Impact of contract farming on income of smallholder malt barley farmers in Arsi and West Arsi zones of Oromia region, Ethiopia

This study examined factors that influence farmers' participation in malt barley contract farming and West Arsi zones of Oromia region, Ethiopia. Data were collected from 384 (190 contract and 194 non-contract) randomly selected farm households. The probit model showed that age, livestock ownership, credit access, distance to the main market and cooperative membership had positive and significant effects on decision regarding contract farming participation. Propensity score matching technique was used to estimate the impact of participation in contract farming on farm households' income. And it revealed that contract farming resulted in an increased annual gross farm income of Birr 24,302.20 for contract, which is 27.80% higher than the gross annual income of non-contract malt barley farm households. The finding of this study highlights that contract farming is viable to increase farm household's income, which policy makers and other concerned agencies may consider as an alternative rural development approach so long as it is tailored to contexts alike.