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Abstract
Purpose
Farmers’ risk attitudes and risk perceptions play an essential role in shaping risk management strategies to address risks and uncertainties. Contract farming is considered as one of the feasible approaches to tackle farmers’ concerns. However, risk perspectives under various categories have not been included in studies on farmers’ preferences for contract farming in the literature, especially in Vietnam. This study aims to determine factors affecting farmers’ choices of different contract farming practices.
Design/methodology/approach
The Explanatory Factor Analysis (EFA) and Multinomial Logit model (MNL) were applied to explore the impacts of risk perspectives on farmers’ preferences for contract farming. Data has been collected from 211 rice farmers in An Giang province, “the rice bowl” of the Mekong Delta, Vietnam.
Findings
The study found that farm size, cooperatives, extension, market access and trust have significantly impacted on contract participation while a delay payment was a barrier for farmers’ motivation to opt for the contract. Farmers’ contract choices were also influenced by their risk attitudes and perceptions under different risk dimensions. The financial, policy and human risk-averse behavior predisposed farmers to single out the full contract while the policy and human risk-loving and production, market and finance risk-averse respondents were in favor of the marketing contract. Moreover, the findings indicated that the more farmers concerned about risk of weather and market, the more choices for the full contract, whereas the risk perceptions of weather and policy encouraged farmers to use the limited contract. By contrast, farmers who perceived the impacts of risk of diseases/pests and human, were likely to adopt the marketing contract.
Research limitation/implications
This study just focuses on collecting data from farmers perspective. Future studies involving stakeholders such as enterprises and policy makers are strongly recommended so as to design suitable contracts and enforce contract schemes effectively in Vietnam.
Managerial or Policy implications
The study is useful for policy makers, agribusiness firms and producers in improving the contract design of rice supply chain and also provides references for other regions in rice production.
Originality/value
The findings also contribute to the literature on different types of contracts and the multidimensional aspect of risk for rice production in Vietnam
Key words: Contract farming, farmers’ preferences, risk preferences, risk attitudes, risk perceptions
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