Factors Influencing Agricultural Contracts in Value Chain: Lessons from Small Rice Producers in Côte d’Ivoire

Abstract

The contract farming approach, in which smallholders are tied to credit and input suppliers under certain conditions, and can repay the loan with the harvest, is one of the initiatives supporting value chain (VC) development. In this article, we analyse the factors that influence the creditworthiness of rice contract terms for smallholder farmers in Côte d’Ivoire. We use a sample of 134 rice farmers participating in a World Bank inclusive rice VC project in 2021 and apply multivariate probits to analyse factors affecting the creditworthiness of contractual arrangements in the project’s three pilot regions. The results indicate that a range of factors related to the characteristics of the producer, his plot, his environment, as well as the level of trust between the producer and the processing unit significantly affect compliance with the terms of the rice contract. As a result, policymakers supporting the development of the rice VC should initiate hydro-agricultural schemes in the lowlands and reinforce the interventions of extension services and trust between actors in the VC.