Contract farming for increasing farmers’ profit: A case of planting Japonica rice in An Giang Province

Abstract

Japanese rice has been grown in An Giang province in recent years for high-income and specialized markets. This study aims to evaluate profits gained from growing Japanese rice, especially in the case of having contracts with a rice processing and export company. The study was conducted based on surveying 120 farmers in the Winter-Spring crop 2021-2022 in An Giang province; involving three groups (i) growing Japanese rice and signing contracts with a consumption company, (ii) growing Japanese rice and selling it to traders, and (iii) growing high yielding Indica rice. Descriptive statistics, analysis of variance and multivariate regression are the tools used to analyze the collected data. The results show that Japanese rice has a relatively high yield and is on equivalent with that of the Indica rice, and the production costs are similar among the three groups under survey. However, the contract-signing group has a significantly increased profit, followed by Japanese rice growing group selling to traders while the Indica-rice growing group ranks third. From these results, several policy implications on varieties and contract farming are recommended.