Contract Farming and Outgrower Schemes in East and Southern Africa

Abstract

This article examines the experience of seven countries in East and Southern Africa with contract farming and outgrower schemes. In such schemes, farmers sell their crops under contract to private or public enterprises for processing or export in return for various price guarantees, inputs and services. The article identifies some of the key determinants of success or failure, evaluates performance and examines the constraints to replication. In most cases, performance in delivering services and providing income increases to farmers has been quite good, although high management costs limit the extent to which this form of organisation could be more widely applied. Looser control, relying more on price incentives and farmer participation, might lower overhead costs while developing management capability among growers.

Contract Farming in Sub‐Saharan Africa: A Survey of Approaches, Debates and Issues

“…After the work of Glover and Kusterer (1990), a ‘political economy’ and ‘economic sociology’ group seems to emerge in works such as Little and Watts (1994) and Daviron and Gibbon (2002), which also contrasts with the focus of policy‐orientated ‘evaluative’ research (e.g. Glover 1989; Glover 1990) and the conceptual apparatus of the New Institutional Economics (NIE) approach, interested in analysing the emergence, incentives and efficiency implications of CF as an institutional arrangements that seeks to resolve market failures 13…”

“…Contracting out to small‐scale farmers, however, entails some additional costs and risks for the buyer, such as the need to set up complex structures of planning and monitoring thousands of scattered smallholders (Jackson and Cheater 1994; Watts 1994; Baumann 2000; Eaton and Shepherd 2001; Jaffee 2003). Using farmers' groups to pool additional risks and costs may be an option (Glover 1990; Porter and Phillips‐Howard 1997; Konings 1998), but, as Gibbon and Ponte (2005, 160) suggest, the experiences of farmers' associations that help consolidate successful CF schemes are not so frequent 55 . Moreover, risks of poor quality, lack of enforceability of standards and unreliable supplies now loom large in agribusiness strategies and particularly affect their linkages with smallholders (Dolan 2004; Gibbon and Ponte 2005; Minot 2009; Maertens et al.…”

The Local Social and Environmental Impacts of Smallholder-Based Biofuel Investments in Zambia

“…These include the nature of the crop (shaping up-front investment levels and labor requirements), land tenure and availability (shaping willingness to invest and to participate), and farmers' income diversification (shaping farmers' bargaining power and exposure to risk) and prior experiences with large-scale investors (shaping levels of awareness at the negotiation stage) (Lamb and Muller 1982, Glover 1990, Porter and Phillips-Howard 1997. They also include investor practices related to staffing and communication, product grading and pricing, and contract terms (e.g., input provision arrangements, transparency, barriers to exit), as well as contextual factors, such as pricing policies (which exert upward or downward pressures on rent capture by smallholders) and diversification of market outlets (Glover 1990, ECI Africa Consulting 2006, Freeman et al 2009, CSBF 2010.…”

‘More vital to our future than we realize?’ Learning from Netting’s thesis on smallholder farming, 25 years on

“…167 coffee, cocoa, rubber, tobacco), in locations where labour is abundant and land constrained, a 168 successful production model is one in which large scale production is achieved through smallholder 169 grower sub-contracts (Ouma, 2015). The extent to which such systems present opportunities and risks 170 for smallholders is debated (Coulter et al, 1999;Oya, 2012;Glover, 1990). There are, however, 171 examples of such systems in which those smallholder producers maintain a significant amount of 172 autonomous control over the management and production practices of their farm land -maintaining towards impact-at-scale mechanisation and innovations such as biotechnologies (Brooks, 2015).…”