Abstract
The study analyzed the determinants of participation in dairy contract farming using data collected from 424 (192 participants and 232 non-participants) randomly selected milk-producing farmers from three districts of the North Shewa Zone of Oromia Regional State, Ethiopia. The study combines both quantitative and qualitative data obtained from household interview using semi structured questionnaire, key informant interview, focus group discussion, and direct personal observation. Descriptive statistics and econometric models were used to analyze data. The binary logistic regression model was employed to identify factors affecting participation in dairy contract farming. Results show that age, sex, perception of price uncertainty, frequency of extension contact and access to training significantly and positively affect participation in dairy contract farming while time taken to milk collection centers affected it significantly and negatively. Results suggest that the need to encourage young farmers, female-headed households, increasing frequency of extension contact, creating access for training, decentralization of milk collection centers and contract farming reduces perceived price uncertainty faced by smallholder farmers from the spot market through creating guaranteed milk price in the study area. 
Highlights
IntroductionRecent sophisticated ideas like environmentally soundness (which concerns the interaction between the environment and economics) and sustainability (which adds a broad social element to the environmental and economic, and requires the consideration of time horizons), standards and regulations related to environment and health care among the driving forces of the fast growing contractual relationships (Rehber, 2019)
Recent sophisticated ideas like environmentally soundness and sustainability, standards and regulations related to environment and health care among the driving forces of the fast growing contractual relationships (Rehber, 2019)
Results suggest that the need to encourage young farmers, female-headed households, increasing frequency of extension contact, creating access for training, decentralization of milk collection centers and contract farming reduces perceived price uncertainty faced by smallholder farmers from the spot market through creating guaranteed milk price in the study area
Summary
Recent sophisticated ideas like environmentally soundness (which concerns the interaction between the environment and economics) and sustainability (which adds a broad social element to the environmental and economic, and requires the consideration of time horizons), standards and regulations related to environment and health care among the driving forces of the fast growing contractual relationships (Rehber, 2019). The process of globalization and market liberalization in many developing countries has resulted in the growing integration of global agricultural markets and major structural change in the agriculture sector. The processes have expanded lucrative markets for high-value agricultural products (Seerp et al, 2018). Contract farming plays a significant role (Hanisch and Rommel, 2012; MacDonald and Korb, 2013; Rehber, 2019). Access to new reliable markets, ability to purchase inputs, protection against the systematic loss, access to credit and financial intermediation, access to information, production and management of skill transfer, new technology, agro-services (mechanization, transportation), ability to receive inputs (seeds, fertilizers) at lower cost and extension services, risk reduction through guaranteed prices, decrease transaction cost and training for management are among the advantages of participating in contract farming. Risk of contract default, risk of monoculture, little or lack of bargaining power, monopsonistic markets, corruption, delays in payment, change in contract terms, loss of flexibility, promotion of export-orientated agriculture at the expense of subsistence agriculture and favoring large-scale farmers, etc. are the main disadvantages for smallholder farmers (Seerp, 2018)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
