Impact Assessment

Contract Farming in Development Countries. A Review, Martin Prowse, 2012

    Based on a review 100 recent case studies, this research paper offers a comprehensive assessment of contract farming initiatives in developing countries.

    Summary of results
    The author identifies and compares 35 ‘successful’ and 9 ‘failed’ contract-farming initiatives in terms of their effects on farm productivity or income. The samples support the view that contract farming participants earn significantly higher incomes or productivity than non-participants; however, while selection bias at the household level has mostly been addressed, the selection of the cases themselves may still be biased. The author further finds that in the majority of cases, contract farming arrangements were entered with large companies. More than half of the successful cases were contracts with small farms, 26% with a combination of both small and large farms, and 20% with medium-sized or large farms. The majority of the contracts with small farms were through producer organisations. Successful participation of smallholders in contract farming seems particularly likely where landholding inequality rates are not very high. Importantly, 54% of the successful cases were export-oriented, striving to achieve export quality standards, including 20% which pursued organic or fair trade certification. The failed cases showed greater domestic orientation, and none produced crops with organic or fair-trade standards.

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