Purpose of the Paper
The purpose of this paper is to explore the key benefits and pitfalls of contracts and provide recommendations for efficient management through contracting in modern food supply chains.
Methodology
A total of 428 small-scale paprika producers were surveyed in Malawi. The qualitative part of the study included semi-structured interviews with the contracting company.
Key Findings
Contracting had mainly a positive impact on the producers' livelihoods. High-income producers and those with a large proportion of land under contract showed the highest percentage of positive influence. The income from contracting was sufficient for 5.4% of producers, partially sufficient for 57.2% and not sufficient for 37.4% of producers. Compliance with the contract terms regarding agreed quality and quantity was challenging for the surveyed producers. The contracting company representatives emphasised that selling the crop outside of the contract to vendors, manipulating the delivered crop and lack of mutual trust were the key pitfalls of supply via contracts.
Research Limitations and Practical Implications
Contracting conditions and management vary in different sectors and across countries. This case study focuses on one food supply chain in Malawi and the conclusions are limited to similar food supply chains. The practical implications of the study are reflected in the recommendations for the efficient management of contracts within the dynamic food sector.
Originality
The study explored contracting from both a qualitative and quantitative perspective. The views from the contractor and contracted producers were combined to provide an in-depth understanding of food supply chain management through contracts.
Keywords: Contracts, food supply chain management, Malawi.
