Strengthening Market Linkages of Smallholder Pig Producers through Informal Contracts in Northern Viet Nam
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Formal contracts with integrator companies are limited to large-scale pig producers in Viet Nam. There are, however, forms of informal contracts where smaller-scale pig producers establish stable links with their input suppliers or/and output buyers. Traders screen farmers with whom they could potentially engage into contracts. As relations become more established and stable, farmer reputation / reliability, rather than scale of production, becomes the more important consideration. Human and social capital factors of pig producers are found to be significant determinants of participation in contracts. Farmers engaged in informal contracts with cooperatives benefit from contract participation through higher average net returns per unit of output in the case they use ‘mixed breeds’ of pigs. The benefit is not clear cut with respect to the use of exotic breeds.