The contractual relationships in the Italian durum wheat chain: empirical survey evidence

Abstract

The paper investigates the vertical relations along the Italian durum wheat chain and the factors affecting farmers’ behavior in adopting contractual agreements. Sale/crop-growing contracts in the durum wheat sector are analyzed through a direct survey to a sample of 261 durum wheat farmers. The questionnaire collected data on downstream relations and contract terms between farmers and processing and/or marketing firms along the durum wheat chain. A logit model is used to identify factors affecting the likelihood of contract farming between farms and processors. One of the main issues emerging is the low frequency of written contractual forms between durum wheat farmers and downstream operators. In most cases the farmers do not want constraints and reveal a lack of trust in contracts. They prefer to sell their product to a local downstream operator with whom they have a long-standing and solid relationship of trust. Moreover, results of a logistic model show that certain farm features, such as turnover and degree of specialization in durum wheat production, play an important role in driving the decision to adopt written contracts.

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

“…Our findings can also help European and Italian policy-makers and managers, who have been mainly concerned with the scarce use of contracts by farmers and their organisation, to better coordinate agri-food chains (Sollazzo et al , 2020). Increasing interest in developing nonstandard modes of organisation in agro-food networks has emerged, particularly in Europe, where agricultural production is embedded in various and changing institutional environments (Ménard and Klein, 2004).…”

Crop up! : adoption and value chain organisation in crop diversification transitions

“…It is thus advisable to consider this differential effect in future studies. Effects we found for cooperative members and transaction preferences are in line with previous studies in which general attitudes towards contracts shaped farmers' preferences for specific contract offers (Allen & Colson, 2019;Solazzo et al, 2020). Finally, we found that satisfaction with the current buyer relationship makes farmers more likely to accept stricter contract conditions which echoes Calvet et al (2019), who emphasise the importance of trust in the contracting institutions: trust seems more important the more profound the changes requested from the farmer.…”

“…These are mostly farmers that, all else equal, have more formal education, are not members of cooperatives and generally prefer more flexibility in their sales arrangements. This echoes results from Solazzo et al (2020) who found that Italian wheat farmers in their sample prefer the autonomy granted by foregoing written contracts while at the same time still building on trust-based long-term relationships with their buyer. This seems to imply that a significant share of farmers are unlikely to be attracted by contracts that require written documentation, e.g.…”

“…For example, several studies have shown that farmers' environmental attitudes influence their willingness to partake in AES (Calvet et al, 2019;Defrancesco et al, 2018;, as well as general perceptions of or resistance to contracts (Allen & Colson, 2019). This general resistance to contracts was also shown for marketing contracts, though unrelated to sustainable practices, for Italian cereal farmers, where resistance to the use of written contracts being due to an aversion to restrictions and low trust in contracts generally (Solazzo et al, 2020). Further, more standard control variables have also been linked to the participation in AES, such as gender, age, education, experience, and land size (Calvet et al, 2019;Kuhfuss & Subervie, 2018;Mack et al, 2020).…”

Incentives to Stimulate European Wheat Farmers to Adapt Their Fusarium Species Mycotoxin Management

“…In the UK, 53% of the cereal farmers had a written contract or cross-shareholding arrangements between the farmer and processor [ 32 ]. Solazzo, et al [ 33 ] found that only 12% of the Italian durum wheat farmers signed a forwarding contract because they lacked trust in contracts and did not want to have constraints. Moreover, they reported that turnover and degree of specialization in durum wheat production drove the adoption of written contracts.…”