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Contract farming was implemented in Tigray to improve access to support and marketing services and ensure consistency in the volume of supplied products. However, its impact has not been examined yet. Therefore, this study estimates the impact of contract farming on sesame productivity farmers in western Tigray. The study uses cross-sectional farm household-level data collected in 2021 with a sample of 397 household heads and those household heads were selected using a multistage stratified random sampling technique. Propensity Score Matching and Endogenous Switching Regression models were employed to estimate the impact of contract farming on Sesame productivity and to check the robustness of the results. Our findings show that participation in contract farming corroborates important improvements for contract farmers via the chosen output indicators. The number of workers used, farming experience, inorganic fertilizer use, seed variety, and farm size allocated to sesame were positively associated with both contract and non-contract farmers. However, years of schooling were positively correlated while the age of household heads was negatively associated with contract farmers. On the other hand, access to extension services was negatively correlated with the non-contract farmers. The endogenous switching regression model predicts two results coincidentally for the contract and non-contract farmers. The result indicates that 400 kg per hectare would reduce sesame productivity if the farmers would not adopt contract farming while non-contract farmers could improve their sesame productivity by 150 kg per hectare if they would be part of the program.
Hailu et al. (Fri,) studied this question.