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Westminster International University in Tashkent
Research Proposal
Topic: Why Do Small-Scale Producers Choose to Produce under Contract? Vegetable Exports from Uzbekistan
Author:
ID: 000238
Course: Master of Arts in International Business and Management
Supervisor: MuzaffarAhunov
Date: 14 February 2017
Word count: 2463
Contents
Summary ………………………………………………………………… .3
1. Introduction …………………………………………………………… 4
2. Literature Review ………………………………………………………5
3. Research question ………………………………………………………7
4. Research methodology………………………………………………… 7
4.1 Data collection …………………………………………………………………………………7
4.2 Data analysis ………………………………………………………………………………… .8
4.3 Research Ethics ……………………………………………………………………………… 9
4.4 Research limitations ………………………………………………………………………… 9
5. Conclusion……………………………………………………………… 9
6. List of References ………………………………………………………10
7. Appendices ………………………………………………………………12
Why Do Small-Scale Producers Choose to Produce under Contract? Vegetable Exports from Uzbekistan
Summary
In this proposal I present an investigation the motivations behind the decision of small-scale producers to grow nontraditional vegetables under export contract in the case of rural Uzbekistan. I will dividemy respondents in groups according to four regions and factors that motivate them to work under contract, alsowill investigate main characteristics of these farmers which influenced on farmers in decision making according participation in contract farming.
More than 491 percent of the population of Uzbekistan lives in rural areas; climate conditions are good enough to produce high-quality vegetables for export markets. However,only about 11 percentof produced vegetables go for export. And only small part of them produced bycontracted farmers (WB, 2014). Though, in theory contract farming is beneficial for farmers because of higher income and productivity of farmers,risk minimization, access to market and economies of scale (Simmons, 2002).
While in many counties contract farming applies successfully for ages, in Uzbekistan this type of farming is still developing. One of the most recent definitions of Contract farming – it is a forward agreement, which indicates the responsibilities of farmers and purchasers as counterparts in business (Will, 2013).
This research work will be focused on motivation factors which influence on small-scale producers decision to grow vegetables under contract for export.Will be investigated four main possible types of Uzbek farmers’ motivation:
absence of traditional transportation risksand logistics costs, changes of prices risks and inflation rates growth (market uncertainty);
reason to use ground during winter period with additional income, because some nontraditional crops, which have high export demand (mungbean) are suitable in rotation with cotton and wheat (income benefits);
knowledge and experience acquisition, which can lead to new bigger projects and contracts (indirect benefits);
recentlyactively started changes of state agricultural policy of the country: motivating and supporting small-size farmers (intangible benefits).
Until recent time agrarian structure of Uzbekistan based mainly on tow crops: cotton (as main export crop) and wheat (as providing food security strategic crop). There have been relatively limited opportunities for small-scale producers to enhance their livelihood. Thus, contract production especially connected to export supply chains wasa ‘‘golden opportunity’’ for local producers that have the abilities to enable them to produce high-value export agricultural products (Coulter, et al., 1999; Heri, 2000).
The second subject which will be investigated in the research is the characteristics of farms and farmers possibly causing on their participation in contract farming:
Size of farm: according to statistics research (Ministry of Agriculture and Water Resources, Uzbekistan, 2016) there are 160 372 farming producers that involved into agriculrural activity, with average farms sizes about 22.3 Ha (and 55.2 Ha at farming producers oriented to two main crops production) 2016.
Proportion of land used for export crops
Possible difficulties or their absence to market access for farmers
The proportion of income from crop which farmer going to grow for export
Exploring on-going basis of such motives nature in the context of the supply chains restructuration and policy reforms in particularly necessary in the case with global supply chains for agricultural commodities linked to strong-value markets (Dolan and Humphrey, 2000; Dolan and Humphrey, 1999).
