Impact of contract farming on land productivity and income of maize and potato growers in Pakistan

While the positive income effect of contract farming is well established in the literature, the heterogeneity of effects for different crops has not been widely investigated. This study compares the income and productivity effects of large-scale contract farming under contract schemes for potatoes and maize in Pakistan. In the area of the study, maize is a common staple crop, widely available in the market, while the potatoes produced by contract farmers are a special variety not sold in the market. We find that potato contracting is associated with significantly higher income for participating farmers, while maize contracting has no association with either income or productivity. We found no negative association between contract participation and income from other sources. Taken together, these results show a higher total household income for potato contract farmers. We also show unique evidence that potato contract farmers tend to employ more skilled workers under a salary system for the management of farms, which implies that contract farming may have positive spillover effects in the skilled labor market. Neither scheme, however, is associated with larger employment of agricultural labor for simple tasks.     

Farmers’ preferences for supermarket contracts in Kenya

With the modernization of global agri-food systems, the role of contract farming increases. This also involves smallholder farmers in developing countries. While previous studies have looked at economic impacts of contract schemes on smallholder farmers, little is known about farmers’ preferences for contracting in general, and for specific contract design attributes in particular. Better understanding farmers’ preferences and constraints is important to make smallholder contract schemes more viable and beneficial. This article builds on a choice experiment to analyze farmers’ preferences and preference heterogeneity for contracts in Kenya. In the study region, supermarkets use contracts to source fresh vegetables directly from preferred suppliers. However, farmer dropout rates are high. Mixed logit models are estimated to examine farmers’ attitudes towards critical contract design attributes. Having to deliver their harvest to urban supermarkets is costly; hence farmers require a significant output price premium. Farmers also dislike delayed payments that are commonplace in contract schemes. The most problematic contract attribute is related to unpredictable product rejection rates, substantially adding to farmers’ risk. Designing contracts with lower transaction costs, more transparent quality grading, and fairer risk-sharing arrangements could enhance smallholder participation in supermarket procurement channels.     

Do development projects crowd-out private sector activities? Evidence from contract farming participation in Northern Ghana

Contract farming (CF) is attractive as a possible private sector-led strategy for improving market coordination and smallholder farmers’ welfare. At the same time, governmental and non-governmental development projects aimed at improving farmers’ welfare continue to be organized. It is not uncommon for CF activities and development projects to take place in the same communities. Yet so far there is no evidence on how development projects affect CF activities. We examine factors affecting entry in and exit from different maize CF schemes in Northern Ghana, and focus specifically on the role of development projects. We find that the presence of agricultural development projects in the community is associated with lower scheme entry, but this not the case for non-agricultural projects. CF exit is more strongly associated with maize projects, but not significantly with non-maize or non-agricultural projects. Thus, our findings do not support concerns of a general moral hazard problem arising from the presence of any development project, but indicate possible negative associations of more closely related agricultural or maize projects with maize CF participation.     

Rice farming in Nigeria : in praise of the smallholder

Food production policy in Nigeria is now oriented towards large scale commercial production. The Federal Government proposes 20000 hectares of public cassava farming in all 19 states and in the Abuja capital territory. The National Grains Board and the National Root Crops Production Company are establishing large farms in their operational zones. The Nigerian Agricultural and Cooperative Bank is loaning millions of naira to individual private farmers to encourage them to establish large farms. Virtually every state government has its Agricultural Development Corporation directly involved in agricultural production on a large scale. It is presumed that the smallholder system on which Nigeria currently depends is inefficient and could not be relied upon to achieve the necessary increases in production.     

Contract farming configuration: Smallholders’ preferences for contract design attributes

While Contract Farming (CF) can enhance smallholders’ income in developing countries, empirical research on the motivation of smallholders to participate in CF is scarce. This paper explores farmer preferences for particular contract design attributes. We combined analytical hierarchy process and discrete choice experiments to investigate the importance of contract design attributes. On the basis of data collected among potato farmers in Ethiopia, we found that input market uncertainty is more important than output market uncertainty in smallholders’ decision to participate. Farmers tend to minimize their risk by opting for the buyer firm above the state and NGOs as providers of seed, inputs, and technical assistance. The results imply that the success of a CF scheme depends on the willingness of the firm to incorporate the preferred contract design attributes. Institutional intervention in the input market could induce agribusiness firms to offer attractive contracts for smallholders.     

