Determinants of Participation in Contract Farming Among Smallholder Dairy Farmers: The Case of North Shewa Zone of Oromia National Regional State, Ethiopia

The study analyzed the determinants of participation in dairy contract farming using data collected from 424 (192 participants and 232 non-participants) randomly selected milk-producing farmers from three districts of the North Shewa Zone of Oromia Regional State, Ethiopia. The study combines both quantitative and qualitative data obtained from household interview using semi structured questionnaire, key informant interview, focus group discussion, and direct personal observation. Descriptive statistics and econometric models were used to analyze data. The binary logistic regression model was employed to identify factors affecting participation in dairy contract farming. Results show that age, sex, perception of price uncertainty, frequency of extension contact and access to training significantly and positively affect participation in dairy contract farming while time taken to milk collection centers affected it significantly and negatively. Results suggest that the need to encourage young farmers, female-headed households, increasing frequency of extension contact, creating access for training, decentralization of milk collection centers and contract farming reduces perceived price uncertainty faced by smallholder farmers from the spot market through creating guaranteed milk price in the study area.