Does contract farming improve welfare? A review

Bellemare, Marc F.; Bloem, Jeffrey R.

doi:10.1016/j.worlddev.2018.08.018

Cited by 205 publications

(183 citation statements)

References 107 publications

Supporting

Mentioning

173

Contrasting

Unclassified

Order By: Relevance

“…According to Snodgrass and Sebstad (2005) the avocado cluster in Kandara was formed to address challenges facing smallholders' participation in lucrative markets for high-value fruit tree value chains [1]. The challenges included lack of market information, limited access to inputs, limited access to resources and/or weak incentives for upgrading, weak vertical and horizontal linkages within the value chain,…”

Section: Structure and Organization Of Cf In Kandaramentioning

confidence: 99%

Does contract farming improve smallholder income? The case of avocado farmers in Kenya

Mwambi

Oduol

Mshenga

et al. 2016

Journal of Agribusiness in Developing and Emerging Economies

121

View full text Add to dashboard Cite

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.*Related content and download information correct at time of download. Mwanarusi SaidiDepartment of Crop, Horticulture and Soil Science, Egerton University, Nakuru, Kenya Abstract Purpose -Contract farming (CF) is seen as a tool for creating new market opportunities hence increasing incomes for smallholder farmers. Critics, however, argue that CF is likely to pass risks to small scale farmers, thus favouring large scale farmers at the expense of smallholder farmers. The purpose of this paper is to examine the effect of CF on smallholder farmers' income using a case study of avocado farmers in Kandara district in Kenya. Design/methodology/approach -The study uses data collected from 100 smallholder avocado farmers in Kandara district in Kenya and employs an instrumental variable model (Probit-2SLS) to control for endogeneity in participation in the contract and examine the effect of CF on household, farm and avocado income. Findings -The results indicate that participation in CF is not sufficient to improve household, farm and avocado income. Question remains regarding efficient implementation of CF arrangements to promote spill over effects on other household enterprises.Research limitations/implications -The research was carried out using farmers in Kandara district in Kenya as a case study, findings might therefore not reflect the status of CF in all countries. Originality/value -The paper contributes to the growing debate on the effect of value chain upgrading strategies such as contracting on smallholder farmers' welfare. The form of contracting studied in this paper differs from the standard contracts in that the key stakeholders (producers) are loosely enjoined in the contract through officials of their groups.

show abstract

Section: Structure and Organization Of Cf In Kandaramentioning

confidence: 99%

Does contract farming improve smallholder income? The case of avocado farmers in Kenya

Mwambi

Oduol

Mshenga

et al. 2016

Journal of Agribusiness in Developing and Emerging Economies

121

View full text Add to dashboard Cite

show abstract

“…In order to facilitate smallholder farmers' participation in managed agrifood value chains, contract farming (CF) has of these studies show positive impacts of CF on welfare indicators such as household income, farm productivity, and food security (Bernard, Hidrobo, Le Port, & Rawat, 2019;Harou, Walker, & Barrett, 2017;Maertens & Velde, 2017;Mishra et al, 2018b;Miyata et al, 2009). However, the empirical evidence on this topic remains inconclusive in the development debate (Bellemare & Bloem, 2018). In particular, some argue that companies take advantage of cheap labor and transfer production risk to farmers and thus making farmers worse off (Miyata et al, 2009).…”

Section: Introductionmentioning

confidence: 99%

“…Therefore, the estimation must consider unobserved heterogeneity that could simultaneously affect the CF decision and the dependent variables. The limitation in approaches used in past studies has been noted by Bellemare and Bloem (2018) and Ton, Vellema, Desiere, Weituschat, and D'Haese (2018). Most studies have either used instrumental variable (IV) approach (Simmons, Winters, & Patrick, 2005), or propensity score matching (PSM) technique (Mishra et al, 2018b) to account for selection bias.…”

Section: Introductionmentioning

confidence: 99%

Participation in contract farming and farm performance: Insights from cashew farmers in Ghana

Dubbert

2019

Agricultural Economics

View full text Add to dashboard Cite

The global demand for cashew nuts continues to increase steadily. However, many African countries face difficulties in marketing and adding value to the product. Using recent survey data of 391 cashew farmers in Ghana, this paper contributes to the growing evidence on the significance of contract farming (CF) in improving the welfare of rural households in developing countries. Specifically, the paper analyzes the factors that influence cashew farmers' decisions to participate in CF, and the impact of participation on farmers' performance. We employ a recently developed switching regression model with endogenous explanatory variables and endogenous switching to control for selection bias caused by observable and unobservable factors. The empirical results show that participation in CF significantly increases labor productivity and price margins, as well as cashew yields, and net revenues. A disaggregated analysis of the sample into farm size categories reveals that small-sized cashew farms tend to benefit more through CF, compared to medium-and large-sized farms.

show abstract

“…Through contract farming, smallholders can access farm inputs such as credit, information, technology, and extension services, which are essential for integrating smallholders into globalizing and consolidating markets that small farmers otherwise find unaffordable (FAO, 2017;Ploeg, 2012;Poulton et al, 2010). Indeed, although empirical evidence suggest contract farming may be beneficial to smallholders, methodologically, it is challenging to establish causality between farmer participation and increased productivity and/or income (Barrett et al, 2012;Bellemare & Bloem, 2018). Despite this challenge, numerous scholars employing several different techniques generally conclude that contract farming leads to increased productivity and/or income gains for smallholder (Dedehouanou, Swinnen, & Maertens, 2013;Maertens & Vande-Velde, 2017;Miyata et al, 2009).…”

Section: Contract Farming As a Triple-win Mechanismmentioning

confidence: 99%

Achieving Sustainable Development Goals in the global food sector: A systematic literature review to examine small farmers engagement in contract farming

et al. 2019

View full text Add to dashboard Cite

Contract farming, a common strategy among multinational companies in the global food sector, can help achieve Sustainable Development Goals (SDGs). However, it largely depends on whether or not small farmers can participate in contract farming programs, which has been a major issue globally. Our main objective in this systematic literature review is to identify the factors that drive small farmer participation in contract farming. We analyze 97 peer‐reviewed journal articles published between 1977 and 2017. Our review finds that farmer demographic characteristics, farm structure, farmer characteristics, and farmer attitudes influence participation in contract farming although causal mechanisms remain ambiguous. We therefore suggest the need for more comprehensive methodologies to examine small farmer participation in contract farming. In the meantime, global food sector companies must consider these factors as they develop plans toward achieving SDGs.

show abstract

Does contract farming improve welfare? A review

Cited by 205 publications

References 107 publications

Does contract farming improve smallholder income? The case of avocado farmers in Kenya

Does contract farming improve smallholder income? The case of avocado farmers in Kenya

Participation in contract farming and farm performance: Insights from cashew farmers in Ghana

Achieving Sustainable Development Goals in the global food sector: A systematic literature review to examine small farmers engagement in contract farming

Contact Info

Product

Resources

About