The effectiveness of contract farming for raising income of smallholder farmers in low‐ and middle‐income countries: a systematic review

Ton, Giel; Desiere, Sam; Vellema, Wytse; Weituschat, Sophia; D’Haese, Marijke

doi:10.4073/csr.2017.13

Cited by 40 publications

(44 citation statements)

References 84 publications

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“…There is also some evidence of positive welfare effects of participation in contract farming schemes around staple crops such as potatoes (e.g., 2012) and rice (e.g., Setboonsarng, Leung, and Stefan 2008). A meta-analysis on the welfare effects of contract farming by Ton et al (2016), based on 26 elegible studies (including many of the articles cited above), finds that contract farming has increased welfare of participating farmers by 62% on average (with a 95% confidence interval between 40% and 88%).…”

Section: Efficiency Premiums and Spillovers In Smallholder Contract-fmentioning

confidence: 99%

Inclusive Value Chains to Accelerate Poverty Reduction in Africa

Swinnen¹,

Kuijpers²

2020

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The rapid transformation of agri-food value chains in Africa and other developing countries has important implications for economic growth and poverty reduction. Policy makers increasingly recognize this but there is a need for a better understanding of what value chain transformation entails and what the main policy options are. This paper provides an overview and analysis of different value chain models that have emerged in the past decades and reviews the literature on the main development implications. We discuss and categorize existing policy initiatives that aim to stimulate inclusive value chain development. Based on this review we identify lessons and implications for policy makers. In general these modern value chains have been significantly affected by changes in agricultural and food standards. Such standards are spreading rapidly and food production and trade are increasingly regulated through stringent public and private requirements on food quality and safety, and ethical and environmental aspects (Henson and Reardon 2005; Jaffee and Henson 2004). 1 Both public and private standards have become more stringent and more widespread. 2 Yet, the modernization of value chains, both domestically and internationally, has accelerated sharply during the past decades. Moreover, the growth has been strongest in where standards are most important, i.e. in the higher value productswhich includes fruits, vegetables, seafood, fish, meat and dairy products. For example, the shift towards high-value exports has been most dramatic in developing regions (Maertens and Swinnen 2015). In Asia and in Latin-America, high-value products increased from around 20% of agricultural exports in the 1980s to around 40%. The process is similar, albeit slower, in Africa. At the same time, (foreign) investment at various stages of these value chains has increased significantly. Increased investment has been triggered by several factors. The first reason is the wave of investment liberalizations in the past 20 years which have made it easier for FDI to flow in. The second reason is strong economic growth in emerging and developing countries, which has triggered increases in demand for higher quality products and, with growing urbanization as part of the economic development process, and increasing demand for retail and processed products in urban areas In combination, these developments have resulted in changes in the way agricultural value chains are organised with increasing levels of verticial coordination, upgrading of the supply base and increased dominance of large multinational food companies (McCullough, Pingali, and Stamoulis 2008; Swinnen and Maertens 2007). These processes have important implications for developing countries. Increased demand for high-value products and increasing prices in international food markets create opportunities for developing countries to realize economic growth through expanding and diversifying their agricultural exports. High-value agricultural exports entail an important potential for raising r...

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Section: Efficiency Premiums and Spillovers In Smallholder Contract-fmentioning

confidence: 99%

Inclusive Value Chains to Accelerate Poverty Reduction in Africa

Swinnen¹,

Kuijpers²

2020

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“…Smallholders have an incentive to follow advice in order to access inputs and markets. For their part, firms have an incentive to invest in extension in order to secure sufficient quantity and quality of produce (for recent reviews on contract farming, see Barrett et al, ; Da Silva & Rankin, ; Oya, ; Prowse, ; Ton et al, ). The degree of private‐sector extension is often determined by the nature of the crop in question, the production system, and labour demand (Oya, ; Poulton, Dorward, & Kydd, ; Will, ).…”

Section: Introductionmentioning

confidence: 99%

Smallholders' demand for and access to private‐sector extension services: A case study of contracted cotton producers in northern Tanzania

Jensen

Prowse

Larsen

2018

Journal of Agrarian Change

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This paper examines demand for and access to private-sector extension services by contracted cotton producers in northern Tanzania.Data from a non-random survey of 520 smallholders show that only 21.9% received any extension and only 4.6% received extension from the cotton ginnery. Wealthier households were three times more likely to receive extension from any provider. While the public sector remains the main source of extension and is prioritized by smallholders, almost all households demanded extension from firms and are willing to invest 3 days per month mainly for advice on cotton and maize production. The involvement of third parties in the supply of extension from ginneries could not only meet smallholders' demands but could increase cotton supply and repayment rates to the firm, and thus finance the provision of missing extension advice.

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“…The midstream and downstream of the food output and input supply chains have emerged as a growing field of research [4][5][6] . However, this literature has largely focused on the contracting of farmers by value chain actors, and in particular the formal provision of resources within contract arrangements with large processors and supermarkets [7][8][9][10] . Yet just a very small share of small-scale producers sell under contract directly to large firms 3 .…”

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confidence: 99%

A scoping review of market links between value chain actors and small-scale producers in developing regions

et al. 2020

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Sustainable Development Goal 2 aims to end hunger, achieve food and nutrition security and promote sustainable agriculture by 2030. This requires that small-scale producers be included in, and benefit from, the rapid growth and transformation under way in food systems. Small-scale producers interact with various actors when they link with markets, including product traders, logistics firms, processors and retailers. The literature has explored primarily how large firms interact with farmers through formal contracts and resource provision arrangements. Although important, contracts constitute a very small share of smallholder market interactions. There has been little exploration of whether non-contract interactions between small farmers and both small- and large-scale value chain actors have affected small farmers’ livelihoods. This scoping review covers 202 studies on that topic. We find that non-contract interactions, de facto mostly with small and medium enterprises, benefit small-scale producers via similar mechanisms that the literature has previously credited to large firms. Small and medium enterprises, not just large enterprises, address idiosyncratic market failures and asset shortfalls of small-scale producers by providing them, through informal arrangements, with complementary services such as input provision, credit, information and logistics. Providing these services directly supports Sustainable Development Goal 2 by improving farmer welfare through technology adoption and greater productivity.

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The effectiveness of contract farming for raising income of smallholder farmers in low‐ and middle‐income countries: a systematic review

Cited by 40 publications

References 84 publications

Inclusive Value Chains to Accelerate Poverty Reduction in Africa

Inclusive Value Chains to Accelerate Poverty Reduction in Africa

Smallholders' demand for and access to private‐sector extension services: A case study of contracted cotton producers in northern Tanzania

A scoping review of market links between value chain actors and small-scale producers in developing regions

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