Economic Dimensions of Agrarian Contracting
Abstract
The achievements of the interdisciplinary New Institutional Economics are adapted and a holistic approach to the definition, classification, evaluation, and improvement of contracts and contractual relations is justified. A critical analysis of the contemporary development of Contractual Economics is made and the specificity of the economic study of agrarian contracts is summarized. A ‘new’ Agents-Means-Process-Order (AMPO) approach for economic analysis, evaluation and improvement of agrarian contracts is presented, including: (1) economic definition of agrarian contracts and characterization of their place in the system of agrarian governance as bilateral or multilateral agreements related to agricultural production and services; (2) economic characteristics of the agents participating in the contractual relations (interests, awareness, risk-taking, capability, tendency to opportunism, etc.); (3) economic characteristics of different types of agrarian contracts (for purchase and sale, hire of labor and resources, services, loan, insurance, marketing, coalition, etc.); (4) economic characterization of the agrarian contracting process (technological, transactional, institutional, etc. factors for managerial choice); (5) economic characterization of the outcome of the contractual process and the dominant governance order in the agrarian sphere (rule of law, rule of force, contractual structure, etc.); (6) characterization of the stages for the improvement of agrarian contracts and governance (identification of problems and failures of the market, private contracting, and public modes; needs and forms of new public intervention, etc.); (7) identification of needs and sources of new information for analysis and evaluation of agrarian contracts.
References
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[23] Dinterman, C. (2022). What Farmers Need to Know About Carbon Contracts, Successful Farming. Available at: https://www.agriculture.com/crops/conservation/what-farmers-need-to-know-about-carbon-contracts
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[28] Goodhue R. (2022). From Handshakes to Blockchains: Economic Analysis of Contracts in Agriculture. In: de Gorter, H., McCluskey, J., Swinnen, J., Zilberman, D. (eds) Modern Agricultural and Resource Economics and Policy. Natural Resource Management and Policy, vol. 55. Springer, Cham.
[29] Hayami Y., Otsuka, K. (1993). The Economics of Contract Choice: An Agrarian Perspective, Oxford University Press.
[30] Ikeda, S.; Natawidjaja, R.S. (2022). The Sustainability of Contract Farming with Specialized Suppliers to Modern Retailers: Insights from Vegetable Marketing in Indonesia. Agriculture, 12: 380. DOI:https://doi.org/10.3390/agriculture12030380
[31] James, H., Klein, P., Sykuta, M. (2011). The Adoption, Diffusion, and Evolution of Organizational Form: Insights from the Agrifood Sector. Managerial and Decision Economics, 32(4): 243–59.
[32] Kocheva, D. (2018). Application of economic instruments for household waste management in municipalities in Bulgaria, dissertation work for awarding the educational and scientific degree ‘doctor’, UNSS (in Bulgarian).
[33] Kuzilwa J., Fold, N., Henningsen, A. and Larsen, M. (2019). Contract Farming and the Development of Smallholder Agricultural Businesses: Improving markets and value chains in Tanzania, Routledge.
[34] MacDonald J., (2015). Trends in Agricultural Contracts. Choices, 30(3): 1-6.
[35] Massey, R., Sykuta, M., Pierce, V. (2020). Contracts in agriculture. Farm management, University of Missouri.
[36] Michler J. and Wu, S. (2020). Relational Contracts in Agriculture: Theory and Evidence. Annual Review of Resource Economics, 12: 111-127.
[37] Mishra A., Kumar, A., Joshi, P. (Editors), (2022). Transforming Agriculture in South Asia The Role of Value Chains and Contract Farming, Routledge.
[38] Mugwagwa, I., Bijman, J., Trienekens, J. (2020). Typology of contract farming arrangements: a transaction cost perspective. AGREKON, 59 (2): 169-187. DOI: https://doi.org/10.1080/03031853.2020.1731561
[39] North, D. (1990). Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press.
[40] Ostrom, E. (1999). Revisiting the Commons: Local Lessons, Global Challenges. Science, 284: 278–282.
[41] Otsuka, K., Chuma, H., Hayami, Y. (1992). Land and Labor Contracts in Agrarian Economies: Theories and Facts. Journal of Economic Literature, 30: 1965-2018.
[42] Radeva, D. (2017). Economics of the new alternative agriculture in Bulgaria - Permaculture, dissertation work for awarding the educational and scientific degree ‘doctor’, UNSS, 2017 (in Bulgarian).
[43] Ronaghi, M., et al. (2020). The Effects of Good Governance on the Agricultural Sector. International Journal of Agriculture and Environmental Research, 6(1): 11-29.
[44] Santiago, M., and Sykuta, M. (2016). Regulation and Contract Choice in the Distribution of Wine. Journal of Wine Economics, 11(2): 216-232.
