Smallholder Inclusion Through Cooperative Contract Farming of Cavendish Banana Farmers in Davao del Norte, Philippines: A Meta-Frontier Analysis

As the third-highest global supplier of Cavendish bananas, the Philippine banana industry has a vital role in rural development. We compared farmers' technical efficiency (TE) and production performance across different contract farming arrangements: individual contracts, cooperative contracts, and growers without a contract. Using a random sample of 186 farmers in Davao del Norte, Philippines, we used meta-frontier Data Envelopment Analysis to calculate TE scores and then use a truncated regression with bootstrapping to model the efficiency sources. We applied propensity score matching to minimize observable bias resulting from self-selection among farmers participating in contract farming. The results across returns-to-scale assumptions and matching methods reveal that cooperative contract farmers have significantly higher TE and revenue performance than individual and noncontract farmers, primarily due to high export-quality production and associated premium prices. Individual contract farmers were also more technically efficient and had higher returns than noncontract farmers. Smallholder farmers tend to participate more in cooperative contract farming. Thus, cooperative contracts should include smallholder farmers in export value chains to improve smallholder farmer income. This strategy will lead to the formation of inclusive agrifood value chains in Mindanao, Philippines.