Opportunities for Farmers to Gain New Knowledge
Farmers under contract for soybean, cucumbers, and maize seed learned new knowledge
directly from firms, while potato and tomato farmers had experience and knowledge prior to
the contracts. Potato farmers also received knowledge from universities under the firms'
support. Knowledge included fertilizer and chemical applications and intensive production
scheduling that could be transferred to other crops. Manarungsan and Suwanjindar (1992)
report that oil palm, pineapple, and asparagus farmers gained new technical knowledge from
input suppliers.
Contract farming can lessen farmers' entrepreneurial ability even if they gain management
skills. Farmers under contract for prawns (Office of Agricultural Economics 1989) and ducks
(Office of Agricultural Economics 1993) expressed that they lost their freedom in farm
management. This hindered their knowledge development and decision-making ability.
Advantages and disadvantages are indicated in several contract-farming studies
(Wiboonpongse et al. 1998).
The situation has changed. Wiboonpongse and Sriboonchitta (2007) finds that potato
growers in the oldest production sites have accumulated production know-how and
successfully innovated seed storage in place of seed supplied by contract firms. With
accumulated marketing knowledge and inputs from local stores and brokers, growers have
been cultivating early potatoes to earn favorable prices at 14 baht/kg on the open market;
when the normal harvesting date approaches, prices revert to the contract price (8 baht/kg).
Seed storage technology has allowed growers in many production areas to decide whether
to grow with or without contracts.
Table 2 [ PDF 14.4KB | 1 page ] illustrates experienced potato growers who are able to enjoy margins twice as high
as less experienced (non-contract) growers in similar production environments.
Download this Discussion Paper [ PDF 128.1KB| 21 pages ].
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The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.
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