Philippine E-Journals

The Characteristics of Contract Farming for Farm Smallholder: The case of Thailand and Lao PDR

Supaporn Pouncgchompu | Kobayashi Hajime | Supawadee Chantanop

 

Abstract:

In recent decades, contract farming has been spreading rapidly within developing countries, although it has long been established in developed countries. Yet, contract farming has primarily tended to be a potential industry for economic development in both. Contract farming has accounted for 15% of agricultural output in developed countries, while in developing countries, it has been steeply increasing (Rehber, 2007) Contract farming in developed countries provides a consistent flow of raw materials to the processing industry, which are mainly formed groups of farmers contracting with private firms (Erkan, 2007). Meanwhile, in developing countries, contract farming is mostly the result of multi-lateral arrangements involving private firms (Glover,1984) or is the result of many contractual relationships organized by different actors that is managed by complementing and partially replacing farm land and plantations (Erkan, 2007).