Can Contract Farming of Cassava Contribute to Amelioration of Climate Change in Thailand?

Abstract

There are four main objectives for success in reducing the problems from climate change by increasing the concern with a better understanding of more effective policies for sustainable development of ethanol production by cassava as an alternative energy source in Thailand. The first objective is to examine the agri-business systems of cassava production for producing ethanol as an alternative energy source and to identify types of smallholders who might decide to become involved in contract farming for cassava production. Participation in contracts under agricultural cooperatives in cassava production is based on verbal agreement between farmers and agricultural cooperatives and a written contractual agreement between agricultural cooperatives and ethanol processors. Four categories of smallholders were identified based on ownership of land and assets. The second objective is to evaluate the factors affecting contract farming. Results of examination using Linear Probability, Probit and Logit models show human capital, physical assets, production costs, credit access and agricultural groups are important factors in participation in contracts. Most wealthy smallholders face high transaction costs and hence they are willing to participate in contracting. However, lower-income smallholders, who also faced high transaction costs, were not interested in participation in contract farming. This might be because most of them were older and had lower levels of education. Thus, they might have difficulties adapting to contracting. The third and fourth objectives are to evaluate the effects of contract participation on outcomes.