IMPACT OF COOPERATIVE MEMBERS' CONTRACT ARRANGEMENTS ON SUGARCANE FARMING IN KILOMBERO VALLEY

Abstract

Contract farming has been adopted by agribusiness firms and cooperatives to ensure a constant supply of raw materials to the buyers. It is a foreseen approach by cooperatives and other firms for improving farmers' production and marketing risks. Since the 1990s, contract farming has been introduced and farmers were organized through farmer's associations in Kilombero Valley. In 2017 farmers decided to be organized through cooperatives. It's unclear whether the contracts that cooperatives sign with the buyer have improvements that represent a significant change. This study presents an analysis of contract farming arrangements when farmers were organized through associations and after the formation of Agricultural Marketing Cooperative Societies. A quasi-experimental research design was used to collect qualitative and quantitative data. Descriptive statistics and Propensity Score Matching were used for data analysis. According to the findings, the farmers’ productivity has increased by 44%, and sugarcane prices increased by 46%. It is concluded that the transition from the farmers' association to the cooperative via contract farming has resulted in positive changes for farmers in terms of productivity and profitability. It is recommended that farmers who are non-Agricultural Marketing Cooperative Societies members should be encouraged to join Agricultural Marketing Cooperative Societies.