Advanced Search
MyIDEAS: Login

As You Sow, So Shall You Reap: The Welfare Impacts of Contract Farming

Contents:

Author Info

  • Bellemare, Marc F.

Abstract

What is the impact of participation in commodity chains on producer welfare? Contract farming – wherein a processing firm delegates its production of agricultural commodities to growers – is often viewed as a means of increasing grower welfare in developing countries. Because the nonrandom participation of growers in contract farming has so far not been dealt with convincingly, whether participation in contract farming increases welfare is up for debate. This paper uses the results of a contingent valuation experiment to estimate willingness to pay to enter contract farming, which is then used to control for actual participation in contract farming. Using data from Madagascar, results indicate that contract farming entails a 12- to 18-percent increase in income; a 16-percent decrease in income volatility; a two-month decrease in the duration of the hungry season; and a 30-percent increase in the likelihood that a household receives a formal loan.

Download Info

If 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.
File URL: http://mpra.ub.uni-muenchen.de/23638/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23638.

as in new window
Length:
Date of creation: 03 Jul 2010
Date of revision:
Handle: RePEc:pra:mprapa:23638

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: Contract Farming; Welfare; Grower-Processor Contracts; Outgrower Schemes;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. repec:feb:framed:0075 is not listed on IDEAS
  2. 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.
  3. Ackerberg, D.A. & Botticini, M., 1999. "Endogenous Matching and the Empirical Determinants of Contract Form," Papers 96, Boston University - Department of Economics.
  4. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
  5. Andrew D. Foster & Mark R. Rosenzweig, 2010. "Microeconomics of Technology Adoption," Working Papers 984, Economic Growth Center, Yale University.
  6. Hubbell, Bryan J. & Marra, Michele C. & Carlson, Gerald A., 2000. "Estimating The Demand For A New Technology: Bt Cotton And Insecticide Policies In The Southeast," Proceedings:Transitions in Agbiotech: Economics of Strategy and Policy, June 24-25, 1999, Washington, D.C. 26016, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
  7. John List & Sally Sadoff & Mathis Wagner, 2010. "So you want to run an experiment, now what? Some simple rules of thumb for optimal experimental design," Artefactual Field Experiments 00094, The Field Experiments Website.
  8. Maertens, Miet & Swinnen, Johan F.M., 2007. "Trade, Standards and Poverty. Evidence from Senegal," 106th Seminar, October 25-27, 2007, Montpellier, France 7924, European Association of Agricultural Economists.
  9. Thomas Reardon & C. Peter Timmer & Christopher B. Barrett & Julio Berdegué, 2003. "The Rise of Supermarkets in Africa, Asia, and Latin America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1140-1146.
  10. 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.
  11. 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.
  12. M. Keith Chen, 2008. "Rationalization and Cognitive Dissonance: Do Choices Affect or Reflect Preferences?," Levine's Working Paper Archive 122247000000002336, David K. Levine.
  13. Stefan Dercon, 2005. "Risk, Poverty and Vulnerability in Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 14(4), pages 483-488, December.
  14. repec:feb:artefa:0096 is not listed on IDEAS
  15. Matin Qaim & Alain de Janvry, 2003. "Genetically Modified Crops, Corporate Pricing Strategies, and Farmers' Adoption: The Case of Bt Cotton in Argentina," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 814-828.
  16. Angrist, Joshua D, 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records," American Economic Review, American Economic Association, vol. 80(3), pages 313-36, June.
  17. Dehejia, R.H. & Wahba, S., 1998. "Propensity Score Matching Methods for Non-Experimental Causal Studies," Discussion Papers 1998_02, Columbia University, Department of Economics.
  18. 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).
  19. Bellemare, Marc F., 2010. "Agricultural Extension and Imperfect Supervision in Contract Farming: Evidence from Madagascar," MPRA Paper 23788, University Library of Munich, Germany.
  20. Philip McMichael, 2009. "A food regime analysis of the ‘world food crisis’," Agriculture and Human Values, Springer, vol. 26(4), pages 281-295, December.
  21. Rao, Elizaphan J.O. & Qaim, Matin, 2011. "Supermarkets, Farm Household Income, and Poverty: Insights from Kenya," World Development, Elsevier, vol. 39(5), pages 784-796, May.
