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.

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