Farmers’ Preferences on Contract Farming

Agricultural production is vulnerable to climate factors, thus the yield and crop prices are also fluctuating. Farmers need to face the risk in the production and in the market simultaneously, causing the imbalance between production and marketing. There are many countries which are operating mainly in small farms planned their agricultural production by taking contract framing, which is not only be used to avoid the imbalance between production and marketing, but also reduce farmers’ market risk. At present, Taiwan is also actively promoting contract farming. However, most of farmers and manufacturers are taking an oral agreement. Thus the cases of breaching contract are often occurred, causing problems in both sides of the contractual. Most of the previous literatures of contract farming were merely to discuss how it affects the income of farmers and the motivation to participate, but rarely focus on understanding the needs of farmers. Thus this study will collect the farmers’ intention and preferences to participate in contract farming by questionnaires, and discuss the factors that influencing farmers to participate the contract farming by using the choice model. The results showed that the respondents have significant positive preference on formal written document, buyer are providing seedlings, seeds, materials and other input factors. While crops acquisition conditions distinguish a particular quality or grade has a significant negative preferences. Furthermore, the relevant government units resolve disputes assist has a positive preference. We suggest that the government can assist in setting up a credible dispute mediation committee to mediate both sides of the contractual relationship.