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Contract Farming and Smallholder Incentives to Produce High Quality: Experimental evidence from the Vietnamese Dairy Sector

Producer penalties and bonuses can help reduce the incidence of side-selling and better align farmers' incentives with purchasers'. Bonuses can help ensure that farmers take the necessary measurements to produce the quality characteristics often present in contract farming arrangements. A randomized controlled experiment with milk producers in Vietnam showed that the presence of penalties and bonuses drove farmers to higher input use which resulted in higher quality milk.

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Country
Publication year
2013