Contracts in cattle production in Ghana: their nature, and effects on input use and technical efficiency

2018

English

We study the nature of contracts in cattle production and explain their existence in specific locations using agency and transaction cost theory. In their study of pastoral groups, especially those in West Africa, anthropologists have referred to contracts in cattle production including herding contracts. However, few studies have analysed these contract types with the view of explaining their existence. We found two categories of contracts: cattle owner – kraal owner (CK) contracts and kraal owner - herdsman (KH) contracts. Contracts in each of these two categories can be explicit, with the reward given by the cattle owners to kraal owners explicitly specified, or implicit and unspecified. The existence of CK contracts are explained both in terms of agency theory (risk and incentive tradeoffs) and transaction cost theory (low specificity of production assets, environmental uncertainty, and monitoring cost). We also found that difficulty in measuring performance and monitoring cost associated with curbing herdsman’s opportunism and hidden information regarding herdsmen’s skills provide explanations for the existence of KH contracts

Ameleke, G. Y.