IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v10y2018i5p1604-d146802.html
   My bibliography  Save this article

Making Contract Farming Arrangements Work in Africa’s Bioeconomy: Evidence from Cassava Outgrower Schemes in Ghana

Author

Listed:
  • Adu-Gyamfi Poku

    (Institute of Agricultural Sciences in the Tropics (Hans-Ruthenberg-Institute), University of Hohenheim, Wollgrasweg 43, 70599 Stuttgart, Germany)

  • Regina Birner

    (Institute of Agricultural Sciences in the Tropics (Hans-Ruthenberg-Institute), University of Hohenheim, Wollgrasweg 43, 70599 Stuttgart, Germany)

  • Saurabh Gupta

    (Center for Development Management, Indian Institute of Management Udaipur, Udaipur District, Balicha, Rajasthan 313002, India)

Abstract

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 farmers and agribusiness firms. A complementary combination of qualitative and quantitative methods is employed to assess the sustainability of these institutional arrangements. The results indicate that ad hoc or opportunistic investments that only address smallholders’ marketing challenges are not sufficient to ensure mutually beneficial and sustainable schemes. The results suggest that firms’ capacity and commitment to design contracts with embedded support services for outgrowers is essential to smallholder participation and the long-term viability of these arrangements. Public-private partnerships in outgrower schemes can present a viable option that harnesses the strengths of both sectors and overcomes their institutional weaknesses.