Literature Review
Contract farming
Contract farming is a period that refers to the status, in which farmers produce and deliver agricultural products for an integrated enterprise according to an agreement (Dhillonand Singh, 2006). Agricultural production under contract farming in developed countries fully described (e.g. Martinez and Reed, 1996), also described tendency and causes of its growth (Royer and Rogers, 1998).
The same tendency of increase in contract farming accrued indeveloping countriesas part of on-going processes of agro-industrialization (Dorward et al., 1998). Moreover, for developing countries there are a number of factors which may lead to an even more rapid expansion of contract farming. One of them is the increase of supermarkets in food retailing. In last two decades, the number of supermarkets has grown rapidly in the urban areas of developing countries, particularly in Asia (Reardon and Berdegué, 2002).
Usually contract farming helps to increase income and welfare of farmers. Livelihood improvement and poverty reduction are the predictable results of income stabilization in rural areas (Man &Navi, 2010; Tuan, 2012).The World Bank also recognizes contract farming as way which would lead to the transfer of newest agricultural technology, entrepreneurial development of small farmers and market growth (The World Bank, 2005).
Farmers’ motivation
The main estimated motivation for farmers to work under contracts is the higher income and absence of risks. In theory farmers have many benefits exempt profitability from contracted farming for example no need to worry about transaction costs reduction, market access, prices uncertainty (Singh, 2002).However, the increase in contract farming has caused debate over its welfare and economic benefits to small farmers, which requires a detailed study of the issue (Warning and Key 2002).
And many research works already done in this filed, but this study will be focused mainly on farmers’ motivation factors and various characteristics which influence on their motivation and decision making, such as the efficacy of input and output markets and related transaction costs, land and water access, agricultural services provision, etc. These factors need to be connected withdominant agrarian structures and the opportunities for growth of agricultural production and incomes.
Following questions are sought for answers during the research:
1. What is the motivation for small-scale producers to engage in contracting, and
2. What are the systematic differences between farmers influencing on their decisions to contracts in Uzbekistan?
Research Methodology
Data collection
The research replicates Masakure and Henson (2005) experience “Why Do Small-Scale Producers Choose to Produce under Contract? Lessons from Nontraditional Vegetable Exports from Zimbabwe” in case of Uzbekistan, therefor data collection and data analyses will be as close as possible to original, but research work will be carry out in regions of Uzbekistan. And I am going to collect data from small-scale vegetable producers (farmers) in four different regions (Tashkent, Andijan, Fergana and Karakalpakstan regions) of the country,in order to cover different climate and soil conditions in which farmers work and live.
Data collection and its analyses will be organized in three main phases over the period from May, 2017 to November, 2017. In the beginning, exploratory interviews will be undertaken with International Center for Agricultural Research in the Dry Areas (Office for Uzbekistan)stuff (mainly with Uzbek agrarian scientists), research workers and staffof scientific research institutes (Uzbek Research Institute of Vegetable, Melon Crops and Potato growing and Uzbek Research Institute of Plant Industry), and stuff of “Beans with benefits” project (a joint GIZ and World Vegetable Center project), who already investigated the agricultural export chances, and work of Uzbek agro-firms,in order to understand fully the context in which contract farming scheme operates under Uzbek conditionsю The tentative structure of the questionnaire attached, it will be modified and complemented by taking into account the advice of the supervisor(SeeAppendix 1).
Secondly, 80 in-depth interviews will beorganized with a selected group of contracted small-scale producers that aimed to include the range of producers working under contracts in groups by age, size of farm, length of time they had been supplying agro-firms, size of production, names of crops producing for export, names of non-traditional crops producing for export etc.
The tentative structure of the questionnaire attached, it will be modified and complemented by taking into account the advice of the supervisor (SeeAppendix 2).Thereby, the data that will be gathered during the in-depth interviews will help to identify the differences in experiences of contracted producers and their initial motivations to join the contract farming.
Data analysis
In the third stage, the information gathered from in-depth interviews in previous stages of the research will be used in order to designquestionnaires, which will be askedin personal interview with a sample of 40 contracting producers. The tentative structure of the questionnaire attached, it will be modified and complemented by taking into account the advice of the supervisor (SeeAppendix 3).These producers will be sampled with use of a multistage process.