Assessing the impact of improved agricultural technologies on household income in rural Mozambique

In many areas of Africa, rural livelihoods depend heavily on subsistence farming. Using improved agricultural technologies can increase productivity in smallholder agriculture and thus raise household income and reduce poverty. Data from a nationally representative rural household survey from 2005 is used to assess the impact of four technologies – improved maize seeds, improved granaries, tractor mechanization, and animal traction – on household income in Mozambique. To ensure the robustness of the results, three econometric approaches were used: the doubly-robust estimator, sub-classification and regression, and matching and regression. The results show that, overall, using an improved technology did not have a statistically significant impact on household income. This may be associated with a widespread drought that occurred in 2005. Despite drought, distinguishing between households based on propensity score quintiles revealed that using improved technologies, especially improved maize seeds and tractors, significantly increased the income of those households who had better market access. Thus, to allow households to benefit from the use of improved technologies, policy makers need to reduce structural impediments to market participation by ensuring adequate road infrastructure and enabling access to markets.     

Targeting agricultural research and extension for food security and poverty alleviation: A case study of fish farming in Central Cameroon

Over 5 years of participatory on-farm research, market access, profitability, farming systems productivity and economic sustainability were compared on 100 small-scale farms in Central Cameroon. Integration technology based on the use of agricultural by-products as fishpond inputs was the driver for intensification. Over all farms, fishpond productivity increased from 498 kg to 1609 kg fish/ha (2145 kg/ha/yr). During the project period, the number of active fish farmers increased from 15 to 192 (including 55 farms which participated only through information exchange). Over all farms, net returns from aquaculture increased by 5 times over pre-project levels. Productivity, intensity and profitability increased more significantly in periurban areas with good market access, compared to rural areas. Among farmers with good market access, average net income from the aquaculture enterprise rose from $118 up to $1485. Research-Extension Team (RET) support cost an average of $61,300 per year. Over 5 years, rural farmers recaptured 23% of the relevant RET investment compared to 442% by periurban farmers. Likewise, increase in production attributable to RET intervention was higher for periurban (253%) compared to rural (11.3%) fish farmers. Within 3 years of the end of extension support, rural farmers had returned to pre-project production levels, whereas periurban farms had better maintained their productivity and profitability. Findings indicate that, in areas with little or no access to markets, the number of fishponds and fish farmers can be increased and yields improved, increasing local food supplies, but sustainability in the absence of extension subsidies is questionable. To achieve either of the two principal goals for the sector, food security and/or poverty alleviation, investments need to be made in improving the availability of quality technical assistance to targeted farmers and finding means of reducing social conflict arising from perceived inequalities in the accrual of the benefits of development.     

Competitiveness and technical efficiency: Determinants in the groundnut oil sector of India

India imports about half of its domestic consumption needs of edible oils. Groundnuts are a major source of edible oils in India. One of the central problems of groundnut production and processing is huge inefficiencies due to an uncertain production environment owing to rainfed cultivation, the low resource base of smallholder farmers and processors, and the low adoption rates of improved technology. This paper addresses critical issues that impair the groundnut sector’s international competitiveness and efficiency. The paper uses primary data collected from Indian farmers and processors of groundnuts to measure efficiency, and it suggests policies for reducing yield gaps and increasing efficiency. Specific policies suggested from the study are (a) the harnessing of improved varieties with attributes like drought tolerance, high oil content, high productivity for large-scale seed multiplication and distribution by public and private agencies; (b) viable village seed banks and seed networks through cycles of post-rainy season seed multiplication to meet the seed requirements in the rainy season and vice versa; (c) adoption of low-cost technologies to increase profitability and reduce risk; (d) oilseed clusters to facilitate scale and scope economies in processing units; and (e) capital subsidies to accelerate technological upgrading to shed inefficiency in the processing sector. The expected gains in efficiency in the production and processing of oilseeds are expected to result in producer and consumer gains which would justify the proposed incentives for seeds and for technological upgrading in the processing sector.     

Climate risk management strategies and food security: Evidence from Cambodian rice farmers

This study investigates the adoption of three climate-resilient strategies (3CRS), drought/flood-resistant rice varieties, integrated pest management (IPM) practices, and weather advisory; the impact of 3CRS on food security, namely, productivity and profits of the Cambodian paddy farmers. Using endogenous switching regression (ESR) approach and household survey from Cambodian farmers, the study finds a low adoption rate (14%) of 3CRS. The low adoption of 3CRS means missing opportunities for rice farmers. Access to information through training and input suppliers is found to increase the adoption of 3CRS. The adoption of 3CRS increases rice yields and profits by 36% and 45%, respectively. Additionally, if nonadopters adopted 3CRS, rice yields and profits would increase by 55% and 52%, respectively. Findings suggest the development of institutional capacity, implementation, and dissemination of knowledge of climatic changes, and adaptation strategies to increase food security.     

