Farmer preferences regarding durum wheat contracts in Italy: a discrete choice experiment

Abstract

PurposeThis study aims to investigate farmer preferences regarding sales contracts for durum wheat in Italy.Design/methodology/approachThe authors consider that contracts are formed by an organisational entity that is in charge of transferring decision and property rights based on reductions in transaction costs. The empirical analysis presents a discrete choice experiment with three distinct models that was performed by a survey of 160 wheat farmers in southern Italy.FindingsThe results show that contractual terms affect the probability of both a contract being signed and allocating decision rights due to their effects on price, technology and quality.Practical implicationsThis study provides some insights on which contractual attributes could support the wider use of contracts along the durum wheat supply chain in Italy.Originality/valueThe paper reveals that contracts are relevant not only to the coordination of agri-food chains because of price stabilisation but also due to their impacts on technology and quality strategies.

Matching ecological transition and food security in the cereal sector: The role of farmers' preferences on production contracts

“…However, evidences contrast with Wang et al (2011) and Abebe et al (2013) who reported smallholders' preference for a floating price, when the ex post spot market price is expected to exceed the price proposed in the contract. Oliveira et al (2021) also found a similar pattern in a previous study in the durum wheat sector, where producers were not significantly interested to contractual terms establishing the modality of payment in advance.…”

“…All these clauses refer to quality requirements, which have a large impact on farmers' acceptance because they not only define minimum quality levels but also payment of premium prices. In our case, the reluctance to accept costly obligations, such as an excessive quality threshold (e.g., 14% or even 13% of protein content for durum wheat), can be attributed to possible quality measurement problems in line with Abebe et al (2013) and Oliveira et al (2021).…”

“…In this area of intervention, what emerges is that farmers prefer a higher degree of decentralization of decision rights on the production process rather than a quasi-hierarchical centralization imposed by the industry without negation. Interestingly, against the expectation that farmers rely on clauses that ensure coordination of decisions to both safeguard their specific investments and protect them from technology and behavioral uncertainty (as in Oliveira et al, 2021 andin Al Ruqishi et al, 2020), here what prevails is the decisional autonomy for a production cycle characterized by a low level of dedicated investments. However, this evidence is in line with Abebe et al (2013) and Vaissiere et al (2018), which showed that the probability of accepting a contract decreases with increasing levels of restrictions on management practices, since farmers place more value on the freedom to make autonomous decisions.…”

“…Following Martino and Polinori (2019) and Oliveira et al (2021), a production contract is seen as the combination of specific clauses/terms (henceforth also named "attributes") that encompass both governance and production costs. As a consequence, the profit of the farmer i (i = 1, 2, 3 .…”

How to Make a Smartphone-Based App for Agricultural Advice Attractive: Insights from a Choice Experiment in Mexico

“…Discrete choice experiments (DCEs) are suitable methods to elicit preferences for product characteristics when a product is new or not yet commercially available [13]. DCEs are gaining interest in agricultural research and have been used recently, for example, to study preferences regarding interactions with markets with focus on certification or contracts [14][15][16] or preferences for crop characteristics [17][18][19] or farming practices such as the use of inputs such as fertilisers, pesticides, or the application of conservation measures [20][21][22][23][24] and also to investigate preferences regarding agricultural or environmental policies [25][26][27][28].…”