Tenfarmers will be randomly selected, from each of four districts to participate in the survey. I will present myself as academic researcher with no connections to any agro-firm of government agencies. And explain that all responses will be kept confidential and their names of any other personal information (like addresses, telephone numbers, etc.) will not be used in data analyses, or passed to third parties.The information on the characteristics of farmers will be collect by questionnaires, benefitsfrom contract production, accompany problems from work under contract, etc.
The impact and importance of motivating factors in the initial decision making of farmers concerning work under contractwill be identified through the in-depth interviews. Questions will have possible answers organized in form of five-point Likescales from ‘‘very important’’ (5) to ‘‘very unimportant’’ (1). The factor analysis will be used to evaluate thevalues of scales from answers with the aim to identify any patterns and to sum up any hidden constructs into a coherent series of subsets.
After that cluster analysis will be done with use of gathered information from farmers in order to identify systematic differences in the relative importance of the identified motivation subsets. The clusters will be compared according to the socio-demographic characteristics of the cluster members. Table provides detailed description of stages and timetable of the research (See Appendix 4).
Despite the fact that the research will not involves any private information, and all data will be confidential in order to avoid any misunderstandings, participants will be informed about the research objectives and secure conditions of data use and storage. The collected data will be ensured in confidentiality through proper storage of the data and use of coding in the analysis.
The author will sign code of misconduct issued by the University of Westminster(See Appendix 5).
Research limitations
I will try to replicate Masakure and Henson experience from Zimbabwe in terms of Uzbekistan but I was forced to exclude 1 item from the research – the final division of interviewed farmers into male and female, because I know in advance that no female farmers will participate in my surveys. The second difference in my research from Masakure and Henson the total number of farmers will be 80 (20 representatives from each of 4 regions), but if I will have any opportunity to extend that number I will use it.
Conclusion
The replicatingMasakure and Henson experience from Zimbabwe in Uzbekistan should confirm or deny their findings, and expose the situation on contract farming in Uzbekistan. The study will explore the extent and direction of the relationship between various factors which can influence the farmers decision according to contract farming. The possible findings from the study are expected to reveal the level of motivation of Uzbek farmers to work under contracts.
This research will be of particular importance in the subject area offarmers motivation according to contract farming and various factors which may influence on their decisions. The study will contribute to a better understanding of farmersdecision making and motivations towards cooperation with agro-firms under contracts.
References
Annual statistics, Ministry of Agriculture and Water Resources, Uzbekistan, 2016
Coulter, J., Goodland, A., Tallontire, A., andSpringfellow, R. (1999).Marrying farmer cooperation and contract farming for agricultural service provision in Sub Saharan Africa.ODI Natural Resource Perspectives, 48(November).
Dhillon, S.S. and N. Singh 2006, Contract farming in Punjab: An analysis of problems, challenges and opportunities, Pakistan Economic and Social Review. Vol. XLIV, No. 1, pp. 19-38.
Dolan, C., and Humphrey, J. (2000). Governance and trade in fresh vegetables: the impact of UK supermarkets on the African Horticulture Industry. Journal of Development Studies, 37(2), 147–176.
Dorward, A., Kyyd, J., andPoulton, C. (Eds.). (1998). Smallholder cash crop production under market liberalisation: A new institutional economics perspective. Wallingford: CABI International.
Heri, S. (2000).The growth and development of the Horticultural Sector in Zimbabwe. Paper prepared for the UNCTAD Conference, UNCTAD, Geneva.
Khidirov, Dilshod; Khidirov, Dilshod. 2016. Uzbekistan - Horticulture Development Project : P133703 - Implementation Status Results Report : Sequence 04. Washington, D.C. : World Bank Group.
Man, N. and N.M. Nawi 2010, The practices of contract farming among fresh fruit and vegetable suppliers in Malaysia, American Journal of Agricultural and Biological Sciences 5 (3): 321-330, 2010. ISSN 1557-4989.
