Determinants of contract farming for smallholder sunflower producers in northern Uganda

Abstract

Contract farming is a form of vertical coordination, largely aimed at correcting market failures associated with spot markets that arise due to imperfect information. The objective of this study was to assess the determinants of farmer engagement in sunflower (Helianthus annus L.) contracts in northern Uganda. Stratified random sampling was used to select 150 contracted and 150 non-contracted sunflower farmers in Oyam District, from where primary data were collected using a semi-structured questionnaire. A Logistic regression model was used to examine the factors that influenced farmer participation in contract farming. The major determinants of participation in contract farming by smallholder farmers were age (P<0.1), sunflower production experience (P<0.01), access to credit (P<0.01) and unit produce price (P<0.01).Collaborative efforts by all parties engaged in contracting arrangements are necessary to negotiate a minimum price with the farmers, with a possibility to re-negotiate whenever the market price is above the set price. The study pointed out that improvement in rural roads to enhance transportation of produce to mini-store is vital in driving sunflower contract farming in Oyam district. Therefore, policies aimed at improving rural roads are urgently needed.