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Demythifying Contract Farming: Evidence from Rural South Africa

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  • Freguin-Gresh, Sandrine
  • Anseeuw, Ward
  • D'Haese, Marijke F.C.
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    Abstract

    This paper intends to contribute to the on-going debate about whether and how restructured agri-food markets can provide viable market opportunities for small-scale farmers in South Africa. It aims at analyzing contract farming from the small-scale farmer perspective and at better understanding the implications for small-scale farmers regarding contractual arrangements with processing and/or marketing firms. The paper, based on empirical research conducted in the Limpopo Province of South Africa and on a combination of qualitative and econometric analyses, argues however that contract farming is not a panacea for small-scale farmers. On one hand, contract farming improves agricultural production for contract farmers benefiting from increased incomes, enables better access to services and resources and creates new opportunities to participate in markets. However, on the other hand, the results, show that contract farming remains limited and mostly involves the already better-off, who have benefited from specific development paths and public support. This case study shows that contract farming by itself does not appear to provide an efficient means of reducing poverty, nor does it provide an institutional tool through which to improve rural livelihoods. It does therefore, not represent a tool for the majority of small farmers and for redressing the historical imbalances in the South African agricultural sector.

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    Bibliographic Info

    Paper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 126567.

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    Date of creation: 2012
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    Handle: RePEc:ags:iaae12:126567

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    Web page: http://www.iaae-agecon.org/
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    Keywords: Contract farming; small-scale agriculture; poverty; South Africa; Agribusiness; Community/Rural/Urban Development; Food Security and Poverty; Marketing;

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    1. Glover, David J., 1984. "Contract farming and smallholder outgrower schemes in less-developed countries," World Development, Elsevier, vol. 12(11-12), pages 1143-1157.
    2. Kalie Pauw & Liberty Mncube, 2007. "The Impact of Growth and Redistribution on Poverty and Inequality in South Africa," Country Study 7, International Policy Centre for Inclusive Growth.
    3. 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.
    4. Bellemare, Marc F., 2010. "Agricultural Extension and Imperfect Supervision in Contract Farming: Evidence from Madagascar," MPRA Paper 23788, University Library of Munich, Germany.
    5. Johann Kirsten & Kurt Sartorius, 2002. "Linking agribusiness and small-scale farmers in developing countries: Is there a new role for contract farming?," Development Southern Africa, Taylor & Francis Journals, vol. 19(4), pages 503-529.
    6. Vermeulen, Hester & Kirsten, Johann F. & Sartorius, Kurt, 2008. "Contracting arrangements in agribusiness procurement practices in South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(2), June.
    7. Robert Eastwood & Johann Kirsten & Michael Lipton, 2006. "Premature deagriculturalisation? Land inequality and rural dependency in Limpopo province, South Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 42(8), pages 1325-1349.
    8. Ortmann, Gerald F. & King, Robert P., 2006. "Small-Scale Farmers in South Africa: Can Agricultural Cooperatives Facilitate Access to Input and Product Markets?," Staff Papers 13930, University of Minnesota, Department of Applied Economics.
    9. Bolwig, Simon & Gibbon, Peter & Jones, Sam, 2009. "The Economics of Smallholder Organic Contract Farming in Tropical Africa," World Development, Elsevier, vol. 37(6), pages 1094-1104, June.
    10. Meike Wollni & David R. Lee & Janice E. Thies, 2010. "Conservation agriculture, organic marketing, and collective action in the Honduran hillsides," Agricultural Economics, International Association of Agricultural Economists, vol. 41(3-4), pages 373-384, 05.
    11. Miyata, Sachiko & Minot, Nicholas & Hu, Dinghuan, 2009. "Impact of Contract Farming on Income: Linking Small Farmers, Packers, and Supermarkets in China," World Development, Elsevier, vol. 37(11), pages 1781-1790, November.
    12. Poulton, Colin & Dorward, Andrew & Kydd, Jonathan, 2010. "The Future of Small Farms: New Directions for Services, Institutions, and Intermediation," World Development, Elsevier, vol. 38(10), pages 1413-1428, October.
    13. 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.
    14. Perret, Sylvain R. & Anseeuw, Ward & Mathebula, F., 2005. "Poverty and livelihoods in rural South Africa: Investigating diversity and dynamics of livelihoods. Case studies in Limpopo," Working Papers 60885, University of Pretoria, Department of Agricultural Economics, Extension and Rural Development.
    15. Barrett, Christopher B., 2008. "Smallholder market participation: Concepts and evidence from eastern and southern Africa," Food Policy, Elsevier, vol. 33(4), pages 299-317, August.
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