1. ANALYSIS OF FARMERS’ PERCEPTIONS ABOUT TOBACCO
CONTRACT FARMING:
A CASE STUDY OF CHIPALA EPA IN KASUNGU
BY
CHIMWEMWE ISAAC BANDA
[+265888215152]
chimwemweisaacbanda@gmail.com
(Presented on 10th June, 2016 at Bunda College of Agriculture)
SUPRVISED BY: DR SERA GONDWE

2. INTRODUCTION
 Tobacco, or “green gold” as it is popularly
known in Malawi, is the country’s primary
export and an important cash crop for both
smallholder farmers and large estates (FAO,
2003)
 Smallholder farmers find it hard and
unattractive to be growing tobacco due to high;
- Production costs
- Transactional costs
- Risks including market inefficiencies.

3. INTRODUCTION…
 To improve smallholders’ participation in
tobacco, reduce the associated risks and costs,
contract farming has been recommended by the
GoM and NGOs as one of the mechanism
(ASWAp,2011).
 Contract farming is an agreement between
farmers and processing or marketing firms for
the production and supply of agricultural
products under forward agreements, frequently
at predetermined prices

4. PROBLEM STATEMENT
 Contract farming represents a major source of
credit to most smallholder farmers unlike the
standard loans from banks (IFAD, 2003)
 It improves the chances of smallholders to
participate in the production of high value crops.
 In some cases CF has not succeeded and has
proved to be a failure; in such cases both the
company and the farmers have felt that input
and credit are both uneconomic and too
risky(IFAD,2003).

5. PROBLEM STATEMENT
 Due to this farmers have reduced their
confidence in similar arrangements in the
future and have shown no interest to be
contracted again(IFAD, 2003)

6. JUSTIFICATION
 The research provides some insight into the
practical challenges to successful contract
implementation
 Help to explore and identify the conditions
under which the contracting companies and
farmers can both significantly benefit, ensure a
long term relationships and the sustainability
of the scheme

7. OBJECTIVES
 Main Objective
To analyze farmers’ perceptions about tobacco
contract farming
 Specific Objective
1. To assess the perception of farmers’ in
participating in contract farming
2. To assess strengths and opportunities of
contract farming participation

8. RESEARCH QUESTIONS
 What are the farmers’ perceptions in
participating in Contract Farming?
 What are the strengths and opportunities of
tobacco contract farming?

9. METHODOLOGY
 STUDY AREA
Chipala EPA in Kasungu
 DATA COLLECTION
This study used both primary and secondary
data.
Primary data consisted of information obtained
from questionnaires.
Secondary information was obtained through a
review of existing material such as dissertations,
books in Bunda library, internet

10. METHODOLOGY…
 SAMPLE SIZE
A randomly selected sample size of 70
contracted farmers was used
 DATA ANALYSIS
• SPSS was used to analyze the data collected.
Microsoft Excel was also used for mathematical
calculations
• SWOT analysis was carried out using information
obtained from the farmers

11. METHODOLOGY…
o Weighted Average Index (WAI) was used for
analyzing the perception of the farmers’ in
participating in Contract Farming.
• Responses, which were divided into three scales:
WAI = [fa (1.0) + fb (0.0) + fc (0.5)]/N
Where: Fa = Frequency of agree,
Fb = Frequency of disagree,
Fc = Frequency of neutral,
N = Total Number of respondents
Agree Disagree Neutral
1.0 0.0 0.5

12. METHODOLOGY
o Garrett's ranking technique was used to analyze of factors
constraining tobacco contract farming:
Percentage position =
100(Rij−0.50)
𝑁 𝑗
Where;
Rij = Rank given for the ith item by the
jth individual
Nj = Number of items ranked by the jth
individual

13. RESULTS AND
DISCUSSION
ITEMS AGREE DISAGREE NEUTRAL TOTAL
RESPONDENTS
WAI
The inputs obtained from
the contracting companies
47 6 17 70 0.79
The price you obtain from
the contract companies
4 48 18 70 0.19
Participation in contract
formation or negotiations
33 9 28 70 0.67
Debt recovery by
contractors
24 19 27 70 0.54
Knowledge or extension
services about the
production of tobacco
62 1 7 70 0.94
FARMER’S PERCEPTION ON CONTRACT FARMING ACTIVITIES

14. RESULTS AND
DISCUSSION…
• The scores of WAI were classified into three
levels:
0 - 0.33 = Disagree
0.34 - 0.67 = Neutral
0.68 - 1 = Agree
• The farmers agree with the inputs and extension
services with WAI of 0.79 and 0.94 respectively.
• Famers were neutral in there resposes on
participation in contract formation or negotiations
and Debt recovery by contractors with WAI of 0.67
and 0.54 respectively.
• However disagreed with the prices obtained under

15. RESULTS AND
DISCUSSION…
S.No Factor Total
Respondents
Total
score
Mean score Rank
1 Low price for crop produce 70 4185 59.79 1*
2 Delay procurement and
transportation of produce
70 4012 57.31 2*
3 Poor legal framework and law
enforcement
70 3893 55.61 4*
4 Cheating by an agency/corruption 70 3896 55.66 3*
5 Post determination of price 70 3294 47.06 7
6 Lack of involvement in contract
negotiation
70 3402 48.6 6
7 Poor service delivery and handling of
complains by the firm
70 3563 50.9 5*
8 Delayed payment for crop produce 70 2782 31.19 10
9 Provision of inputs at higher rate 70 2570 36.71 9
10 Delay in arranging inputs 70 2183 39.74 8
RESULT RANKING VARIOUS CONSTRAINTS USING GARRET RANKING
TECHNIQUE

16. RESULTS AND
DISCUSSION…
Strengths Weaknesses
 Scope for adoption of new technology
 Aversion of price risk
 Credit facility by the companies
 Guidance from qualified staff
 Weak insurance systems
 Weak legal backup for the growers
Opportunities Threats
 Ensures supply of inputs to the
farmers and output to the firm
 Maintenance of uniform quality of the
produce
 Breach of contract either by growers or
by company
 Diversion of inputs to other crops by the
farmers
 Poor service delivery and handling of
farmers’ complaints
SWOT ANALYSIS

17. CONCLUSION
 In order to ensure the sustainability of contract
farming the following major constraints have to
be addressed
• Low price for the crop produce
• Delay in procurement and transportation of
produce
• cheating by an agency and corruption
• poor legal framework and law enforcement
• poor service delivery by the firm and handling of
farmers’ complaints

18. RECOMMENDATION
 Policies should be put in place where women
should be empowered and enabled to
participate in Contract farming
 The government should improve the legal
framework and ensure law enforcement in
contract farming
 Marrying Contract farming with farmers’
organizations such as associations and
cooperatives

19. THANK YOU