Although Vietnam is ranked as the world’s largest pig producers and the global pork consumption country, its swine and pork industry have been at the beginning of modernization. Swine producers, which dominate by small–scale farmers, are suffering from a number of risks. Participation in formal contract farming is one of the mitigation strategies. This study aims at summarizing the main risks of different scales pig farmers and analyzing how they have been overcome insights the contract agreements. Through the review of previous works, using time series database and in depth–interviews, results have been found as follows. Contract agreements in swine sector are the applications of ones in developed countries, which have been amended to fit Vietnam’s circumstance. Production management and marketing contracts have specific terms to share almost staple risks of independent small–scale producers like the price of hog and animal feed, utilization of breeds, feeding, and related technical production. It prevents the systematic risk of epidemic diseases through bio–control solutions of the large– and mega–farms. Marketing contract brings benefit for processors in terms of cost reduction by ensuring steady large flows of uniform live hog inputted. The majeure case is identified, although it is the un–specific rule. Contract agreement retains its limitation, as a non–market instrument, in mitigating with correlated risks. It cannot cover systematic effect to contractors like epidemic diseases, variation in the domestic hog price, the volatility of international market price of staple materials for animal feed production and/or the compound–risks created by the combination of those. However, this scheme is considered as an essential instrument for risk mitigation given the fact that agricultural insurance, future contract, options, or other financial tools do not exist in Vietnam. The contract agreement, vertical integration or coordination are the ways to boost the development of swine industry in the developing countries.
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