Factors that influence the use of contract farming by southern Chilean farmers

L. Morales, R. Echeverria, and M. Barrera. 2013. Factors that determine the use of contract farming by southern Chilean farmers. Cien. Inv. Agr. 40(1):43-53. Unlike in the central zone of Chile, the use of contract farming (CF) is uncommon in the southern regions of the country, and few studies have attempted to explain this situation. The objective of this study was to analyze the factors that influence the use of CF in southern Chile. The methodology consisted of two approaches: a quantitative approach, wherein a multinomial logit model was applied to data obtained from questionnaires completed by 384 southern producers, and a qualitative approach that included in-depth individual interviews with professionals, officials of public institutions, and producer focus groups. The main results show that producers with high educational levels, large farms, and production oriented toward the export market who are located in areas with a high concentration of neighbors using CF, who belong to organizations, and who need technical assistance from agribusiness firms are highly likely to use a CF system. However, despite the individual effect of each factor, their combined effect is related to the highest use of CF. Moreover, the lack of a positive relationship between risk-averse farmers and the use of contracts could be a sign of a problem in the way the contracts are established in southern Chile.