[45] Sarov, A. (2017). Management of agricultural cooperatives - challenges and prospects, dissertation work for awarding the educational and scientific degree ‘doctor’, IAE (in Bulgarian).
[46] Schiefferm J. and Vassalos, M. (2015). Risk and the Use of Contracts by Vegetable Growers, 30(3): 1-6.
[47] Stebekm, E. (2011). Between ‘Land Grabs’ and Agricultural Investment: Land Rent Contracts with Foreign Investors and Ethiopia’s Normative Setting in Focus. Mizan Law Review, vol. 5, DOI:https://doi.org/10.4314/mlr.v5i2.1
[48] Sykuta, M. (2010). Concentration, Contracting and Competition: Problems In Using The Packers and Stockyards Act To Supplement Antitrust. The CPI Antitrust Journal, 4(2).
[49] Sykuta, M., and Parcell, J. (2002). Contract Structure and Design in Identity Preserved Grain Production, 2002. Review of Agricultural Economics, 25(2).
[50] Sykuta, M., and Cook, M. (2001). A New Institutional Economics Approach to Contracts and Cooperatives, American Journal of Agricultural Economics, 83(5): 1273-1279.
[51] Terziyska, R. (2016). Management of network structures in agrarian business, dissertation work for awarding the educational and scientific degree ‘doctor’, UNSS. (in Bulgarian).
[52] Veldwisch G. and Woodhouse, P. (2021). Formal and informal contract farming in Mozambique: Socially embedded relations of agricultural intensification. Journal of Agrarian Change, 22: 162–178, DOI:https://doi.org/10.1111/joac.12461
[53] Villaume, S. (2011). Paid employment in agriculture: the rising proportion of seasonal contracts division Agriculture, Insee.
[54] Voutos, Y., Drakopoulos, G. and Mylonas, P. (2019). Smart Agriculture: An Open Field for Smart Contracts, 2019 4th South-East Europe Design Automation, Computer Engineering, Computer Networks and Social Media Conference (SEEDA-CECNSM), 1-6.
[55] Williamson, O. (2005). The Economics of Governance, American Economic Review, 95: 1–18.
[56] Wu, S. and MacDonald, J. (2015). Economics of Agricultural Contract. Grower Protection Legislation, 30(3): 1-6. Available at: http://choicesmagazine.org/choices-magazine/theme-articles/current-issues-in-agricultural-contracts/economics-of-agricultural-contract-grower-protection-legislation
[57] Technical support, Advantages and Disadvantages of Contracting and Sub-Contracting in Marketing of Agricultural Produce, Friedrich Ebert Stiftung (2002).
[58] USDA, Agricultural Resource Management Survey: farms with contracts by farm typology, (2012). From Farm Structure and Organization: Background on Farm Organization, USDA Economic Research Service.
[59] World Bank. (2015) Investment Contracts for Agriculture: Maximizing Gains and Minimizing Risks, World Bank.
[60] ZAZ. (2018). LAW on the lease in agriculture, last amendment (in Bulgarian).
[61] ZZD. (2021). LAW on obligations and contracts, last amendment (in Bulgarian).
[2] Arrow, K. (1962). Economic Welfare and the Allocation of Resources for Invention, in The Rate and Direction of Inventive Activity, 609.
[3] Bachev, H. and Ivanov, B. (2024). Framework for Holistic Assessment of the Quality of Agri-food Governance in Bulgaria. Sustainability, Vol. 16, 5: 2177. DOI: https://doi.org/10.3390/su16052177
[4] Bachev, H. and Terziev, D. (2002a). Organization of labor supply in Bulgarian farms. Economics and Management of Agriculture, 1: 21-30 (in Bulgarian).
[5] Bachev, H. and Terziev, D. (2001). Organization of land supply in Bulgarian farms. Economics and Management of Agriculture, 6: 17-27 (in Bulgarian).
[6] Bachev, H. and Terziev, D. (2002c). Organization of service supply in Bulgarian farms. Economics and Management of Agriculture, 3: 20-28 (in Bulgarian).
[7] Bachev, H. and Terziev, D. (2002b). Organization of the supply of material assets in Bulgarian farms. Economics and Management of Agriculture, 2: 17-24 (in Bulgarian).
[8] Bachev, H. (2024). About Economics of Agrarian Contracts, in A. Tavidze (Editor) Progress in Economics Research, Nova Science Publisher, New York, Vol. 52: 157-218.
[9] Bachev, H. (2024). To the question of economic study of agrarian contracts, Dialog, 1: 19-45 (in Bulgarian). DOI: https://doi.org/10.58861/tae.di.2024.1.02
[10] Bachev, H. (2023). What is Agrarian Governance?, in A. Tavidze (Editor) Progress in Economics Research. Nova Science Publisher, New York, Vol. 51: 131-160.
