Effect of Contract Farming on Productity and Welfare of Cassava- Based Farmers in South Eastern Nigeria.

Abstract

The study was conducted in South Eastern Nigeria using Anambra State as a case study.  Eight Local Government Areas (LGAs) were purposively drawn from the study area from which 64 farmers under contract farming were drawn. Also 64 farmers that were not under contract farming were drawn across the LGAs. Staff from Agricultural Development Programme (ADP) and Nigeria Starch Mills, Ihiala, Anambra State assisted in data collected. Data were collected using structured questionnaires and interviews. Data collected were analyzed using frequency tables, means and percentages, Ordinary Least Square (OLS) and Chow’s test models. Results from the analyses show that farmers under contract farming had larger land areas of cultivation and relatively younger than farmers not under contract farming.  The farmers under contract farming were more educated but had fewer years of farming experience than the farmers that were not under contract farming. Farm size, productivity, net returns, and welfare levels of the farmers under contract farming (5.5 ha, N1.8, N78520 and N14630) were equally higher than those not under contract farming (1.4 ha, N1.2, N19300 and N8900). Furthermore, the result shows that the significant factors that influenced the productivity of the farmers were age, educational status, farm size, farming experience and labour cost. The significant factors that influenced welfare of the farmers were education, total household income, land holding, years of farming experience and cost of production. The Chow’s test revealed a significant effect of contract farming on productivity of the farmers. Thus, productivity of contract farmers was significantly higher than productivity of farmers not under contract farming.  However, there was no significant difference in the welfare status of both categories of farmers. The major problems facing contract farming in the zone were fund scarcity, lack of credit facilities and high production cost. Based on the findings, it was recommended that contract farming should be given more awareness especially to rural farmers; socio economic and marketing infrastructure should be improved to reduce costs; policies should address the nature of contract farming in Nigeria; more agro allied firms should be established and should be made to target small scale farmers.

Key words: contract farming, productivity, welfare.