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Sugarcane outgrowers in Ethiopia: ’Forced’ to remain poor?

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  • Mengistu Assefa Wendimu

    (Danish Institute for International Studies (DIIS), Natural Resources and Development
    Department of Food and Resource Economics, University of Copenhagen)

  • Arne Henningsen

    (Department of Food and Resource Economics, University of Copenhagen)

  • Peter Gibbon

    (Danish Institute for International Studies (DIIS), Global Transformations)

Abstract

Contract farming is often seen as a panacea to many of the challenges faced by agricultural production in developing countries. Given the large heterogeneity of contract farming arrangements, it is debatable whether all kinds of contract farming arrangements offer benefits to participating smallholders. We apply matching methods to analyze the effects of a public sugarcane outgrower scheme in Ethiopia. Participation in the outgrower scheme significantly reduces the income and asset stocks of outgrowers who contributed irrigated land to the outgrower scheme, while the effect was insignificant for outgrowers who contributed rain-fed land. We provide several explanations and discuss policy implications.

Suggested Citation

  • Mengistu Assefa Wendimu & Arne Henningsen & Peter Gibbon, 2015. "Sugarcane outgrowers in Ethiopia: ’Forced’ to remain poor?," IFRO Working Paper 2015/06, University of Copenhagen, Department of Food and Resource Economics.
    • Handle: RePEc:foi:wpaper:2015_06
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    3. Fatema, Naureen & Kibriya,, Shahriar, 2022. "Givers of great dinners know few enemies: The impact of household food sufficiency and food sharing behavior on low-intensity, interhousehold conflict in eastern Democratic Republic of Congo," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322524, Agricultural and Applied Economics Association.
    4. Delelegne A. Tefera & Jos Bijman, 2021. "Economics of contracts in African food systems: evidence from the malt barley sector in Ethiopia," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 9(1), pages 1-21, December.
    5. Bekele, Adugna Eneyew & Drabik, Dusan & Dries, Liesbeth & Heijman, Wim, 2022. "Large-scale land investments and land-use conflicts in the agro-pastoral areas of Ethiopia," Land Use Policy, Elsevier, vol. 119(C).
    6. Nhan, Tran Quoc & Gillette, Raulston & Yutaka, Tomoyuki & Can, Nguyen Duy, 2020. "Impact of Outgrower Scheme on Yield,Output Price,and Income: A Rice-Farm-Level Study in the Mekong Delta,Vietnam," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 61(1), pages 1-19, June.
    7. Ton, Giel & Vellema, Wytse & Desiere, Sam & Weituschat, Sophia & D'Haese, Marijke, 2018. "Contract farming for improving smallholder incomes: What can we learn from effectiveness studies?," World Development, Elsevier, vol. 104(C), pages 46-64.
    8. Sileshi Degefa & Osamu Saito, 2017. "Assessing the Impacts of Large-Scale Agro-Industrial Sugarcane Production on Biodiversity: A Case Study of Wonji Shoa Sugar Estate, Ethiopia," Agriculture, MDPI, vol. 7(12), pages 1-15, December.
    9. Bellemare, Marc F. & Bloem, Jeffrey R., 2018. "Does contract farming improve welfare? A review," World Development, Elsevier, vol. 112(C), pages 259-271.
    10. German, Laura A. & Bonanno, Anya M. & Foster, Laura Catherine & Cotula, Lorenzo, 2020. "“Inclusive business” in agriculture: Evidence from the evolution of agricultural value chains," World Development, Elsevier, vol. 134(C).

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    More about this item

    Keywords

    Productivity; Outgrower scheme; contract farming; sugarcane; propensity score; genetic matching; Ethiopia;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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