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The Political Economy of Contract Farming

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  • John Wilson

    (Department of Sociology, Duke University, Durham, NC.)

Abstract

Contract farming is promoted by agribusiness as a more efficient method of crop and livestock production. Evidence suggests, however, that contracts diminish control by farmers over their operation while increasing their exposure to risk. Conventional models accounting for the spread of contracting emphasize technological factors (e.g., economies of scale, crop perishability, technological complementarity between different stages of production are misleading and inadequate). An alternative model emphasizes the utility of the "subcontracting" organization of production for large agribusiness corporations. A close examination of the spread of contracts reveals that most agribusinesses have pulled back from integration in favor of contracting out and that contracting spreads wherever (1) processors are few in relation to producers, (2) producers are specialized, (3) auction and local terminals have declined in number, (4) there is a surplus of farm operations and credit is tight, (5) farmer's are poorly organized and (6) government supports are weak. The trend toward contracting will continue so long as agribusiness concentration continues, government supports deteriorate, and farms become more specialized.

Suggested Citation

  • John Wilson, 1986. "The Political Economy of Contract Farming," Review of Radical Political Economics, Union for Radical Political Economics, vol. 18(4), pages 47-70, December.
  • Handle: RePEc:sae:reorpe:v:18:y:1986:i:4:p:47-70
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    Cited by:

    1. David Dunham, 1993. "Crop Diversification and Export Growth: Dynamics of Change in the Sri Lankan Peasant Sector," Development and Change, International Institute of Social Studies, vol. 24(4), pages 787-813, October.
    2. Senakpon F. A. Dedehouanou & Johan Swinnen & Miet Maertens, 2013. "Does Contracting Make Farmers Happy? Evidence from Senegal," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59, pages 138-160, October.
    3. Hrabrin I. BACHEV, 2016. "Unpacking Agrarian and Agri-business Contracts," Journal of Economics Library, KSP Journals, vol. 3(3), pages 524-547, September.
    4. Soullier, Guillaume & Moustier, Paule, 2016. "Do contracts increase farmers’ incomes and food security? Evidence from the rice value chain in Senegal," 149th Seminar, October 27-28, 2016, Rennes, France 244790, European Association of Agricultural Economists.

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