Abstract/Summary

The study aims to enhance contract performance at farmer–processor interaction. The Dangote Tomato Processing Plant (DTPP) was investigated as a case study, the largest functional processing plant with over 10,000 contract farmers. To achieve its specific objectives, the study uses mixed research methods comprising in-depth Interviews, focus groups, as well as binary and ordered logistic models. The manager of DTPP and three traders identified by snowballing techniques were interviewed. Ten farmers were recruited in each of the four selected catchment areas of DTPP for focus group discussions. The novel transaction-level data were collected from 300 random contract farmers every time they made a sale throughout the 2021 dry season harvest period, covering over 1306 transactions. The qualitative data established that the cost of entry into the processing market, delayed harvest delivery, payment arrangement, and perceived uncertainties over the company’s prospects impede farmers' contract participation. The binary logistic regression results revealed that open fresh market prices and payment delays negatively affect farmers' compliance behaviour. The ordered logistic regression results revealed that, while COVID-19, Anchor Borrower Program and delayed transactions payment widened farmers' expected– observed compliance gap, resource provision, and bonuses minimized farmers expected– observed compliance behaviour gap. The study concludes that contracts may perform better if contracting agribusinesses developed an organized schedule of harvest collection, devise a reliable and timely payment plan, and introduce incentives in the contract. At the same time, government policies that aim to enhance contracts may do better if they continue to pay more attention to providing improved seeds, extension, and other services critical to the agro-processing market. Although the findings of this study could be applied to other contracting agribusiness firms, further study is needed to enforce the findings.