Factors influencing agricultural contracts in value chain: Lessons from small rice producers in Côte D’Ivoire
- International Journal of Rural Management
- 20(1), Suppl, April, 2024: p.S123-S146
This article examines the factors influencing agricultural contracts within value chains, drawing lessons from small rice producers in Côte d’Ivoire. Contract farming has emerged as a key mechanism for integrating smallholders into modern agricultural value chains, offering opportunities for improved market access, risk-sharing, and income stability. However, the effectiveness of contracts depends on multiple factors, including trust between farmers and buyers, institutional support, enforcement mechanisms, and the balance of bargaining power. The study highlights how small rice producers face challenges such as limited literacy, weak infrastructure, and vulnerability to price fluctuations, which affect their ability to negotiate and sustain contracts. By analyzing case evidence from Côte d’Ivoire, the paper underscores the importance of designing inclusive contracts that account for local realities, build farmer capacity, and ensure fair distribution of benefits. The findings contribute to broader debates on agricultural modernization, rural development, and policy frameworks for strengthening value chains in developing economies. 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.- Reproduced