Thesis, Undergraduate (BS Agribusiness Economics) -- U.P. Mindanao

Contract farming has been defined as an agreement between farmers and sponsors for the production and supply of agricultural products under the sponsor's specifications (Eaton and Shepherd, 2001). This farming scheme was implemented by the Department of Agrarian Reform in order for agrarian reform beneficiaries (ARBs) to gain access to high-end markets; have access to support services and facilities and; improve income. However, issues such as unequal bargaining relationship, equity, and sustainability arise from this. This study aims to asses the gains and effect of contract farming to the three agrarian reform cooperatives namely, HARBCO, SFARBEMCO, and SEARBEMCO. For the conduct of the study, 115 ARBs from the three cooperatives which ventured into contract agreement with local/multinational companies were interviewed. In assessing the economic gains, profitability analysis using financial ratios was used. The social gains satisfaction rating was obtained using rank order centroid weights. Also, logistic regression model was employed to identify factors that influence ARBs perception on contract farming. The results show that on the average, the three cooperatives are not gaining from contract farming participations. Furthermore, ARBs have low average annual income generated. Satisfaction of ARBs on belongingness is very low for HARBCO and SEARBEMCO while social stability is low for SEARBEMCO. The results from logistic regression suggest that years of education gender, and income affect ARBs perception on contract farming. Based on the results, it was found that the major factors that greatly affect the outcome of the contract agreement are the business partner of the cooperative and the nature of contract agreement. Hence,it is imperative for the stakeholders involved in the contract to conduct consultations and thorough discussions with regards to the contract agreement. Lastly, evaluation of the contract must be put in place.