High-Value Agricultual Markets and Contract Farming: Implications for Rural Development in Africa

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High-value agricultural markets are gaining in importance internationally, including in developing countries. One typical feature of these markets is tighter vertical coordination along supply chains, often involving contract farming. This is likely to have far-reaching implications for rural development. Previous studies on the impacts of contract farming have concentrated primarily on the direct effects, while indirect effects through various spillovers were largely neglected. This project uses a broader approach. A conceptual framework and appropriate quantitative methodologies will be developed to capture both the direct and spillover effects of contract farming. Empirically, the research will focus on high-value vegetable production in countries of Sub-Saharan Africa, where knowledge on how to promote pro-poor rural development is particularly needed. Using an innovative sampling design, comprehensive household survey data will be collected for one domestic and one export supply chain. Econometric analyses will focus on productivity, efficiency, employment, and income effects, and the role of different institutional factors. The results will advance the research direction and will add to the understanding of how to assess and guide contract farming schemes from a development perspective.