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The revival of smallholder cash crops in Africa: public and private roles in the provision of finance


  • Colin Poulton

    (Department of Agricultural Economics and Business Management, Wye College, UK)

  • Andrew Dorward

    (Department of Agricultural Economics and Business Management, Wye College, UK)

  • Jonathan Kydd

    (Department of Agricultural Economics and Business Management, Wye College, UK)


This paper examines the role of finance in smallholder cash crop production in Sub-Saharan Africa following market liberalization, drawing on theoretical arguments and fieldwork in Ghana, Tanzania and (for comparison) Pakistan. Smallholders' needs for finance for input purchase and traders' needs for finance to facilitate the supply of inputs and the purchase of produce are considered. It is argued that many smallholders need seasonal credit if they are to use inputs and that this can often be best achieved by loans to intermediary traders. But the development of credit markets is blocked by a high incidence of 'strategic default' on loans. Various mechanisms can be used to improve loan repayment rates from farmers, and these are analysed with a particular focus on 'interlocked contracts'. © 1998 John Wiley & Sons, Ltd.

Suggested Citation

  • Colin Poulton & Andrew Dorward & Jonathan Kydd, 1998. "The revival of smallholder cash crops in Africa: public and private roles in the provision of finance," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(1), pages 85-103.
  • Handle: RePEc:wly:jintdv:v:10:y:1998:i:1:p:85-103 DOI: 10.1002/(SICI)1099-1328(199801)10:1<85::AID-JID502>3.0.CO;2-V

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    References listed on IDEAS

    1. Crow, Ben & Murshid, K. A. S., 1994. "Economic returns to social power: Merchants' finance and interlinkage in the grain markets of Bangladesh," World Development, Elsevier, vol. 22(7), pages 1011-1030, July.
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    Cited by:

    1. Berhanu Gebremedhin & Moti Jaleta & Dirk Hoekstra, 2009. "Smallholders, institutional services, and commercial transformation in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 40(s1), pages 773-787, November.
    2. Andrew Dorward & Jonathan Kydd & Colin Poulton & Dirk Bezemer, 2009. "Coordination Risk and Cost Impacts on Economic Development in Poor Rural Areas," Journal of Development Studies, Taylor & Francis Journals, vol. 45(7), pages 1093-1112, August.
    3. Govereh, Jones & Jayne, Thomas S., 1999. "Effects of Cash Crop Production on Food Crop Productivity in Zimbabwe: Synergies or Trade-offs?," Food Security International Development Working Papers 54670, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    4. Dijkstra, A. Geske & Kees van Donge, Jan, 2001. "What Does the 'Show Case' Show? Evidence of and Lessons from Adjustment in Uganda," World Development, Elsevier, vol. 29(5), pages 841-863, May.
    5. Gockowski, James & Ndoumbe, Michel, 2004. "The adoption of intensive monocrop horticulture in southern Cameroon," Agricultural Economics, Blackwell, vol. 30(3), pages 195-202, May.
    6. Crawford, Eric W. & Kelly, Valerie A., 2001. "Evaluating Measures To Improve Agricultural Input Use," Staff Papers 11686, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    7. repec:spr:ssefpa:v:9:y:2017:i:5:d:10.1007_s12571-017-0727-6 is not listed on IDEAS
    8. Masanjala, Winford, 2007. "The poverty-HIV/AIDS nexus in Africa: A livelihood approach," Social Science & Medicine, Elsevier, vol. 64(5), pages 1032-1041, March.
    9. Shiferaw, Bekele & Obare, Gideon & Muricho, Geoffrey, 2006. "Rural institutions and producer organizations in imperfect markets: experiences from producer marketing groups in semi-arid eastern Kenya," CAPRi working papers 60, International Food Policy Research Institute (IFPRI).
    10. Deb, Rahul & Suri, Tavneet, 2013. "Endogenous emergence of credit markets: Contracting in response to a new technology in Ghana," Journal of Development Economics, Elsevier, vol. 101(C), pages 268-283.
    11. Winter-Nelson, Alex & Temu, Anna, 2002. "Institutional Adjustment and Transaction Costs: Product and Inputs Markets in the Tanzanian Coffee System," World Development, Elsevier, vol. 30(4), pages 561-574, April.
    12. Poulton, Colin & Dorward, Andrew & Kydd, Jonathan, 2010. "The Future of Small Farms: New Directions for Services, Institutions, and Intermediation," World Development, Elsevier, vol. 38(10), pages 1413-1428, October.
    13. Sylvaine Lemeilleur, 2014. "The role of input vouchers in modernizing the fresh fruit and vegetable market in Turkey," Agricultural Economics, International Association of Agricultural Economists, vol. 45(4), pages 477-487, July.
    14. Dries, Liesbeth & Gorton, Matthew & White, John & Urutyan, Vardan E. & Sardaryan, Gagik, 2012. "The Role Of Agribusiness In Stimulating On-Farm Investments €“ Case-Study Of The Armenian Dairy Sector," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 6.
    15. Okello, Julius J. & Kirui, Oliver K. & Gitonga, Zachary M. & Njiraini, Georgina W. & Nzuma, Jonathan M., 0. "Determinants of Awareness and Use ICT-based Market Information Services in Developing-Country Agriculture: The Case of Smallholder Farmers in Kenya," Quarterly Journal of International Agriculture, Humboldt-Universität zu Berlin, vol. 53.
    16. Heltberg, R. & Tarp, F., 2002. "Agricultural supply response and poverty in Mozambique," Food Policy, Elsevier, vol. 27(2), pages 103-124, April.
    17. Govereh, Jones & Jayne, T. S., 2003. "Cash cropping and food crop productivity: synergies or trade-offs?," Agricultural Economics, Blackwell, vol. 28(1), pages 39-50, January.
    18. Adjognon, Serge G. & Liverpool-Tasie, Lenis Saweda O. & Reardon, Thomas A., 2017. "Agricultural input credit in Sub-Saharan Africa: Telling myth from facts," Food Policy, Elsevier, vol. 67(C), pages 93-105.
    19. Kelly, Valerie A., 2005. "Farmers' Demand for Fertilizer in Sub-Saharan Africa," Staff Papers 11612, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    20. Henson, Spencer & Masakure, Oliver & Boselie, David, 2005. "Private food safety and quality standards for fresh produce exporters: The case of Hortico Agrisystems, Zimbabwe," Food Policy, Elsevier, vol. 30(4), pages 371-384, August.
    21. Kelly, Valerie & Adesina, Akinwumi A. & Gordon, Ann, 2003. "Expanding access to agricultural inputs in Africa: a review of recent market development experience," Food Policy, Elsevier, vol. 28(4), pages 379-404, August.
    22. Takamasa Akiyama & John Baffes & Donald Larson & Panos Varangis, 2001. "Commodity Market Reforms : Lessons of Two Decades," World Bank Publications, The World Bank, number 13852.

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