Abstract

Contract farming (CF) is gaining traction as a vital solution for improving the fortunes of Ghana's small-scale soybean farmers. Government and non-governmental organizations, such as the Savanna Farmers Marketing Company (SFMC), the Northern Development Authority (NDA), and the Adventist Development and Relief Agency (ADRA), have begun contracting farmers to cultivate soybeans in Ghana, particularly in the Northern Region's Eastern Corridor. The study sought to determine the factors that influence farmers’ decisions to participate in CF in the Eastern Corridor of the Northern Region of Ghana. It involved 374 contract and non-contract soybean farmers selected through a multi-stage sampling procedure. A treatment effect model was estimated to determine the factors that influenced farmers’ participation in CF and its effect on farm income. The factors that positively influenced participation in CF were gender, education, off-farm business, FBO membership, farm size, access to agricultural extension services, and distance from the farm to the market center. However, participation was negatively affected by experience in soybean production and access to production credit. CF participation, the farmer’s level of education, farm size, the cost of plowing, the cost of pesticides, and the cost of seeds all had a positive effect on farm income. The cost of labor and the age of the farmer had a negative effect on farm income. The study recommends policies for greater public investment in facilitators that can enable smallholder farmer participation in CF, such as off-farm income opportunities, extension systems, and transportation infrastructure. It also advocates for measures to promote education, land consolidation, and sustainable intensification that can boost productivity and farm incomes.

Key words: Contract farming, treatment effects model, soybean producers.