Contract Preferences of Smallholders: Evidence From a Study on Potato Production in Uzbekistan

Abstract

Modernization and globalization of agri-food systems in developing countries are increasing the role of contract
farming. In most developing countries, smallholder farmers’ resource endowments are limited; they lack access to
credit, input and output markets and market information. While most available studies on contract farming concentrate on
smallholder farms in developing countries such as Asia, Latin America, and Africa, empirical research on smallholders’
motivation to participate in contract farming in Central Asia is scarce. This paper explores preferences of smallholder
farmers for contract attributes in Uzbekistan where smallholder farmers dominate in the production of agricultural food
crops. We employ conditional and mixed logit models to elicit smallholder potato producers’ preferences for contractual
arrangements using a structured questionnaire for 180 potato growing smallholder farmers. The most important contract
attributes are found to be price, payment method, input provision, and relation to the buyer. As the relation to a buyer
is important for smallholders’ participation in contract farming, programs (such as local agri-fair) to link producers and
retailers will be important.