[11] Bachev, H. and Labonne, M. (2000). About Organization of Agrarian Innovations, Montpellier: INRA,
[12] Bachev, H. (2010c). Framework for Analysis of Agrarian Contracts. Management Research and Practice, Vol. 2, 1: 39-66.
[13] Bachev, H. (2010a). Governance of Agrarian Sustainability, New York: Nova Science Publishers,
[14] Bachev, H. (2010). Management of Farm Contracts and Competitiveness, VDM Verlag Dr. Muller, Germany.
[15] Bachev, H. (2021). Modes of Governance for Ecosystem Services in Bulgarian Farms. Economic Studies, 30(8): 145-174.
[16] Bachev, H. (2013). Risk management in the agri-food sector, Contemporary Economics, Vol.7, 1: 45-62. DOI:https://doi.org/10.5709/ce.1897-9254.73
[17] Bellemare M. (2015). Contract Farming: What’s In It for Smallholder Farmers in Developing Countries? Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 30(3), pp. 1-4
[18] Bulte E., P. Richards, M. Voors (2018): Institutions and Agrarian Development, A New Approach to West Africa, Palgrave Macmillan, 2015.
[19] Coase, R. (1992). The Institutional Structure of Production, Nobel Prize Lecture, American Economic Review, 82(4): 713-719.
[20] Coase, R. (1998). The New Institutional Economics, American Economic Review, 88(2): 72-74.
[21] Coase, R. (1960). The Problem of Social Cost, Journal of Law and Economics, 3: 1-44.
[22] Deshpande, C. (2005). Contracting Farming as Means of Value-Added Agriculture, National Bank for Agriculture and Rural Development, Mumbai.
[23] Dinterman, C. (2022). What Farmers Need to Know About Carbon Contracts, Successful Farming. Available at: https://www.agriculture.com/crops/conservation/what-farmers-need-to-know-about-carbon-contracts
[24] Ducos, G. and Dupraz, P. (2006). Private Provision of Environmental Services and Transaction Costs, Agri-environmental Contracts in France, paper presented at the 3d World Congress of Environmental and Resource Economics, 3-7 July, Kyoto.
[25] Furuboth, E. and Richter, R. (2005). Institutions and Economic Theory: The Contribution of the New Institutional Economics, Ann Arbor: The University of Michigan Press.
[26] Georgiev M., Stoeva, T., Dirimanova, V. (2023). The governance structure of agricultural land contracts–discrete structural alternatives. Bulgarian Journal of Agricultural Science, 29 (Suppl. 1): 71-83.
[27] Georgiev, M. (2011). Institutional Analysis of Transactions in Agricultural Land Contracts in Bulgaria. Agricultural University, Agrarian Sciences, 3(5): 53-62.
[28] Goodhue R. (2022). From Handshakes to Blockchains: Economic Analysis of Contracts in Agriculture. In: de Gorter, H., McCluskey, J., Swinnen, J., Zilberman, D. (eds) Modern Agricultural and Resource Economics and Policy. Natural Resource Management and Policy, vol. 55. Springer, Cham.
[29] Hayami Y., Otsuka, K. (1993). The Economics of Contract Choice: An Agrarian Perspective, Oxford University Press.
[30] Ikeda, S.; Natawidjaja, R.S. (2022). The Sustainability of Contract Farming with Specialized Suppliers to Modern Retailers: Insights from Vegetable Marketing in Indonesia. Agriculture, 12: 380. DOI:https://doi.org/10.3390/agriculture12030380
[31] James, H., Klein, P., Sykuta, M. (2011). The Adoption, Diffusion, and Evolution of Organizational Form: Insights from the Agrifood Sector. Managerial and Decision Economics, 32(4): 243–59.
[32] Kocheva, D. (2018). Application of economic instruments for household waste management in municipalities in Bulgaria, dissertation work for awarding the educational and scientific degree ‘doctor’, UNSS (in Bulgarian).
[33] Kuzilwa J., Fold, N., Henningsen, A. and Larsen, M. (2019). Contract Farming and the Development of Smallholder Agricultural Businesses: Improving markets and value chains in Tanzania, Routledge.
[34] MacDonald J., (2015). Trends in Agricultural Contracts. Choices, 30(3): 1-6.
[35] Massey, R., Sykuta, M., Pierce, V. (2020). Contracts in agriculture. Farm management, University of Missouri.
[36] Michler J. and Wu, S. (2020). Relational Contracts in Agriculture: Theory and Evidence. Annual Review of Resource Economics, 12: 111-127.
[37] Mishra A., Kumar, A., Joshi, P. (Editors), (2022). Transforming Agriculture in South Asia The Role of Value Chains and Contract Farming, Routledge.
