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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