Contract farming scheme for rubber production in Western region of Ghana: why do farmers side sell?

Abstract

ABSTRACT Contract farming guarantees smallholder farmers a reliable market, allow them to access inputs and technical support, and thus improve their welfare. However, side selling is a major threat to the promotion and development of contract farming in Sub-Saharan Africa, including in Ghana. While there is growing interest in addressing this issue for food crops and other tree crops, particularly coffee, there is limited literature on this subject for rubber. Against this background, our paper contributes to filling this knowledge gap by answering the research question “Why do smallholder farmers engage in side selling?” using primary data from 370 rubber farmers participating in an outgrower scheme in Western region of Ghana. A binary Probit regression model is applied in the empirical analysis. We find that 20% of the rubber farmers engaged in contract farming are involved in side selling. The results show that contractor’s delays in payment, delays in weighing latex and farmers’ difficulty in getting truck to transport latex to sale point are positively correlated with side selling behaviour while farmers’ age and access to extension services decrease their likelihood of engaging in side selling. To curb side selling behaviour among rubber farmers, it is important that the contractor addresses the transaction related challenges faced by farmers.