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Contract Farming and Food Security

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  • Marc F. Bellemare
  • Lindsey Novak

Abstract

Contract farming has often been associated with an increase in the income of participating households. It is unclear, however, whether contract farming increases other aspects of household welfare. We use data from six regions of Madagascar and a selection-on-observables design in which we control for a household’s marginal utility of participating in contract farming, which we elicited via a contingent valuation experiment, to show that participating in contract farming reduces the duration of a household’s hungry season by about eight days on average. Moreover, participation in contract farming makes participating households about 18% more likely to see their hungry season end at any time. Further, we find that these effects are more pronounced for households with more children, and for households with more girls. This is an important result as children—especially girls—often bear the burden of food insecurity.

Suggested Citation

  • Marc F. Bellemare & Lindsey Novak, 2017. "Contract Farming and Food Security," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(2), pages 357-378.
  • Handle: RePEc:oup:ajagec:v:99:y:2017:i:2:p:357-378.
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    Cited by:

    1. Jean Balié & Davide Del Prete & Emiliano Magrini & Pierluigi Montalbano & Silvia Nenci, 2017. "Agriculture and Food Global Value Chains in Sub-Saharan Africa: Does bilateral trade policy impact on backward and forward participation?," Working Papers 4/17, Sapienza University of Rome, DISS.
    2. Pierluigi Montalbano & Rebecca Pietrelli & Luca Salvatici, 2017. "Market chain participation and food security: the case of the Ugandan maize farmers," Working Papers 2/17, Sapienza University of Rome, DISS.
    3. Ogutu, Sylvester Ochieng & Goedecke, Theda & Qaim, Matin, 2017. "Agricultural Commercialization and Nutrition in Smallholder Farm Households," GlobalFood Discussion Papers 257242, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    4. Ragasa, Catherine & Lambrecht, Isabel & Kufoalor, Doreen S., 2018. "Limitations of Contract Farming as a Pro-poor Strategy: The Case of Maize Outgrower Schemes in Upper West Ghana," World Development, Elsevier, vol. 102(C), pages 30-56.
    5. repec:spr:ssefpa:v:9:y:2017:i:6:d:10.1007_s12571-016-0642-2 is not listed on IDEAS
    6. Staatz, John & Diallo, Boubacar & Me-Nsope, Nathalie M. & Vroegindewey, Ryan, 2016. "Linking Smallholders To Profitable Markets In West Africa: Case Study Synthesis," Food Security Collaborative Policy Briefs 251849, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    7. repec:gam:jsusta:v:8:y:2016:i:4:p:344:d:67774 is not listed on IDEAS
    8. Ochieng, Dennis O. & Veettil, Prakashan C. & Qaim, Matin, 2017. "Farmers’ preferences for supermarket contracts in Kenya," Food Policy, Elsevier, vol. 68(C), pages 100-111.
    9. Ogutu, Sylvester & Fongar, Andrea & Gödecke, Theda & Jäckering, Lisa & Mwololo, Henry & Njuguna, Michael & Wollni, Meike & Qaim, Matin, 2018. "How to Make Farming and Agricultural Extension More Nutrition- Sensitive: Evidence from a Randomized Controlled Trial in Kenya," GlobalFood Discussion Papers 266309, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    10. repec:eee:wdevel:v:104:y:2018:i:c:p:46-64 is not listed on IDEAS
    11. Kamiche Zegarra, J. & Bravo-Ureta, B., 2018. "Are users of market information efficient? A stochastic production frontier model corrected by sample selection," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275870, International Association of Agricultural Economists.
    12. Jana Schwarz & Monica Schuster & Bernd Annaert & Miet Maertens & Erik Mathijs, 2016. "Sustainability of Global and Local Food Value Chains: An Empirical Comparison of Peruvian and Belgian Asparagus," Sustainability, MDPI, Open Access Journal, vol. 8(4), pages 1-22, April.
    13. repec:oup:apecpp:v:40:y:2018:i:3:p:379-401. is not listed on IDEAS
    14. Khanal, Aditya R. & Mishra, Ashok K., 2018. "Impacts of contract farming decisions on high value crop production of smallholder Nepalese farmers: A multinomial endogenous switching regression approach," 2018 Annual Meeting, August 5-7, Washington, D.C. 274366, Agricultural and Applied Economics Association.
    15. repec:eee:wdevel:v:112:y:2018:i:c:p:259-271 is not listed on IDEAS
    16. Wuepper, David & Sauer, Johannes, 2016. "Explaining the performance of contract farming in Ghana: The role of self-efficacy and social capital," Food Policy, Elsevier, vol. 62(C), pages 11-27.
    17. Ogutu, S. & Fongar, A. & Godecke, T. & Jackering, L. & Mwololo, H. & Njuguna, M. & Wollni, M. & Qaim, M., 2018. "How to Make Farming and Agricultural Extension More Nutrition-Sensitive: Evidence from a Randomized Controlled Trial in Kenya," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277250, International Association of Agricultural Economists.
    18. repec:bla:agecon:v:49:y:2018:i:3:p:279-288 is not listed on IDEAS
    19. repec:spr:ssefpa:v:10:y:2018:i:4:d:10.1007_s12571-018-0792-5 is not listed on IDEAS
    20. repec:eee:jfpoli:v:79:y:2018:i:c:p:179-198 is not listed on IDEAS
    21. Ogutu, Sylvester Ochieng & Goedecke, Theda & Qaim, Matin, 2017. "Agricultural Commercialization and Nutrition in Smallholder Farm Households," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261285, European Association of Agricultural Economists.
    22. Sylvester O. Ogutu & Matin Qaim, 2018. "Commercialization of the small farm sector and multidimensional poverty," GlobalFood Discussion Papers 269561, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    23. Lim, S., 2018. "Risk Aversion, Crop Diversification, and Food Security," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277336, International Association of Agricultural Economists.

    More about this item

    Keywords

    Contract farming; outgrower schemes; grower-processor contracts; agricultural value chains; food security;

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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