Abstract:

Closer coordination has improved smallholder access to resources, technology and markets. The absence of contracts has led the coordination of the local food chains in rural Ethiopia to remain poorly functioning. Despite the huge agrifood potential in Ethiopia, the loose coordination among the actors resulted in failure of the supply chain to offer economic incentives to producers and to deliver quality products to processors/traders. This study aims at examining key determinants for farmers’ participation in contracts or cooperatives. A structured survey was administered to 827 farmers in Tigray, Ethiopia. Household’s land size, livestock, product characteristics, need of credit for inputs and technology and transaction costs were found to influence participation. Based on our findings we suggest policy makers to recognize the role contracts play in the supply of credits, inputs and improving market conditions in rural Ethiopia.

Keywords: