Contract farming has gained in importance in many developing countries. Previous studies analysed effects of contracts on smallholder farmers’ welfare, yet mostlywithout considering that different types of contractual relationships exist. Here, we examine associations between contract farming and farm household income in the oilpalm sector of Ghana, explicitly differentiating between two types of contracts,namely simple marketing contracts and more comprehensive resource-providing contracts. Moreover, we look at different income sources to better understand howboth contracts are linked to farmers’ livelihood strategies. We use cross-sectional survey data and regression models. Issues of endogeneity are addressed throughmeasuring farmers’ willingness-to-participate in contracts and using this indicator asan additional covariate. Farmers with both types of contracts have significantly higherhousehold incomes than farmers without a contract, yet with notable differences interms of the income sources. Farmers with a marketing contract allocate morehousehold labour to off-farm activities and thus have higher off-farm income. In contrast, farmers with a resource-providing contract have larger oil palm plantations and thus higher farm incomes. The findings suggest that the two contract types areassociated with different livelihood strategies and that disaggregated analysis of different income sources is important to better understand possible underlying mechanisms
In the existing literature, the effects of contract farming on household welfare were examined with mixed results. Most studies looked at single contract types. This paper contributes to the literature by comparing two types of contracts – simple marketing contracts...
Smallholder farmers in developing countries often suffer from high risk and limited market access. Contract farming may improve the situation under certain conditions. Several studies analyzed effects of contracts on smallholder productivity and income with mixed results. Most existing studies...
This study examined the trend in climate in Ghana, how smallholder horticultural farmers perceive this changing climate and how they are responding to its perceived effects. A survey of 480 resource-constrained horticultural producers was conducted in two municipalities of Ghana....
Poverty is prevalent in the small-farm sector of many developing countries. A large literature suggests that contract farming —a preharvest agreement between farmers and buyers— can facilitate smallholder market participation, improve household welfare, and promote rural development. These findings have...
This paper uniquely focuses on rapidly-developing domestic value chains in Africa’s emerging bioeconomy. It uses a comparative case study approach of a public and private cassava outgrower scheme in Ghana to investigate which contract farming arrangements are sustainable for both...
