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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

Year of publication 2007

Pages 12p.

Publisher FAO ;

Product type Document

Series title Pro-Poor Livestock Policy Initiative (PPLPI) Research Report

Edition 1

Synopsis (short abstract) Formal contracts with integrator companies are limited to large-scale pig producers in Viet Nam. There are, however, forms of informal contracts where smaller-scale pig producers establish stable links with their input suppliers or/and output buyers. Traders screen farmers with whom they could potentially engage into contracts. As relations become more established and stable, farmer reputation / reliability, rather than scale of production, becomes the more important consideration. Human and social capital factors of pig producers are found to be significant determinants of participation in contracts. Farmers engaged in informal contracts with cooperatives benefit from contract participation through higher average net returns per unit of output in the case they use ‘mixed breeds’ of pigs. The benefit is not clear cut with respect to the use of exotic breeds.

Language English

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    Our farm surveys as well as other research in Viet Nam indicate that poultry production is important for the incomes of the rural poor and it is important to recognize that the poor are involved in all stages of the poultry market chain, not just in production. Poultry market channels in northern Viet Nam might be generalized into two or three major avenues: in one small scale farmers produce local chicken and sell to nearby markets or to urban areas through informal channels. In another, medium and large farms sell through formal, regulated channels such as wholesale markets. In a few cases, large companies have built their own slaughterhouses, nearing complete vertical integration. These poultry markets are at a critical juncture. The newer, more formal marketing chains are considered to be easier to regulate, however, if smallholders and / or small-scale traders cannot market local chicken through these channels, they will continue using informal channels due to the high levels of d emand for the local type of chicken in Ha Noi.
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