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Impact of Contract Farming on Income: Linking Small Farmers, Packers, and Supermarkets in China

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Author Info

  • Miyata, Sachiko
  • Minot, Nicholas
  • Hu, Dinghuan

Abstract

Summary This study compares contract and non-contract growers of apples and green onions in Shandong Province, China in order to explore the constraints on participation and the impact of contract farming on income. We find little evidence that firms prefer to work with larger farms, though all farms in the area are quite small. Using a Heckman selection-correction model, we find that contract farming raises income even after controlling for observable and unobservable household characteristics. These results suggest that contract farming can help raise small-farm income, though questions remain regarding the number of farmers that can be brought into such schemes.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 37 (2009)
Issue (Month): 11 (November)
Pages: 1781-1790

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Handle: RePEc:eee:wdevel:v:37:y:2009:i:11:p:1781-1790

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Web page: http://www.elsevier.com/locate/worlddev

Related research

Keywords: China contract farming horticulture farmers supermarkets processors exports;

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References

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  1. Key, Nigel & Runsten, David, 1999. "Contract Farming, Smallholders, and Rural Development in Latin America: The Organization of Agroprocessing Firms and the Scale of Outgrower Production," World Development, Elsevier, vol. 27(2), pages 381-401, February.
  2. Phil Simmons & Paul Winters & Ian Patrick, 2005. "An analysis of contract farming in East Java, Bali, and Lombok, Indonesia," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 513-525, November.
  3. Warning, Matthew & Key, Nigel, 2002. "The Social Performance and Distributional Consequences of Contract Farming: An Equilibrium Analysis of the Arachide de Bouche Program in Senegal," World Development, Elsevier, vol. 30(2), pages 255-263, February.
  4. Minot, Nicholas & Ngigi, Margaret, 2004. "Are Kenya's horticultural exports a replicable success story?," 2020 vision briefs 12 No. 07, International Food Policy Research Institute (IFPRI).
  5. Shenggen Fan & Connie Chan-Kang, 2005. "Is small beautiful? Farm size, productivity, and poverty in Asian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 135-146, 01.
  6. Maertens, Miet, 2006. "Trade, Food Standards and Poverty: The Case of High-Value Vegetable Exports from Senegal," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25614, International Association of Agricultural Economists.
  7. Porter, Gina & Phillips-Howard[malt], Kevin, 1997. "Comparing contracts: An evaluation of contract farming schemes in Africa," World Development, Elsevier, vol. 25(2), pages 227-238, February.
  8. Minot, Nicholas & Ngigi, Margaret, 2004. "Are horticultural exports a replicable success story?," MTID discussion papers 73, International Food Policy Research Institute (IFPRI).
  9. Singh, Sukhpal, 2002. "Contracting Out Solutions: Political Economy of Contract Farming in the Indian Punjab," World Development, Elsevier, vol. 30(9), pages 1621-1638, September.
  10. Minot, Nicholas, 1986. "Contract Farming and Its Effect on Small Farmers in Less Developed Countries," Food Security International Development Working Papers 54740, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  11. Thomas Reardon & C. Peter Timmer & Christopher B. Barrett & Julio Berdegué, 2003. "The Rise of Supermarkets in Africa, Asia, and Latin America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1140-1146.
  12. Glover, David J., 1984. "Contract farming and smallholder outgrower schemes in less-developed countries," World Development, Elsevier, vol. 12(11-12), pages 1143-1157.
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