ABSTRACT
Contract farming is emerging as a promising way to upgrade domestic rice quality in
Togo. The Non-Government Organisation ‘Entreprise Territoir et Développement’
(ETD) has started promoting a kind of contract farming scheme called ’Entreprise de
Service et Organisation de Producteurs’ (ESOP) in the country. The rewards from
contract farming could be substantial for smallholder farmers; yet there is a serious
concern about the farmers’ ability to stay in the partnership for long term because of
constraints that they face. Based on the Modern Contract Theory and the Impact
Evaluation Theory, this study sought to address the following issues: farmers’
motivation to work under ESOP’s contract farming, the impact of ESOP contract
farming on farmers’ performance and the constraints that farmers face in ESOP’s
contract farming. Primary data were collected from a total of 414 smallholder rice
farmers comprising 186 ESOP contract farmers and 228 non contract farmers selected
using a multiple stage sampling techniques in three (3) out of the five (5) Regions in
Togo. Farmers’ motivation and constraints under ESOP contract farming were assessed
using Factors Analysis and Cluster Analysis. The impact of contract farming on farmers
performance was assessed using the Propensitity Score Matching Model and the
Endogenous Switching Regression Model to compare the results. The results showed
that i) incentive elements in the ESOP contract terms, the prevailing input output market
condition in the country and farmers’ need for a reliable source of income were behind
their motivation to work under ESOP contract farming, ii) by participating in ESOP
contract farming, the rice yield was increased by 14%, revenue by 32%, net benefit by
92,200 FCFA/Ha, and paddy quality upgraded from grade IV (poor) to grade I
(premium), iii) ESOP contract farmers face three groups of constraints: a) the price
formula used by ESOP is not satisfactory b) ESOP shows no respect to the agreed
payment mode and c) lack of solidarity within the Farmer Based Organisation. If these
constraints are not well addressed, the ESOP rice contract scheme will gradually
collapse because about 45% of farmers will exit due to the lack of appropriate incentive
elements in the contract, 28% because of lack of cash and carry method of payment, and
27% because of lack of solidarity within the Farmer Based Organisation. The findings
suggest that a policy intervention that facilitates capital access by ESOP from Financial
Institutions is needed to avoid the contract scheme’s collapse. A new design of contract
should include more incentive elements such as the split quality premium price, the
respect of the contract in terms of cash and carry payment method and training on
solidarity within the Farmer Based Organisation.
