Contract farming and rural transformation: Evidence from a field experiment in Benin

Aminou Arouna; Jeffrey D Michler; Jourdain C Lokossou

doi:10.1016/j.jdeveco.2021.102626

Contract farming and rural transformation: Evidence from a field experiment in Benin

J Dev Econ. 2021 Jun:151:102626. doi: 10.1016/j.jdeveco.2021.102626.

Authors

Aminou Arouna¹, Jeffrey D Michler², Jourdain C Lokossou³

Affiliations

¹ Africa Rice Center (AfricaRice), Bouake, Cote d'Ivoire.
² Department of Agricultural and Resource Economics, University of Arizona, Tucson, USA.
³ International Crop Research Institute for the Semi-Arid Tropics (ICRISAT), Bamako, Mali.

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 for rice production in Benin. 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.

Keywords: Contract farming; RCT; Rice; Structural transformation; Sub-Saharan Africa.