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Empirical analysis of contractual arrangements between supermarkets and smallholder farmers remains scarce, yet farmers’ contract preferences influence their participation in supermarket contracts. We employ mixed logit model to analyze farmers’ preferences for contracts using discrete choice data from a sample of vegetable farmers of central Kenya, sampled through stratified random sampling procedure. Results show that farmers generally do not exhibit risk aversion to contracts and would choose them depending on their attributes. Certain farmer characteristics influence decision to contract and preferences for contract design attributes. Findings also show that group marketing could be an interesting option to reduce individual risks and transaction costs. Designing contracts that lower risks to smallholder farmers, and or with transparent risk-sharing clauses would enhance their participation in supermarket contracts. Some wider policy implications are discussed.


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