Abstract
The paper investigates the vertical relations along the Italian durum wheat chain and the factors affecting farmers’ behavior in adopting contractual agreements. Sale/crop-growing contracts in the durum wheat sector are analyzed through a direct survey to a sample of 261 durum wheat farmers. The questionnaire collected data on downstream relations and contract terms between farmers and processing and/or marketing firms along the durum wheat chain. A logit model is used to identify factors affecting the likelihood of contract farming between farms and processors. One of the main issues emerging is the low frequency of written contractual forms between durum wheat farmers and downstream operators. In most cases the farmers do not want constraints and reveal a lack of trust in contracts. They prefer to sell their product to a local downstream operator with whom they have a long-standing and solid relationship of trust. Moreover, results of a logistic model show that certain farm features, such as turnover and degree of specialization in durum wheat production, play an important role in driving the decision to adopt written contracts.
Highlights
Modern market channels demand greater coordination along the supply chain and specific contracts between the agricultural producers and downstream operators (Worley and McCluskey, 2000; Reardon, Gulati, 2008; Fernández-Olmos and Vinuesa, 2009; Jang and Olson, 2010; Malorgio et al, 2016; Xhoxhi et al, 2019).The way in which governance mechanisms are developed in the agrifood system is a relevant field of research
We investigate the main problems in the organizational structure of the durum wheat chain in Italy and highlight key aspects useful to policymakers for improving the effectiveness and the spread of contractual instruments
We approached the empirical analysis of the contractual agreements in the Italian durum wheat chain using a two-step method
Summary
The way in which governance mechanisms are developed in the agrifood system is a relevant field of research In his seminal work, Stoker (1998) defines governance as a “set of institutions and actors that are drawn from and beyond government, aiming at identifying boundaries and responsibilities for tackling social and economic issues” 18), bringing about something without the need for government authority In this light, a contract can be considered a tool for helping smallholder farmers to access more remunerative markets, to provide inputs and credit and reduced price risks (Key and McBride, 2003; Da Silva and Rankin, 2013; Nguyen et al, 2015; Otsuka et al, 2016; Nait Mohand et al, 2017).
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