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Strengthening Market Linkages of Smallholder Pig Producers through Informal Contracts in Northern Viet Nam

Pro-Poor Livestock Policy Initiative: A Living from Livestock









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    Document
    Determinants of Participation in Contract Farming in Pig Production in Northern Viet Nam
    Pro-Poor Livestock Policy Initiative: A Living from Livestock
    2008
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    The rapid growth in demand for pork in Viet Nam presents an opportunity for rural households raising pigs to improve their incomes. This market potential could be exploited to improve incomes of rural smallholders through institutional arrangements that provide improved access to livestock markets and services, through formal and informal contract arrangements. Contract arrangements, however, have explicit and implicit barriers to entry that tend to exclude smallholders, depending on the nature of the contracts. Based on data from a field survey conducted in four provinces in Northern Viet Nam in 2005-06, comprising a sample of 400 pig raising households (200 independent producers, 166 farmers with informal contracts, and 34 farmers with formal contracts with a large integrator), a multinomial logit model was used to identify the factors that determine the likelihood of engagement in formal or informal contracts. A simple probit model was subsequently developed for the determinants of engagement in informal contract arrangements.
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    Ensuring greater access to markets for producers worldwide - GCP/GLO/659/IFA 2019
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    In countries across the world, a significant number of farmers, many of them smallholders, engage in contract farming in one form or another. For many commodities, such as cocoa, rubber and sugar beet, contract farming is rapidly growing in importance, often becoming the dominant model to coordinate production with market linkages. At the heart of contract farming lies an agreement between farmers and buyers. Both agree in advance on the terms and conditions for the production and marketing of farm products. These conditions usually determine the price to be paid to the farmer, the quantity and quality of the product demanded by the buyer and the date of delivery to buyers. In some cases, the contract may also include more detailed information on how the production is to be carried out or whether inputs such as seeds, fertilizers and technical advice will be provided by the buyer. In 2015, a joint publication between the International Institute for the Unification of Private Law, FAO and the International Fund for Agricultural Development, entitled the “Legal Guide on Contract Farming”, was released. The Guide specifically addresses legal aspects of contract farming, describing common contract terms and discussing legal issues and critical problems that may arise under different practical situations, illustrating how they may be treated under different legal systems. The project aimed to expand the impact and benefits of the Legal Guide by disseminating its core messages and recommendations, to promote the engagement of smallholder farmers in fair, profitable and sustainable linkages to markets through contractual relations with buyers.
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    Market Participation of Smallholder Poultry Producers in Northern Viet Nam
    Pro-Poor Livestock Policy Initiative: A Living from Livestock
    2007
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    The constraints posed by weak market infrastructure and poor access to livestock services particularly in the highlands, and to a certain extent in the midlands, are found to be far more adverse on traditional small-scale producers than on semi-commercial smallholder poultry producers. Choice of main market outlets is also heavily influenced by proximity to market centres, with itinerant village traders gaining in importance as market outlet as scale of smallholder production increases. Itineran t traders are the main link between smallholder producers and consumers in larger urban centres, largely through informal market chains. The paper argues that policy and institutional changes directed at making these informal market chains more efficient and safe through improved marketing infrastructure and services would be far more effective tools in improving market access by smallholder producers, particularly in the more remote uplands, than the imposition of restrictions aimed at curtaili ng the market power of itinerant traders.

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