Determinants of farmers participation decision into contract farming: Evidence from heineken brewery's "create" project in tiyo district, ethiopia

For agrarian nations like Ethiopia, vertical integration of agriculture with industry sector is considered as one of the rural development strategies. Contract Farming is one of the strategies designed to bring about vertical integration between the industry and agricultural sectors. Heineken Brewery has introduced malt barley Contract Farming scheme in wheatbarley in Tiyo District of the Arsi Zone in 2014. The participation of local farmers in this Contract Farming is not as it should be. The overall objective of this study is, therefore, to assess factors affecting the farmers' participation in Contract Farming in the study area. The study is focused on Tiyo District as it is the early adapter of Contract Farming with huge potential of malty barley production from the entire zone. Relevant information has been collected from primary sources using self-administered questionnaire. A total of 98 respondents (44 participants and 54 non participants) were selected for the study. The collected data were analyzed using logistic regression model to identify important determinants of farmers' participation in Contract Farming. The result of the logistic model revealed the fact that households education level, land size, family size, extension contact (visit) and awareness were found to be the factors determining the probability of households' participation in Contract Farming in the study area. The project owners are recommended to design intervention mechanism focusing on those factors to enhance the participation of farmers in contract farm to ensure a sustained supply of malt barley needed for the brewery.