Contract Farming in Sub-Saharan Africa: An Empirical Review

Abstract

Contract farming may be defined as agricultural production carried out according to a prior agreement in which the farmer commits to producing a given product in a given manner and the buyer commits to purchasing it. Proponents of contract farming argue that it links small-scale farmers to lucrative markets and solves a number of problems small-scale farmers face in diversifying into high-value commodities. Opponents argue that the imbalance in power between the buyer and the farmer leads to an agreement unfavorable to the farmer. A large majority of empirical studies suggest that contract farming schemes raise the income of farmers participating in the schemes. Contract farming schemes typically face a number of challenges that limit their ability to deliver inputs, credit, and technical assistance to small-scale farmers like side-selling, unwillingness of the company to pay the negotiated price and use quality standard to evade their commitments and high cost of working with large numbers of small-scale farmers. So, government policy should be to facilitate the development of contract farming schemes and developing countries can also promote pro-poor contract farming by creating a conducive policy environment.

Keywords: Contract Farming, Small- Scale, Farmers, Sub - Saharan Africa

DOI: 10.7176/DCS/9-12-01

Publication date: December 31^st 2019