Contracts to Govern the Transition towards Sustainable Production: Evidence from a Discrete Choice Analysis in the Durum Wheat Sector in Italy

Abstract

The increasing request for food sustainability is affecting the pasta sector in Italy. This phenomenon introduces different sources of uncertainties that, in turn, put pressure on all the stages of the supply chain, with a consequent emerging need for a higher level of coordination. Based on the Transaction Costs Theory approach, the paper is aimed at verifying whether contract design—revolving around the negotiation of contractual attributes with different functions in terms of safeguard, adaptability, and coordination—plays a crucial role in aligning sources of uncertainty surrounding transactions with the allocation of property and decision rights. To this aim, a sample of durum wheat producers is interviewed for expressing their preferences about some contractual features, such as price, production and quality rules, sustainable environmental techniques, and advisory services. Using a discrete choice analysis through a multinomial logit model, results reveal that, thanks to the presence of attributes able to ensure coordination and adaptability, contracts are able to steer towards elements of sustainability related to food quality and safety, whereas further efforts are needed to share environmental goals with farmers.