Structural transformation in agriculture remains a critical challenge for economic development, particularly in reducing food insecurity and poverty among farming households. In many developing countries, factors such as price uncertainty, limited access to credit and financial resources, and a lack of technical knowledge hinder the transition from subsistence to market-oriented production. Contract farming (CF) has emerged as an institutional mechanism to address these market failures by vertically coordinating supply chains. CF agreements —formal or semi-formal between farmers and agribusiness firms— define production conditions, quality standards, delivery schedules, and prices. They can also include the provision of inputs, training, technical support, and guaranteed prices. Empirical evidence from various countries shows that CF can increase productivity, improve income stability, facilitate technology transfer, and reduce poverty. However, studies on CF in Iran have largely been qualitative, with limited empirical work on perishable crops like tomatoes. The Miandoab Plain in West Azerbaijan Province is a major tomato-producing region in Iran, yet farmers face severe price volatility and climatic shocks. This study aims to estimate the net effect of CF on tomato yield while controlling for selection bias using advanced econometric methods.