This study aims to analyze the factors that influence the preference of producers and processors for paddy production contracts in Benin. Unlike previous research, this study estimates a global model using pooled data of producers and processors. In addition, it compares producers’ willingness to accept contracts’ attributes to processors willingness to pay for the same attributes. Data were collected in Benin from 300 producers and 140 processors of rice selected randomly. An estimation of the conditional logit model indicates that producers prefer contracts specifying cash payment, prefinancing, and quality agreement. Processors, on the other hand, prefer contracts specifying technical assistance for both harvest and all the production activities, and quality agreements. The latent class logit model shows that there is heterogeneity among the preferences of both producers and processors across the classes. However, producers prefer cash payment and processors assistance for harvesting across all the classes. This suggests that cash payment and assistance for harvesting are pivotal for contract selection by producers and processors, respectively. Producers are willing to accept a lower price for their paddy (reduction of 25.86 and 6.64 FCFA/kg) in exchange for specifying a cash payment mechanism and prefinancing in the contract. Processors are willing to pay an additional amount of 5.58 CFA/kg of paddy to secure good quality rice.
Rice consumption in Benin is increasing simultaneously with a structural change in consumer demand toward higher quality rice. In this context of changing demands, experimental estimation methods provide an effective way to estimate consumer preferences. We conducted a hypothetical choice experiment in 15 open markets across Benin to analyze the demand for rice and the other staple crops. Our findings indicate that consumer preferences differ across different income groups and between urban and rural households, and that consumers in general are sensitive to changes in rice prices. Lastly, substitution between imported and domestic rice is limited. These findings are relevant for development strategies to foster the growth of the domestic rice industry in Benin.
Prices volatility is one of the critical problems that highly affects smallholder producer’s income; therefore, it might contribute to deeper poverty. This study applies portfolio analysis to identify the optimal portfolio of governance structures (GSs) selection for paddy marketing. Data were collected in Benin in 2015 from 300 rice producers randomly selected. The results indicate that the optimal portfolio of two GSs consists of selling 17% and 83% of the production through spot market and formal contract, respectively. The best portfolio of three GSs consists of selling 13%, 57%, and 30% of the production through spot market, formal contract, and farmer association. Finally, a portfolio that consists of selling 10%, 25%, 43%, and 22% of the production through spot market, informal contract, formal contract, and farmers association, respectively, is the best one in the case of four GSs. Formal contract is included in all the best portfolios identified and always presents the highest percentage. Therefore, these formal contracts can be used to enhance rice producers’ revenues and reduce price fluctuation risk. The portfolios developed in this research can be used to advise paddy producers for a better marketing decision.
This study aims to analyse the factors that influence the selection of governance structures by rice producers and processors in Benin. Unlike previous studies, the factors that influence the selection of governance structures are identified simultaneously for both producers and processors of paddy. Data were collected in Benin from about 300 producers and 140 processors of paddy randomly selected. The results indicate that 78% of producers and 92% of the processors use spot market for paddy transaction. Around a quarter of producers use at least two governance structures to sell paddy. Producers and processors belonging to an innovation platform are more likely to use formal contracts in their transactions. Also, producers and processors are more likely to use credit payment mechanism with formal contract. The findings suggest that innovation platforms can be used to facilitate contractual relationships between paddy producers and processors.
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