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Market structure, outgrower contracts, and farm output. Evidence from cotton reforms in Zambia

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  • Irene Brambilla
  • Guido G. Porto

Abstract

This paper investigates the dynamic impacts of cotton marketing reforms on farm output in rural Zambia. Following liberalization and the elimination of the Zambian cotton marketing board, the sector developed an outgrower scheme whereby cotton firms provided credit, access to inputs and output markets, and technical assistance to the farmers. There are two distinctive phases of the reforms: a failure of the outgrower contracts, due to farmers' debt renegation, firm hold up, and lack of coordination among firms and farms, and a subsequent period of success of the scheme, due to enhanced contract enforcement and commitment. We find interesting dynamics in the sector. During the phase of failure, farmers were pushed back into subsistence and cotton yields per hectare declined. With the improvement of the outgrower scheme, farmers devoted larger shares of land to cash crops, and farm output significantly increased. Copyright 2011 Oxford University Press 2011 All rights reserved, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 63 (2011)
Issue (Month): 4 (December)
Pages: 740-766

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Handle: RePEc:oup:oxecpp:v:63:y:2011:i:4:p:740-766

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Cited by:
  1. Claire Delpeuch & Antoine Leblois, 2011. "Sub-Saharan African Cotton Policies in Retrospect," CIRED Working Papers hal-00866412, HAL.
  2. Christian K.M. Kingombe, 2012. "Regional Analysis of Eastern Province Feeder Road Project - District level estimation of the Poverty Alleviation Effects of Rural Roads Improvements in Zambia’s Eastern Province," IHEID Working Papers 10-2012, Economics Section, The Graduate Institute of International Studies.
  3. Balat, Jorge & Brambilla, Irene & Porto, Guido, 2008. "Realizing the gains from trade : export crops, marketing costs, and poverty," Policy Research Working Paper Series 4488, The World Bank.
  4. Aksoy, M. Ataman & Isik-Dikmelik, Aylin, 2007. "The role of services in rural income : the case of Vietnam," Policy Research Working Paper Series 4180, The World Bank.
  5. Delpeuch, Claire & Vandeplas, Anneleen, 2011. "Revisiting the "Cotton Problem" - A Comparative Analysis of Cotton Reforms in Sub-Saharan Africa," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114446, European Association of Agricultural Economists.
  6. Christian K.M. Kingombe, 2012. "The Linkage between Outcome Differences in Cotton Production and Rural Roads Improvements - A Matching Approach," IHEID Working Papers 12-2012, Economics Section, The Graduate Institute of International Studies.
  7. Claire Delpeuch & Antoine Leblois, 2011. "Sub-Saharan African Cotton Policies in Retrospect," Working Papers hal-00866412, HAL.
  8. Christian K.M. Kingombe and Salvatore di Falco, 2012. "The Impact of a Feeder Road Project on Cash Crop Production in Zambia’s Eastern Province between 1997 and 2002," IHEID Working Papers 04-2012, Economics Section, The Graduate Institute of International Studies, revised 28 Feb 2012.
  9. KAMINSKI Jonathan & THOMAS Alban, 2009. "Commodity Reform and Extensive Production Growth: Evidence from Burkinabè cotton farmers," LERNA Working Papers 09.01.277, LERNA, University of Toulouse.
  10. Balat, Jorge F. & Porto, Guido G., 2005. "The WTO Doha Round, cotton sector dynamics, and poverty trends in Zambia," Policy Research Working Paper Series 3697, The World Bank.
  11. Shepherd, Ben & Delpeuch, Claire, 2007. "Subsidies and regulatory reform in West African cotton: What are the development stakes?," MPRA Paper 2289, University Library of Munich, Germany.
  12. Depetris Chauvin, Nicolas & Porto, Guido G., 2011. "Market Competition in Export Cash Crops and Farm Income," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126159, International Association of Agricultural Economists.
  13. Delpeuch, Claire, 2011. "African cotton markets at crossroads : will the price spike turn into a new kick-start ?," Policy Research Working Paper Series 5847, The World Bank.

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