Impact of the business services for farmers organizations (ESOP) contract farming model on paddy producers well-being in Dangbo District of Benin

Abstract

The importance of rice is increasing in peoples’ diets in Benin, but access of locally-produced rice to domestic and foreign markets remains limited due to low quality products and unreliable supply chains. Contract farming for rice processing and exportation promises to ensure secure market access, and lift paddy farmers up from poverty. This study aimed to identify the determinants and assess the impact of participation to the “Business Services for Farmers’ Organizations” (ESOP) contract farming model on producers’ well-being. Sixty paddy producers (30 participants and 30 non-participants), were randomly selected and interviewed in three villages of Dangbo district in Southern Benin. A logistic regression model and the Average Treatment Effect (ATE) method were utilized to elicit the determinants and assess the impact. Size of household, paddy producer price, producer’s experience, yield of paddy and access to credit appeared to be the main determinants of producers’ participation in the ESOP model, leading to a significant (at 5% level) increase in annual net income and food consumption score, respectively by 42.51 and 24.35%. Therefore, the ESOP model had a significant positive impact on producers’ well-being. Therefore, not ignoring some observed competition shortfalls, we recommend a large-scale dissemination of the model, with dedicated attention to paddy producer price, technology, training and credit support as critical levers for policy intervention. Businessmen should be trained to provide key marketing services that enhance contract farming in a competition environment, and advocacy should be undertaken towards the government and credit agencies for the required support to farmers.