 2015 )

3.4 Influence factors of Chinese farmers’ purpose to take part in contract-farming

4 Decisions

5 Approximate work program for finishing the research

Table 2 Planned timeline of mileposts

Topic development 8. June 2015
Expose development 29. June 2015
Literature work 13. July 2015
Datas analysis 27.July 2015
Finish authorship 3. Aug 15

6 A working lineation of the Master Thesis

1 Introduction and background

2 Methodological attacks

2.1 Data beginning

2.2 The theory of planned behaviour ( TPB )

2.3 Logit theoretical account

3 Expected consequences from the research and its deduction

3.1 The development procedure of contract farming in China

3.2 Types of contract farming in China

3.3 Benefits and restriction of contract farming

3.4 Influence factors of Chinese farmers’ purpose to take part in contract-farming

4 Decisions

5 List of beginnings

Ajzen, I., & A ; Fishbein, M. ( 1980 ). Understanding attitudes and foretelling societal behavior.

Da Silva, C. A., & A ; Ranking, M. ( 2013 ).Contract farming for inclusive market entree: Food and Agriculture Organization of the United Nations ( FAO ).

Guo, H., Jolly, R. W., & A ; Zhu, J. ( 2005 ).Contract farming in China: Supply concatenation or ball and concatenation.Paper presented at the 15th Annual World Food & A ; Agribusiness Symposium, IAMA, Chicago.

Konishi, A., & A ; Yi, Y. ( 2015 ). Contract farming for better farmer-enterprise partnerships: ADB’s experience in the People’s Republic of China.

Ma, W., & A ; Abdulai, A. ( 2015 ). Associating apple husbandmans to markets: Determinants and impacts of marketing contracts in China.

MacDonald, J. M. ( 2011 ).Agricultural undertaking update: Contracts in 2008: DIANE Publication.

Mao, F., & A ; Huo, X. ( 2010 ). An analysis on influential factors of husbandmans ‘ purpose to take part in contract-farming., 23( 4 ), 58-62.

Miyata, S., Minot, N., & A ; Hu, D. ( 2009 ). Impact of contract farming on income: associating little husbandmans, baggers, and supermarkets in China.World Development, 37( 11 ), 1781-1790.

Prowse, M. ( 2012 ). Contract farming in developing states: a reappraisal: Agence Francaise de Developpement A Savoir.

Setboonsarng, S. ( 2008 ). Global partnership in poorness decrease: Contract agriculture and regional cooperation: ADB Institute Discussion Papers.

Wang, Y. ( 2007 ).TheoreticalAnalysisandEmPiricalStudyontheTransacting BehaviorsofContractFarminginChina.?


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