¹Center for Agricultural and Rural Development, Zhejiang University, Hangzhou, Zhejiang Province 310029, P.R. China. E-mail: guohongdong@zju.edu.cn

^*The authors are Associate Professor, Center for Agricultural and Rural Development, Zhejiang University; Professor of Economics and former Graduate Assistant, Department of Economics, Iowa State University. Funding for this project was provided in part by the National Science Foundation of China (70373027). Journal paper of the Iowa Agriculture and Home Economics Experiment Station, Ames, Iowa; project number 5002, supported by the Hatch Act and State of Iowa funds.

Abstract

Contract farming in China has grown rapidly over the past 10 years. This paper examines the evolution of contract farming, and explores the incentives to engage in contract farming, preferred contract forms and contract performance from the perspective of both Chinese farmers and contracting firms. Firm and household perceptions of contracting are assessed using data obtained from village- and firm-level surveys. Farmers identify price stability and market access as the key advantages to contracts, while firms consider improved product quality as the primary incentive to use contracts.