Investigating factors affecting on conclusion and implementation in agricultural contracts (approach switching regression).

Document Type : Research Paper

Authors

1 دانشگاه فردوسی مشهد

2 عضو هیئت علمی دانشگاه فردوسی مشهد

Abstract

Introduction
Agriculture has always been a risky activity and in this regard, one of the tools that today, especially in developing countries, plays an important role in tackling these risks and also the confidence of the farmer and guaranteeing the price of the product is the conclusion of agricultural contracts that the conclusion of agricultural contracts that increases the incentives for farmers to produce. expansion of agricultural contracting is important because demand for agricultural products increases with increasing income and population growth, and also increasing agricultural productivity and efficiency with the use of modern agricultural technologies. Given that much of the agriculture in developing countries is in small farms, agricultural contracts are usually used to improve the welfare of these producers, therefore in this study investigating the factors affecting the conclusion of agricultural contracts as well as the exchangeable income between different contracting groups of tomato farmers in Kermanshah province in 2018 has been discussed. The theoretical framework used in this study is that farmers and their decisions to choose the type of contract are always to maximize return on profit and minimize cost over time. These market contract alternatives can be divided into three different contract categories: written contracts, oral contracts, and non-contracts.
 
Materials and Methods
Since in Iran agricultural products (such as tomatoes) lack three types of private, cooperative and hybrid contracts, so in this study, only tomato farmers were investigated in three categories (written, oral and non-contractual). Cochran's formula was used to obtain a desirable sample, since the total number of members of the tomato community was not available. According to Cochran's formula, the optimal sample of farmers was calculated for the common trait of the cultivated area with standard deviation (0.31) and 95% confidence level of 150 farmers. Also, all questionnaires were collected randomly and interviewed with farmers in crop year 2018-2019. The dependent variable included codes 1, 2 and 3 that were considered for written, oral, and non-contractual contracts, respectively. Other explanatory variables included gender, education level, household size, vehicle ownership, computer access to up-to-date communication tools, relative product share in the household, area of cultivation, participation in training, other crop production, status of speculators in the region (zero and one). ), Access to credit, distance to market, amount of production per hectare, and revenue from the crop. This study, there were no sequential multiple responses and Multinomial Logit model was used to analyze the factors influencing the type of tomato crop contract. Multinomial  Logit regression model is the generalization of simple (dual) logistic regression model in which the dependent variable takes more than two modes and there is no specific order between the selected options and finally to measure the traded earnings among different contracting groups. The regression switching approach was applied. In order to estimate the desired models STATA 15 software is used.
Results and discussion
The results of the study, apart from the various effects of variables applied on the surveyed groups, showed that the farmers group with a written and uncontacted contract receive 49 and 46 percent of their income by handing them over to the other group. AlsoFarmers with an oral contract and without a contract are respectively receive 42 and 52 percent of the revenue from placing their product in both contractual groups.In fact, the results show that there is no group of farmers who sell their entire crop under one contract and there is always the incentive to sell through other contracts. From the results of the regression switching approach it can be deduced that although the sample tomato farmers belong to different contracting groups. But they are interconnected. Because of the benefits that each contracting party has, they always receive part of their income from intervention in the other group. It is important to note that, first, not all farmers are required to accept a contracting group, secondly, the primary revenue generated from the crop is of great importance, and this leads to the interference of contracting groups.
 
Suggestions
Based on the above results, the main suggestion of this study is that contracting groups may even prioritize their payments to farmers in order to increase the confidence of tomato farmers in the province or in a multistage manner (before planting, during harvesting due to high labor costs). ) be done. This can reduce the incentive to sell farmers to other contracting groups.
 
JEL Classification: D03, C24

Keywords

References

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Agricultural Economics
Volume 13, Issue 3 - Serial Number 3
December 2019
Pages 133-168

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