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The Effects of Contract Farming on Efficiency and Productivity of Small-Scare Sunflower Farmers in Tanzania

Author

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  • Henningsen, Arne
  • Mpeta, Daniel F.
  • Adem, Anwar S.
  • Kuzilwa, Joseph A.
  • Czekaj, Tomasz G.

Abstract

Due to changes in the global agricultural system and support from various organizations, contract farming has recently been significantly expanded in many developing countries. A considerable body of literature analyses the impact of contract farming on the welfare of smallholders, whereas its impact on efficiency and productivity is mostly overlooked. This study addresses this salient gap by combining the approaches of Bravo-Ureta, Greene, and Solís (Empirical Economics, 2012) and Rao, Brümmer, and Qaim (AJAE, 2012). We first estimate separate production frontiers for contract farmers and non-contract farmers that account for potential selection biases, and second, we create a meta-frontier. Using cross-sectional data from sunflower farmers in Tanzania, we find a significant selection bias. Contract farming significantly increases the yield potential but lowers the average group technical efficiency. As the first effect is slightly larger than the second, we find a small positive effect of contract farming on productivity.

Suggested Citation

  • Henningsen, Arne & Mpeta, Daniel F. & Adem, Anwar S. & Kuzilwa, Joseph A. & Czekaj, Tomasz G., 2015. "The Effects of Contract Farming on Efficiency and Productivity of Small-Scare Sunflower Farmers in Tanzania," 2015 Conference, August 9-14, 2015, Milan, Italy 212478, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:212478
    DOI: 10.22004/ag.econ.212478
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    References listed on IDEAS

    as
    1. William Greene, 2010. "A stochastic frontier model with correction for sample selection," Journal of Productivity Analysis, Springer, vol. 34(1), pages 15-24, August.
    2. Forsund, Finn R. & Lovell, C. A. Knox & Schmidt, Peter, 1980. "A survey of frontier production functions and of their relationship to efficiency measurement," Journal of Econometrics, Elsevier, vol. 13(1), pages 5-25, May.
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    4. Birthal, Pratap S. & Jha, Awadhesh K. & Tiongco, Marites & Narrod, Clare, 2008. "Improving farm-to-market linkages through contract farming: A case study of smallholder dairying in India," IFPRI discussion papers 814, International Food Policy Research Institute (IFPRI).
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    8. Barrett, Christopher B. & Bachke, Maren E. & Bellemare, Marc F. & Michelson, Hope C. & Narayanan, Sudha & Walker, Thomas F., 2012. "Smallholder Participation in Contract Farming: Comparative Evidence from Five Countries," World Development, Elsevier, vol. 40(4), pages 715-730.
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    Cited by:

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    2. Iordanis Parikoglou & Grigorios Emvalomatis & Fiona Thorne, 2022. "Precision livestock agriculture and productive efficiency: The case of milk recording in Ireland," Agricultural Economics, International Association of Agricultural Economists, vol. 53(S1), pages 109-120, November.
    3. Charles Peter Mgeni & Klaus Müller & Stefan Sieber, 2019. "Reducing Edible Oil Import Dependency in Tanzania: A Computable General Equilibrium CGE Approach," Sustainability, MDPI, vol. 11(16), pages 1-17, August.
    4. Ruml, Anette & Qaim, Matin, 2020. "Effects of marketing contracts and resource-providing contracts in the African small farm sector: Insights from oil palm production in Ghana," World Development, Elsevier, vol. 136(C).
    5. Anh Tru Nguyen & Janet Dzator & Andrew Nadolny, 2018. "Contract farming, agriculture productivity and poverty reduction: evidence from tea estates in Viet Nam," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 25(1), pages 109-145, June.

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