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Contract Farming and Rural Transformation: Evidence from a Field Experiment in Benin

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  • Aminou Arouna
  • Jeffrey D. Michler
  • Jourdain C. Lokossou

Abstract

Contract farming has emerged as a popular mechanism to encourage vertical coordination in developing country agriculture. Yet, there is a lack of consensus on its ability to spur structural transformation in rural economies. We present results from a field experiment on contract farming in a developing country. While all contracts have positive effects on welfare and productivity measures, we find that the simplest contract has impacts nearly as large as contracts with additional attributes. This suggests that once price risk is resolved through the offer of a fixed-price contract, farmers are able to address other constraints on their own.

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  • Aminou Arouna & Jeffrey D. Michler & Jourdain C. Lokossou, 2019. "Contract Farming and Rural Transformation: Evidence from a Field Experiment in Benin," NBER Working Papers 25665, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25665
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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • 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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