Is Contract Farming Really Pro-poor? Empirical Evidence from Northern Vietnam

Abstract

Maintaining smallholder competitiveness in the changing market for pigs and pig meat remains an important development challenge, particularly in the context of pro-poor public policymaking. With the ongoing rapid changes in market organizations to respond to changing consumer demand and market requirements, there are viable institutional options and market organizations for smallholders to remain active participants in the pig industry where they are substantially contributing in terms of total output. Results from this study suggest that there is limited scope for smallholder pig producers to participate in formal contracts; however, smallholders were found to participate in informal contracts with cooperatives and with input/output traders that facilitated their access to pig markets. But what drives these smallholders to participate in these types of contractual arrangements for pig and piglet production? A multinomial logit model is applied to reveal the determinants influencing the choice of contractual arrangements by smallholder pig producers in four provinces in Northern Vietnam. Results suggest that the significant determinants of smallholders’ participation in contractual arrangements are age, proportion of time spent in pig-raising, location, distance to veterinary shops, and access to animal health services.