Contract farming in China has grown rapidly over the past 10 years. This paper examines the evolution of Contract farming, and explores the incentives to engage in contract farming, preferred contract forms and contract performance from the perspective of both Chinese farmers and contracting firms. Firm and household perspectives on contracting are assessed using data obtained from village and firm level surveys. Preliminary results from the village survey suggest that most farmers have a favorable view toward contract production. However, contract farming tends to bypass smaller producers. Farmers identify price stability and market access as the key advantages to contracts while firms consider improved product quality ensured through contracts as the critical incentive to exercise contracts. Contracting firms favor direct contracts with larger farms. Contracts with farmer-owned cooperatives and middlemen were also used. The result also indicates that, in general, contract performance is less than desired and is dependent on contract design and specifications. Econometric models are used to examine those factors that encourage farmers and firms to engage in contract farming. Characteristics of agents, product or enterprise type and government support significantly influence farmers� and firms� choice of contracts