Masakure, O. and S. Henson 2005, Why do small-scale producers choose to produce under contract? Lessons from non-traditional vegetable exports from Zimbabwe, World Development, 33(10), pp. 1721-1733.
Reardon, T. and J.A. Berdegue (2002). "The Rapid Rise of Supermarkets in Latin America: Challenges and Opportunities for Development." Development Policy Review 20(4): 371-388.
Singh, S. 2002, Contracting out solutions: Political economy of contract farming in the Indian Punjab, World Development. Vol. 30, No. 9, pp. 1621-1638.
Simmons, P. et al. 2005. An Analysis of Contract Farming in East Java, Bali, and Lombok, Indonesia. Agricultural Economics, Vol. 33, No. 3. 513-525.
Will, M. 2013. Contract Farming Handbook: A Practical Guide for Linking Small-Scale Producers
and Buyers through Business Model Innovation. GIZ/BMZ, Berlin.
World Bank. 2005. Linking Small Scale Producers to Markets: Old and New Challenges. A Workshop of the ARD Rural Infrastructure, Markets and Finance (RIMFI) Thematic Group. World Bank, Washington D.C.
Warning, M., and Key, N. (2002). The social performance and distributional consequences of contract farming: an equilibrium analysis of the Arachide de Bouche Program in Senegal. World Development, 30(2), 255–263.
Appendix 1
Tentative questioner for agrarian research workers and scientists
Appendix 2
Tentative questioner for Farmers (1st stage)
Appendix 3
Appendix 4
Timetable of research
Appendix 5
Your name and surname:
Title of your project: Why Do Small-Scale Producers Choose to Produce under Contract? Vegetable Exports from Uzbekistan
Details:
Ethics consideration questions(Please underline or highlight ‘yes’, ‘no’ or ‘not applicable (N/A)’ as appropriate for each of the questions 1-24 below.)
My project is based (partly or completely) on primary data collected from human participants: yes no
PART 1: Potentialharmorvulnerability
PART 2: Consent, participant information and confidentiality
PART 3: Data
PART 4: Externallinks
If your answer is NO to all questions in part 1, and YES to all questions in parts 2 and 3, your research has no ethical implications that require full ethics approval at this point. What to do next in this case?
Submit this form as appendix to your project proposal, by the relevant project proposal submission date. Your supervisor will evaluate it. If further clarifications or amendments are needed, this will be dealt with by your supervisor as part of the overall project proposal feedback.
Submit this form as appendix to your project proposal by the relevant project proposal submission date. Your supervisor will evaluate it. If further clarifications or amendments are needed, this will be dealt with by your supervisor as part of the overall project proposal feedback.
Apply for full ethics approval. This will normally be done under the guidance of your project supervisor after you have submitted your project proposal, and have received feedback on it.
To apply for full ethics approval, a second form (called PART B) must be completed, signed by you and your supervisor, and send together with your project proposal to Elisabeth Michielsens, Chair of the WBS FREC. You should await the formal confirmation of FREC approval before you start collecting/using data.
Form ‘PART B’ can be downloaded from .
If you have answered YES to question 25: An application should be sent directly to the relevant external ethics committee. A copy of any external approval/conditions letter should, together with your project proposal, be sent to Elisabeth Michielsens, Chair of the WBS FREC.
Further Comments:
If you initiate significant changes to your research at a later stage, it might be necessary to re-consider any ethical impact again. In that case a new student REC form might need to be completed and signed.
For full Code of Practice and university wide research ethics guidance, such as exemplars of Participant Information Sheet and Consent Form, toolkits for Data Protection guidance and Travel Overseas Risk assessments, see:
1Khidirov, Dilshod; Khidirov, Dilshod. 2016. Uzbekistan - Horticulture Development Project : P133703 - Implementation Status Results Report : Sequence 04. Washington, D.C. : World Bank Group.
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