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Overview of smallholder contract farming in developing countries

Author

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  • Simmons, Paul

Abstract

An agribusiness firm's choice to expand activities through contract farming rather than plantations, buying directly from open markets or other means reflects differences in transaction costs found in different types of procurement systems. Smallholders may enter contracts to reduce transaction costs of accessing new markets, borrowing, managing risk, acquiring information or increasing employment opportunities. The success of contracts reflects both the contracting environment and management practices. The contracting environment includes the strength of markets for contracted output, government macro policies, technical sophistication in production and attenuation of land ownership while important management elements are farm groups, selection of participants for contracts, managing contract default and conflict resolution.

Suggested Citation

  • Simmons, Paul, 2002. "Overview of smallholder contract farming in developing countries," ESA Working Papers 289109, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    • Handle: RePEc:ags:faoaes:289109
    DOI: 10.22004/ag.econ.289109
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    Citations

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    Cited by:

    1. repec:oup:apecpp:v:40:y:2018:i:3:p:379-401. is not listed on IDEAS
    2. Nolte, Kerstin & Ostermeier, Martin, 2017. "Labour Market Effects of Large-Scale Agricultural Investment: Conceptual Considerations and Estimated Employment Effects," World Development, Elsevier, vol. 98(C), pages 430-446.
    3. Swati Dhingra, 2016. "Piggy-Back Exporting, Intermediation, and the Distributional Gains from Trade in Agricultural Markets," 2016 Meeting Papers 712, Society for Economic Dynamics.
    4. Rehber, Erkan, 2007. "A Global Overview of Contract Farming," Monographs: Applied Economics, AgEcon Search, number 259079, July.
    5. Marwa, Erick & Manda, Julius, 2021. "Do Youth Farmers Benefit from Participating in Contract Farming: Evidence from French Beans Youth Farmers in Arusha, Tanzania," 2021 Conference, August 17-31, 2021, Virtual 315907, International Association of Agricultural Economists.
    6. Mohan, Sarah, 2020. "Risk aversion and certification: Evidence from the Nepali tea fields," World Development, Elsevier, vol. 129(C).
    7. Xolile Mamba, Tangetile, 2016. "The role of contracts in improving access to credit in the smallholder livestock sector of Swaziland," Research Theses 243472, Collaborative Masters Program in Agricultural and Applied Economics.
    8. Ba, Hélène A. & de Mey, Yann & Thoron, Sylvie & Demont, Matty, 2019. "Inclusiveness of contract farming along the vertical coordination continuum: Evidence from the Vietnamese rice sector," Land Use Policy, Elsevier, vol. 87(C).
    9. repec:hal:journl:dumas-00802135 is not listed on IDEAS
    10. Giuliano Martiniello & Ricardo Azambuja, 2019. "Contracting Sugarcane Farming in Global Agricultural Value Chains in Eastern Africa: Debates, Dynamics, and Struggles," Agrarian South: Journal of Political Economy, Centre for Agrarian Research and Education for South, vol. 8(1-2), pages 208-231, April.
    11. Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Working papers 122846, Factor Markets, Centre for European Policy Studies.
    12. Sifundza, Sandile Bongani, 2019. "Contract farming and access to formal credit in South Africa: A case of small-scale sugarcane growers in the Felixton Mill area of KwaZulu-Natal," Research Theses 334774, Collaborative Masters Program in Agricultural and Applied Economics.
    13. W.O. Chamberlain & W. Anseeuw, 2017. "Contract Farming as Part of a Multi-Instrument Inclusive Business Structure: A Theoretical Analysis," Agrekon, Taylor & Francis Journals, vol. 56(2), pages 158-172, April.
    14. Bolwig, Simon & Gibbon, Peter & Jones, Sam, 2009. "The Economics of Smallholder Organic Contract Farming in Tropical Africa," World Development, Elsevier, vol. 37(6), pages 1094-1104, June.
    15. Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Factor Markets Working Papers 123, Centre for European Policy Studies.

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