Distributional effects of agricultural cooperatives in China: Exclusion of smallholders and potential gains on participation

This paper examines the treatment effects of the agricultural cooperative and publicly funded extension services on individual household economy, using data collected by the author from watermelon-producing farm households in rural Nanjing. The cooperative addressed in this study restricts the participation of small-scale farmers, implying that selection into the program must be taken into consideration for an accurate assessment of the treatment effect. The econometric analysis revealed that government extension services have a modest effect on farm income. In contrast, the treatment effect of the agricultural cooperative is robust and substantially large, accounting for nearly 70% of the pre-matching difference. This suggests that the agricultural cooperative system is an important avenue for farmers to improve their economic status. The treatment effect of the agricultural cooperative is highly heterogeneous; the economic benefits arising from the cooperative are significant only for small-scale farms. We can argue that a coexistence of smallholder exclusion and the treatment effect in favor of small-scale farms poses serious challenges to pro-poor agricultural growth in China.     

Supermarket contracts and smallholder farmers: Implications for income and multidimensional poverty

Food systems in developing countries are changing rapidly with a growing role of modern supermarkets. Supermarkets influence supply chains and the way agricultural products are sourced from farmers. Especially for the procurement of fresh fruits and vegetables, supermarkets often contract farmers directly to ensure consistent and high-quality supply. One important question, which is addressed here, is whether smallholder farmers benefit from supermarket contracts. Previous studies address this question, but mostly focus on income effects without exploring implications for other dimensions of household welfare, such as nutrition, health, or housing conditions. Moreover, most existing studies rely on cross-section data. We add to the literature by analyzing effects of supermarket contracts on income and multidimensional poverty using three rounds of panel data collected from smallholder vegetable farmers in Kenya and econometric models with household fixed effects. On average, supermarket contracts increase household income by over 40%. We also find significant reductions in income poverty and multidimensional poverty. Quantile regressions show that farmers in all income groups benefit, but richer households benefit more than poorer ones in absolute terms. However, supermarket contracts cause the strongest reductions in multidimensional deprivations among the poorest households.     

The impacts of hybrid maize seed on the welfare of farming households in Kenya

This paper explores the impacts of hybrid maize adoption on the welfare of farming households in Kenya. We use a four-year panel dataset to estimate the effects of hybrid seed use on four indicators of household welfare, namely, income, assets, inequality and poverty. Results show that use of hybrid seed not only contributes to higher annual income, but also to raising the value of assets, possibly reflecting longer-term welfare effects. Further, we find that use of hybrid seed reduces the depth of poverty, and that the amount planted reduces inequality. As expected, impacts differ between major and minor maize-growing areas of the country. Maize farmers who do not use hybrid seed are clearly disadvantaged. This calls for continued public and private investments in the infrastructure and policy process that supports a competitive, liberalized seed industry and improved access of smallholder farmers to well-adapted, affordable hybrids.     

Can small farms benefit from big companies’ initiatives to promote mechanization in Africa? A case study from Zambia

After years of neglect, there is a renewed interest in agricultural mechanization in Africa. Since government initiatives to promote mechanization are confronted with major governance challenges, private-sector initiatives may offer a promising alternative. However, given limited scientific studies on such private-sector options such approaches are often viewed skeptically. One concern is that multi-national agribusiness companies take advantage of smallholder farmers. Another concern is that mechanization causes rural unemployment. To shed light on these concerns, this paper analyzes an initiative of the agricultural machinery manufacturer John Deere to promote smallholder mechanization in Zambia through a contractor model. The analysis focuses on the impact of this initiative on farmers who receive tractor services using Propensity Score Matching. The results indicate that farmers can almost double their income by cultivating a much larger share of their land. The analysis suggests that the increased income is used for children’s education and more food, but does not result in increased food diversity. The demand for hired labor increases due to land expansion and due to a shift from family labor, including that of children, to hired labor. Questions that require further investigation are identified, including strategies to incentivize tractor owners to provide services, to also increase land productivity, and to avoid new forms of dependency of agricultural laborers that may result from a shift in the timing of the labor demand.     