  22. Minten, Bart & Randrianarison, Lalaina & Swinnen, Johan F.M., 2009. "Global Retail Chains and Poor Farmers: Evidence from Madagascar," World Development, Elsevier, vol. 37(11), pages 1728-1741, November.
  23. 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.
  24. Bellemare, Marc F. & Barrett, Christopher B., 2005. "An Ordered Tobit Model of Market Participation: Evidence from Kenya and Ethiopia," Working Papers 14748, Cornell University, Department of Applied Economics and Management.
  25. 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.
  26. Carson, Richard T. & Hanemann, W. Michael, 2006. "Contingent Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 17, pages 821-936 Elsevier.
  27. 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.
  28. Cameron, Trudy Ann & James, Michelle D, 1987. "Efficient Estimation Methods for "Closed-ended' Contingent Valuation Surveys," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 269-76, May.
  29. Bryan J. Hubbell & Michele C. Marra & Gerald A. Carlson, 2000. "Estimating the Demand for a New Technology: Bt Cotton and Insecticide Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 118-132.
  30. 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.
  31. Vossler, Christian A. & Kerkvliet, Joe, 2003. "A criterion validity test of the contingent valuation method: comparing hypothetical and actual voting behavior for a public referendum," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 631-649, May.
  32. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
  33. repec:feb:natura:0057 is not listed on IDEAS
  34. Angrist, Joshua D, 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records: Errata," American Economic Review, American Economic Association, vol. 80(5), pages 1284-86, December.
  35. Masahide Watanabe, 2010. "Nonparametric Estimation of Mean Willingness to Pay from Discrete Response Valuation Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1114-1135.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. As You Sow, So Shall You Reap: The Welfare Impacts of Contract Farming
    by Marc F. Bellemare in Marc F. Bellemare on 2012-05-08 09:00:08
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. 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.
  2. Barrett, Christopher B. & Bachke, Maren E. & Bellemare, Marc F. & Michelson, Hope C. & Narayanan, Sudha & Walker, Thomas F., 2010. "Smallholder Participation in Agricultural Value Chains: Comparative Evidence from Three Continents," MPRA Paper 27829, University Library of Munich, Germany.
  3. Michelson, Hope C., 2012. "Small farmers, NGOs, and a Walmart World: Welfare effects of supermarkets operating in Nicaragua," MPRA Paper 42458, University Library of Munich, Germany.
  4. Sudha Narayanan, 2012. "The Heterogeneous welfare impacts of participation in contract farming schemes: Evidence from Southern India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-019, Indira Gandhi Institute of Development Research, Mumbai, India.
  5. Céline Guimas, 2012. "Effect of organic contract farming on labor demand. A study case in the Western Uganda," Post-Print dumas-00802135, HAL.
  6. Narayanan, Sudha, 2014. "Profits from participation in high value agriculture: Evidence of heterogeneous benefits in contract farming schemes in Southern India," Food Policy, Elsevier, vol. 44(C), pages 142-157.
  7. Sudha Narayanan, 2012. "Safe gambles? Farmer perceptions of transactional certainty and risk-return tradeoffs in contract farming schemes in Southern India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-021, Indira Gandhi Institute of Development Research, Mumbai, India.
  8. Bellemare, Marc F. & Holmberg, Andrew M., 2010. "The Determinants of Music Piracy in a Sample of College Students," MPRA Paper 23641, University Library of Munich, Germany.
  9. Linda Kleemann & Awudu Abdulai & Mareike Buss, 2013. "Is Organic Farming Worth its Investment? The Adoption and Impact of Certified Pineapple Farming in Ghana," Kiel Working Papers 1856, Kiel Institute for the World Economy.
  10. Gómez, Miguel I. & Ricketts, Katie D., 2013. "Food value chain transformations in developing countries: Selected hypotheses on nutritional implications," Food Policy, Elsevier, vol. 42(C), pages 139-150.
  11. Neda Trifković, 2013. "Governance Strategies and Welfare Effects: Vertical Integration and Contracts in the Catfish Sector in Vietnam," IFRO Working Paper 2013/20, University of Copenhagen, Department of Food and Resource Economics.
  12. Abebe, Gumataw K. & Bijman, Jos & Kemp, Ron & Omta, Onno & Tsegaye, Admasu, 2013. "Contract farming configuration: Smallholders’ preferences for contract design attributes," Food Policy, Elsevier, vol. 40(C), pages 14-24.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:23638. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

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.