Impact of Contract Farming on Smallholder Poultry Farmers' Income in Kenya
AbstractContract farming is a form of vertical coordination largely aimed at correcting the market failure associated with spot markets that arise due to imperfect information. However the impact of contract farming on the welfare of smallholder farmers in Kenya is not well understood. While some authors have argued that contact farming improves access to ready markets by smallholder farmers, other studies have suggested that contract farming lowers the incomes of smallholder farmers because the contractors wield greater market power over the farmers. Consequently, it is seen as a blessing by some and a necessary evil by others. This study uses a propensity score matching technique to shed light on the impact of contract farming on smallholder farmers. The study also examines the conditioners of participation in contract farming. It uses data collected from 180 smallholder poultry farmers stratified by participation in contract production. The study finds that, on average, contracted farmers earned more net revenue per bird compared to the independent farmers, by approximately 27 percent, and as such participating in contract farming could improve the welfare of these small holder poultry farmers. This finding suggests that getting smallholder commercial poultry farmers to participate in contract farming can help improve their welfare through increasing the net revenues from these birds and thereof incomes.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 126196.
Date of creation: 2012
Date of revision:
Contract farming; smallholder farmers; impact; propensity score matching; poultry production; Kenya.; Agribusiness; Institutional and Behavioral Economics;
This paper has been announced in the following NEP Reports:
- NEP-AFR-2012-07-08 (Africa)
- NEP-AGR-2012-07-08 (Agricultural Economics)
- NEP-ALL-2012-07-08 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Becerril, Javier & Abdulai, Awudu, 2010. "The Impact of Improved Maize Varieties on Poverty in Mexico: A Propensity Score-Matching Approach," World Development, Elsevier, vol. 38(7), pages 1024-1035, July.
- Marco Caliendo & Sabine Kopeinig, 2008.
"Some Practical Guidance For The Implementation Of Propensity Score Matching,"
Journal of Economic Surveys,
Wiley Blackwell, vol. 22(1), pages 31-72, 02.
- Caliendo, Marco & Kopeinig, Sabine, 2005. "Some Practical Guidance for the Implementation of Propensity Score Matching," IZA Discussion Papers 1588, Institute for the Study of Labor (IZA).
- Marco Caliendo & Sabine Kopeinig, 2005. "Some Practical Guidance for the Implementation of Propensity Score Matching," Discussion Papers of DIW Berlin 485, DIW Berlin, German Institute for Economic Research.
- 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.
- Akhter Ali & Awudu Abdulai, 2010. "The Adoption of Genetically Modified Cotton and Poverty Reduction in Pakistan," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(1), pages 175-192.
- Rehber, Erkan, 1998. "Vertical Integration In Agriculture And Contract Farming," Working Papers 25991, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
- 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.
- Miyata, Sachiko & Minot, Nicholas & Hu, Dinghuan, 2009.
"Impact of Contract Farming on Income: Linking Small Farmers, Packers, and Supermarkets in China,"
Elsevier, vol. 37(11), pages 1781-1790, November.
- Miyata, Sachiko & Minot, Nicholas & Hu, Dinghuan, 2007. "Impact of contract farming on income: Linking small farmers, packers, and supermarket in China," IFPRI discussion papers 742, International Food Policy Research Institute (IFPRI).
- 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.
- Birthal, Pratap S. & Joshi, P. K. & Gulati, Ashok, 2005. "Vertical coordination in high-value commodities," MTID discussion papers 85, International Food Policy Research Institute (IFPRI).
- Liane Faltermeier & Awudu Abdulai, 2009. "The impact of water conservation and intensification technologies: empirical evidence for rice farmers in Ghana," Agricultural Economics, International Association of Agricultural Economists, vol. 40(3), pages 365-379, 05.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.