Investigating factors affecting the development of contract farming. Case study: tomatoes in Kermanshah Province

Abstract

The escalating demands of a growing population and rising living standards strain the efficiency of traditional agricultural methods in fulfilling consumer nutritional needs. Technological advancements, particularly the introduction of contract farming models, offer a potential path towards addressing these challenges. However, in Iran, contract farming remains an underdeveloped and under-researched agricultural practice. This study delves into the factors influencing the development of contract farming in Iran. Employing a two-level multinomial logit model and data collected through 380 questionnaires administered to farmers in the Kermanshah region, the research reveals income (measured by the number of employed household members) as the primary driver of contract farming adoption. Additionally, factors such as reduced agricultural risk, higher education levels among farmers, improved product sales prices, and proximity to processing facilities positively impact the expansion of contract farming. Interestingly, “push factors” like land scarcity significantly influence non-contract farming participation, with 30.8% of surveyed households relying on these alternative methods. Geographical factors also contribute, explaining 23% of the observed variance in farming activity choices. These findings inform key policy interventions for sustainable contract farming development in Iran: robust legal frameworks and transparent contracts, contract-specific insurance schemes, training for agricultural extension workers, and farmer awareness campaigns.