[38] Mugwagwa, I., Bijman, J., Trienekens, J. (2020). Typology of contract farming arrangements: a transaction cost perspective. AGREKON, 59 (2): 169-187. DOI: https://doi.org/10.1080/03031853.2020.1731561
[39] North, D. (1990). Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press.
[40] Ostrom, E. (1999). Revisiting the Commons: Local Lessons, Global Challenges. Science, 284: 278–282.
[41] Otsuka, K., Chuma, H., Hayami, Y. (1992). Land and Labor Contracts in Agrarian Economies: Theories and Facts. Journal of Economic Literature, 30: 1965-2018.
[42] Radeva, D. (2017). Economics of the new alternative agriculture in Bulgaria - Permaculture, dissertation work for awarding the educational and scientific degree ‘doctor’, UNSS, 2017 (in Bulgarian).
[43] Ronaghi, M., et al. (2020). The Effects of Good Governance on the Agricultural Sector. International Journal of Agriculture and Environmental Research, 6(1): 11-29.
[44] Santiago, M., and Sykuta, M. (2016). Regulation and Contract Choice in the Distribution of Wine. Journal of Wine Economics, 11(2): 216-232.
[45] Sarov, A. (2017). Management of agricultural cooperatives - challenges and prospects, dissertation work for awarding the educational and scientific degree ‘doctor’, IAE (in Bulgarian).
[46] Schiefferm J. and Vassalos, M. (2015). Risk and the Use of Contracts by Vegetable Growers, 30(3): 1-6.
[47] Stebekm, E. (2011). Between ‘Land Grabs’ and Agricultural Investment: Land Rent Contracts with Foreign Investors and Ethiopia’s Normative Setting in Focus. Mizan Law Review, vol. 5, DOI:https://doi.org/10.4314/mlr.v5i2.1
[48] Sykuta, M. (2010). Concentration, Contracting and Competition: Problems In Using The Packers and Stockyards Act To Supplement Antitrust. The CPI Antitrust Journal, 4(2).
[49] Sykuta, M., and Parcell, J. (2002). Contract Structure and Design in Identity Preserved Grain Production, 2002. Review of Agricultural Economics, 25(2).
[50] Sykuta, M., and Cook, M. (2001). A New Institutional Economics Approach to Contracts and Cooperatives, American Journal of Agricultural Economics, 83(5): 1273-1279.
[51] Terziyska, R. (2016). Management of network structures in agrarian business, dissertation work for awarding the educational and scientific degree ‘doctor’, UNSS. (in Bulgarian).
[52] Veldwisch G. and Woodhouse, P. (2021). Formal and informal contract farming in Mozambique: Socially embedded relations of agricultural intensification. Journal of Agrarian Change, 22: 162–178, DOI:https://doi.org/10.1111/joac.12461
[53] Villaume, S. (2011). Paid employment in agriculture: the rising proportion of seasonal contracts division Agriculture, Insee.
[54] Voutos, Y., Drakopoulos, G. and Mylonas, P. (2019). Smart Agriculture: An Open Field for Smart Contracts, 2019 4th South-East Europe Design Automation, Computer Engineering, Computer Networks and Social Media Conference (SEEDA-CECNSM), 1-6.
[55] Williamson, O. (2005). The Economics of Governance, American Economic Review, 95: 1–18.
[56] Wu, S. and MacDonald, J. (2015). Economics of Agricultural Contract. Grower Protection Legislation, 30(3): 1-6. Available at: http://choicesmagazine.org/choices-magazine/theme-articles/current-issues-in-agricultural-contracts/economics-of-agricultural-contract-grower-protection-legislation
[57] Technical support, Advantages and Disadvantages of Contracting and Sub-Contracting in Marketing of Agricultural Produce, Friedrich Ebert Stiftung (2002).
[58] USDA, Agricultural Resource Management Survey: farms with contracts by farm typology, (2012). From Farm Structure and Organization: Background on Farm Organization, USDA Economic Research Service.
[59] World Bank. (2015) Investment Contracts for Agriculture: Maximizing Gains and Minimizing Risks, World Bank.
[60] ZAZ. (2018). LAW on the lease in agriculture, last amendment (in Bulgarian).
[61] ZZD. (2021). LAW on obligations and contracts, last amendment (in Bulgarian).
Published
2024-06-28
How to Cite
BACHEV, Hrabrin.
Economic Dimensions of Agrarian Contracting.
Theoretical and Practical Research in Economic Fields, [S.l.], v. 15, n. 2, p. 288-318, june 2024.
ISSN 2068-7710.
Available at: <https://journals.aserspublishing.eu/tpref/article/view/8468>. Date accessed: 26 dec. 2024.
doi: https://doi.org/10.14505/tpref.v15.2(30).12.
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