Smallholders' perceptions and preferences for market attributes promoting sustained participation in modern agricultural value chains

Connecting smallholder farmers to modern agricultural value chains (henceforth high-value markets [HVMs]) represents a credible pathway to improving the welfare of farmers in developing countries. Smallholder exit rates from HVMs remains high, raising concerns about their sustained participation of smallholders in HVMs. We conduct a Best-Worst Scaling choice experiment with horticultural farmers in Kenya to understand their perceptions and preferences for market attributes that could promote sustained participation in HVMs. A unique feature of our study examines smallholders' best or worst choice consistency as means to further understand their thought process. Our results reveal that smallholders mostly expressed preference for a flexible incentive-based pricing option and long-term formal relationships with their buyers. Delayed payments and high investment requirements were the worst market attributes chosen by smallholders. Preference heterogeneity was driven by the farming experience, gender, income and location of the farmers. We find that smallholders are well aware of conditions that might motivate exit from HVMs relative to conditions that facilitate participation in HVMs. Our findings demonstrate the relevance of various key market attributes central to participation in HVMs, while teasing out the various coordination roles cooperatives, non-governmental organisations can play in facilitating sustained smallholder participation in HVMs.     

Exploring the relationship between farm size and productivity: Evidence from the Australian grains industry

The effect of farm size on productivity remains to be one of the longest standing debates in the agricultural development literature. In this paper, we use farm level data for the Australian grains industry from 1989 to 2004 to investigate the relationship between farm size and total factor productivity and its potential determinants. We show that a positive farm-size productivity relationship could be linked to farmer capital choice. In particular, the productivity advantage of larger farms is likely to diminish as farms use contract services to replace self–owned capital, suggesting that the hire of capital services (hereafter ‘capital outsourcing’) may lift the productivity level of small farms compared to their larger counterparts.     

Does agricultural trade affect productivity? Evidence from Chilean farms

This paper analyzes the relationship between trade and agricultural productivity in Chile, a middle-income country with a recent noticeable history of agricultural trade. This study uses an agricultural commodity trade exposure index in a cross-sectional analysis of more than 70,000 farms to study the relationship between the trade exposure of agricultural commodities and the yields reported by these farms in the 1997 Chilean agricultural census. In order to capture both import and export exposure we subdivide farms in two groups, according to the Chilean case: farms producing only importables such as grains (traditional crops), and farms producing both traditional crops and non-traditional agricultural commodities (products more related to export markets). We exclude from our analysis farms producing only non-traditional products because the census only reports yields for traditional crops. We employ a switching regression model to analyze the effects of trade exposure on traditional crop yields for both groups of farms. Results show that the trade exposure index is positively related to farm yields for both groups, but with a larger effect on farmers producing both traditional and non-traditional commodities. These results are important because they suggest that spillovers from both importables and exportables produce gains in the productivity of traditional crops.     

Transferring hybrid maize technology : The role of the private sector

Developing countries have tried a variety of policies concerning new technology as a source of agricultural growth; there is still much debate on which is the most efficient. More study of private methods of technology transfer is needed. This article presents some preliminary statistical tests of the relationships among seed imports, private research, public research and yield. Seed imports and private research are found to be important potential sources of improved technology. Countries which restrict imports and activities by multinational seed companies may impose costs on their farmers and consumers in terms of foregone productivity.     

农业经营组织演化的经济学解释

对农业经营组织演化的经济学机理进行了系统梳理和分析。研究表明：农业生产特性使得公司化和集体化模式面临高监督和组织协调成本,中国农村土地安排的社会保障功能,使得农业家庭经营具有一定的合理性。然而,农业家庭经营本身难以克服农业资本和技术服务约束、市场准入困难和市场风险威胁,农业经营正在经历一个组织化的过程。“公司＋农户”在克服市场进入障碍和降低市场风险的同时,面临着由于合同不完全性、不公平性和机会主义导致的合约不稳定窘境;农户合作社通过农户之间的合作,能够克服农户资本和技术服务农业生产约束,通过组织化农户与企业签定合约,提升了契约稳定性,但传统的农户合作存在“搭便车”等内在缺陷,限制了服务的规模,必须进行内部制度创新,向新一代合作社演化。农业经营的外部环境和内在技术变化,必然会引起农业组织本身的变化,农业经营组织演化的经济因素和演化方向,是值得进一步关注的问题。     

Impacts of sustainability certification on farm income: Evidence from small-scale specialty green tea farmers in Vietnam

Sustainability certification for small-scale farms has gained considerable momentum in developing countries. However, evidence on the economic benefits of certification schemes in the context of domestically consumed foods and beverages is scarce. This paper addresses this gap by evaluating the impacts of sustainability standards on the selling prices, sales, costs and net income of small-scale specialty green tea farming in Vietnam. We analyze original survey data on 401 smallholder green tea farmers and employ propensity score matching to mitigate self-selection bias. Our estimates reveal that certified green tea producers are able to obtain a higher average selling price and sales value. In addition, although certification leads to a dramatic increase in the costs of hired labor, net farm income is still significantly improved.