The role of production contracts in the coordination of the agri-food chain: evidence and future issues for the durum wheat chain in Italy

The economics of contracts has undergone major developments in the recent decades. At the same time, the issue of co-ordination among actors in the same product chain through contractual instruments has attracted significant attention. In addition, the recent volatility of agricultural prices has made the role of contracts in risk allocation more important across different stages of the production chain. The paper explores the role of production contracts in the co-ordination of agri-food chain, considering evidence from the particular case of the durum wheat chain in Italy. After a review of the literature and brief examination of the sector and institutional context of Italian wheat production, the paper considers the present and potential role of production contracts, through a Delphi exercise. Based on this, proposals for action priorities (policy) are discussed along with an agenda for future research. The outcome of the Delphi exercise confirms the perceived need of improving the use of contracts in the Italian wheat sector. It also confirms the difficulties in addressing this issue. Solutions and needs for further research are identified at two main levels: a) detailed contract design; and b) wider chain governance.