ANALYSIS OF FARMERS’ PERCEPTIONS ABOUT TOBACCO CONTRACT FARMING:

A CASE STUDY OF CHIPALA EPA IN KASUNGU

BYCHIMWEMWE ISAAC BANDA

[+265888215152]chimwemweisaacbanda@gmail.com

(Presented on 10th June, 2016 at Bunda College of Agriculture)

SUPRVISED BY: DR SERA GONDWE

INTRODUCTION Tobacco, or “green gold” as it is

popularly known in Malawi, is the country’s primary export and an important cash crop for both smallholder farmers and large estates (FAO, 2003)

Smallholder farmers find it hard and unattractive to be growing tobacco due to high;

- Production costs- Transactional costs - Risks including market

inefficiencies.

INTRODUCTION… To improve smallholders’ participation in

tobacco, reduce the associated risks and costs, contract farming has been recommended by the GoM and NGOs as one of the mechanism (ASWAp,2011).

Contract farming is an agreement between farmers and processing or marketing firms for the production and supply of agricultural products under forward agreements, frequently at predetermined prices

PROBLEM STATEMENT Contract farming represents a major source

of credit to most smallholder farmers unlike the standard loans from banks (IFAD, 2003)

It improves the chances of smallholders to participate in the production of high value crops.

In some cases CF has not succeeded and has proved to be a failure; in such cases both the company and the farmers have felt that input and credit are both uneconomic and too risky(IFAD,2003).

PROBLEM STATEMENT Due to this farmers have reduced their

confidence in similar arrangements in the future and have shown no interest to be contracted again(IFAD, 2003)

JUSTIFICATION The research provides some insight into

the practical challenges to successful contract implementation

Help to explore and identify the conditions under which the contracting companies and farmers can both significantly benefit, ensure a long term relationships and the sustainability of the scheme

OBJECTIVES Main ObjectiveTo analyze farmers’ perceptions about tobacco contract farming Specific Objective1. To assess the perception of farmers’ in

participating in contract farming2. To assess strengths and opportunities of

contract farming participation

RESEARCH QUESTIONS What are the farmers’ perceptions in

participating in Contract Farming? What are the strengths and opportunities

of tobacco contract farming?

METHODOLOGY STUDY AREAChipala EPA in Kasungu DATA COLLECTIONThis study used both primary and secondary data.Primary data consisted of information obtained from questionnaires.Secondary information was obtained through a review of existing material such as dissertations, books in Bunda library, internet

METHODOLOGY… SAMPLE SIZE A randomly selected sample size of 70 contracted farmers was used

DATA ANALYSIS• SPSS was used to analyze the data collected.

Microsoft Excel was also used for mathematical calculations

• SWOT analysis was carried out using information obtained from the farmers

METHODOLOGY…o Weighted Average Index (WAI) was used for

analyzing the perception of the farmers’ in participating in Contract Farming. • Responses, which were divided into three scales:

WAI = [fa (1.0) + fb (0.0) + fc (0.5)]/NWhere: Fa = Frequency of agree,

Fb = Frequency of disagree, Fc = Frequency of neutral, N = Total Number of respondents

Agree Disagree Neutral

1.0 0.0 0.5

METHODOLOGYo Garrett's ranking technique was used to analyze of factors

constraining tobacco contract farming:

Percentage position = Where;

Rij = Rank given for the ith item by the jth individual

Nj = Number of items ranked by the jth individual

RESULTS AND DISCUSSION

ITEMS AGREE DISAGREE NEUTRAL TOTAL

RESPONDENTS

WAI

The inputs obtained from

the contracting companies

47 6 17 70 0.79

The price you obtain from

the contract companies

4 48 18 70 0.19

Participation in contract

formation or negotiations

33 9 28 70 0.67

Debt recovery by

contractors

24 19 27 70 0.54

Knowledge or extension

services about the

production of tobacco

62 1 7 70 0.94

FARMER’S PERCEPTION ON CONTRACT FARMING ACTIVITIES

RESULTS AND DISCUSSION…• The scores of WAI were classified into three levels:

0 - 0.33 = Disagree 0.34 - 0.67 = Neutral

0.68 - 1 = Agree• The farmers agree with the inputs and extension

services with WAI of 0.79 and 0.94 respectively.• Famers were neutral in there resposes on

participation in contract formation or negotiations and Debt recovery by contractors with WAI of 0.67 and 0.54 respectively.

• However disagreed with the prices obtained under contract farming with WAI of 0.19

RESULTS AND DISCUSSION…

S.No Factor Total Respondents

Total score

Mean score Rank

1 Low price for crop produce 70 4185 59.79 1*2 Delay procurement and

transportation of produce70 4012 57.31 2*

3 Poor legal framework and law enforcement

70 3893 55.61 4*

4 Cheating by an agency/corruption 70 3896 55.66 3*5 Post determination of price 70 3294 47.06 76 Lack of involvement in contract

negotiation70 3402 48.6 6

7 Poor service delivery and handling of complains by the firm

70 3563 50.9 5*

8 Delayed payment for crop produce 70 2782 31.19 109 Provision of inputs at higher rate 70 2570 36.71 910 Delay in arranging inputs 70 2183 39.74 8

RESULT RANKING VARIOUS CONSTRAINTS USING GARRET RANKING TECHNIQUE

RESULTS AND DISCUSSION…

Strengths Weaknesses Scope for adoption of new technology Aversion of price risk Credit facility by the companies Guidance from qualified staff

Weak insurance systems Weak legal backup for the growers 

Opportunities Threats Ensures supply of inputs to the

farmers and output to the firm Maintenance of uniform quality of the

produce 

Breach of contract either by growers or by company

Diversion of inputs to other crops by the farmers

Poor service delivery and handling of farmers’ complaints

 

SWOT ANALYSIS

CONCLUSION In order to ensure the sustainability of

contract farming the following major constraints have to be addressed• Low price for the crop produce• Delay in procurement and transportation of

produce • cheating by an agency and corruption • poor legal framework and law enforcement • poor service delivery by the firm and

handling of farmers’ complaints

RECOMMENDATION Policies should be put in place where

women should be empowered and enabled to participate in Contract farming

The government should improve the legal framework and ensure law enforcement in contract farming

Marrying Contract farming with farmers’ organizations such as associations and cooperatives

THANK YOU