Contract farming: a comparison of production and marketing contracts as sourcing strategies in the fast food restaurant industry

Abstract

ABSTRACT The study sought to determine the most effective type of contract for sourcing broiler chickens from poultry farmers in Zimbabwe. Contract farming is used as a form of supplier development by restaurant businesses to source broiler chickens through either production or marketing contracts. However, it is yet to be evaluated whether supplier performances improve under production or marketing contracts. A sample of 50 chickens from production contract farmers and 50 from marketing contract farmers were assessed, summing to an effective sample size of 100 broiler chickens. Data was analyzed using Multivariate Analysis of Variance (MANOVA). Results indicated that there are statistically significant differences between supplier performance metrics on the basis of the type of contracts farmers operated under. The poultry mortality rate was higher under marketing contracts than under production contracts. On-time delivery rate was higher under production contracts than under marketing contracts, while there were no statistically significant differences in the pre-slaughter weight of chickens between marketing and production contracts. The study therefore recommended that restaurant businesses as agro-processing firms stand to have effective and efficient supply chain management performance if they source their broiler chickens through production contracts rather than marketing contracts.