Suggested Citation

  • Adu-Gyamfi Poku & Regina Birner & Saurabh Gupta, 2018. "Making Contract Farming Arrangements Work in Africa’s Bioeconomy: Evidence from Cassava Outgrower Schemes in Ghana," Sustainability, MDPI, vol. 10(5), pages 1-21, May.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:5:p:1604-:d:146802
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/10/5/1604/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/10/5/1604/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Maertens, Miet & Vande Velde, Katrien, 2017. "Contract-farming in Staple Food Chains: The Case of Rice in Benin," World Development, Elsevier, vol. 95(C), pages 73-87.
    2. Henson, Spencer & Reardon, Thomas, 2005. "Private agri-food standards: Implications for food policy and the agri-food system," Food Policy, Elsevier, vol. 30(3), pages 241-253, June.
    3. Hueth, Brent & Ligon, Ethan & Dimitri, Carolyn, 2007. "AJAE Appendix: Agricultural Contracts: Data and Research Needs," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 89(5), pages 1-7, December.
    4. Masakure, Oliver & Henson, Spencer, 2005. "Why do small-scale producers choose to produce under contract? Lessons from nontraditional vegetable exports from Zimbabwe," World Development, Elsevier, vol. 33(10), pages 1721-1733, October.
    5. Mighell, Ronald L. & Jones, Lawrence A., 1963. "Vertical Coordination in Agriculture," Agricultural Economic Reports 307164, United States Department of Agriculture, Economic Research Service.
    6. Peter Bogetoft & Henrik Ballebye Olesen, 2002. "Ten rules of thumb in contract design: lessons from Danish agriculture," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 29(2), pages 185-204, June.
    7. Govinda R. Timilsina & John C. Beghin & Dominique van der Mensbrugghe & Simon Mevel, 2012. "The impacts of biofuels targets on land‐use change and food supply: A global CGE assessment," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 315-332, May.
    8. Barrett, Christopher B. & Bachke, Maren E. & Bellemare, Marc F. & Michelson, Hope C. & Narayanan, Sudha & Walker, Thomas F., 2012. "Smallholder Participation in Contract Farming: Comparative Evidence from Five Countries," World Development, Elsevier, vol. 40(4), pages 715-730.
    9. Miyata, Sachiko & Minot, Nicholas & Hu, Dinghuan, 2009. "Impact of Contract Farming on Income: Linking Small Farmers, Packers, and Supermarkets in China," World Development, Elsevier, vol. 37(11), pages 1781-1790, November.
    10. Schipmann, Christin & Qaim, Matin, 2011. "Supply chain differentiation, contract agriculture, and farmers' marketing preferences: The case of sweet pepper in Thailand," Food Policy, Elsevier, vol. 36(5), pages 666-676, October.
    11. Warning, Matthew & Key, Nigel, 2002. "The Social Performance and Distributional Consequences of Contract Farming: An Equilibrium Analysis of the Arachide de Bouche Program in Senegal," World Development, Elsevier, vol. 30(2), pages 255-263, February.
    12. Marc F. Bellemare, 2010. "Agricultural extension and imperfect supervision in contract farming: evidence from Madagascar," Agricultural Economics, International Association of Agricultural Economists, vol. 41(6), pages 507-517, November.
    13. Gow, Hamish R. & Streeter, Deborah H. & Swinnen, Johan F. M., 2000. "How private contract enforcement mechanisms can succeed where public institutions fail: the case of Juhocukor a.s," Agricultural Economics, Blackwell, vol. 23(3), pages 253-265, September.
    14. Singh, Sukhpal, 2002. "Contracting Out Solutions: Political Economy of Contract Farming in the Indian Punjab," 2002 ASAE 3rd International Conference, October 18-20, Jaipur, India 294714, Asian Society of Agricultural Economists (ASAE).
    15. C. Dolan & J. Humphrey, 2000. "Governance and Trade in Fresh Vegetables: The Impact of UK Supermarkets on the African Horticulture Industry," Journal of Development Studies, Taylor & Francis Journals, vol. 37(2), pages 147-176.
    16. Brent Hueth & Ethan Ligon & Carolyn Dimitri, 2007. "Agricultural Contracts: Data and Research Needs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(5), pages 1276-1281.
    17. Schipmann, Christin & Qaim, Matin, 2011. "Supply chain differentiation, contract agriculture, and farmers’ marketing preferences: the case of sweet pepper in Thailand," GlobalFood Discussion Papers 108349, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    18. Torero, Maximo & Viceisza, Angelino C.G., 2016. "Potential collusion and trust: Evidence from a field experiment in Vietnam," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 11(1), pages 1-11.
    19. Christoph Saenger & Matin Qaim & Maximo Torero & Angelino Viceisza, 2013. "Contract farming and smallholder incentives to produce high quality: experimental evidence from the Vietnamese dairy sector," Agricultural Economics, International Association of Agricultural Economists, vol. 44(3), pages 297-308, May.
    20. Alexander, Corinne & Goodhue, Rachael E. & Rausser, Gordon C., 2007. "Do Incentives for Quality Matter?," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 39(1), pages 1-15, April.
    21. Bellemare, Marc F., 2012. "As You Sow, So Shall You Reap: The Welfare Impacts of Contract Farming," World Development, Elsevier, vol. 40(7), pages 1418-1434.
    22. Reardon, Thomas & Barrett, Christopher B., 2000. "Agroindustrialization, globalization, and international development: An overview of issues, patterns, and determinants," Agricultural Economics, Blackwell, vol. 23(3), pages 195-205, September.
    23. Paul Winters & Phil Simmons & Ian Patrick, 2005. "Evaluation of a Hybrid Seed Contract between Smallholders and a Multinational Company in East Java, Indonesia," Journal of Development Studies, Taylor & Francis Journals, vol. 41(1), pages 62-89.
    24. Guo, Hongdong & Jolly, Robert W., 2008. "Contractual arrangements and enforcement in transition agriculture: Theory and evidence from China," Food Policy, Elsevier, vol. 33(6), pages 570-575, December.
    25. Minten, Bart & Randrianarison, Lalaina & Swinnen, Johan F.M., 2009. "Global Retail Chains and Poor Farmers: Evidence from Madagascar," World Development, Elsevier, vol. 37(11), pages 1728-1741, November.
    26. Key, Nigel & Runsten, David, 1999. "Contract Farming, Smallholders, and Rural Development in Latin America: The Organization of Agroprocessing Firms and the Scale of Outgrower Production," World Development, Elsevier, vol. 27(2), pages 381-401, February.
    27. Hongdong Guo & Robert W Jolly & Jianhua Zhu, 2007. "Contract Farming in China: Perspectives of Farm Households and Agribusiness Firms," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 49(2), pages 285-312, June.
    28. Berdegue, Julio A. & Balsevich, Fernando & Flores, Luis & Reardon, Thomas, 2005. "Central American supermarkets' private standards of quality and safety in procurement of fresh fruits and vegetables," Food Policy, Elsevier, vol. 30(3), pages 254-269, June.
    29. Singh, Sukhpal, 2002. "Contracting Out Solutions: Political Economy of Contract Farming in the Indian Punjab," World Development, Elsevier, vol. 30(9), pages 1621-1638, September.
    30. Phil Simmons & Paul Winters & Ian Patrick, 2005. "An analysis of contract farming in East Java, Bali, and Lombok, Indonesia," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 513-525, November.
    31. Polson, Rudulph A. & Spencer, Dunstan S. C., 1991. "The technology adoption process in subsistence agriculture: The case of cassava in Southwestern Nigeria," Agricultural Systems, Elsevier, vol. 36(1), pages 65-78.
    32. Schipmann, Christin & Qaim, Matin, 2011. "Supply chain differentiation, contract agriculture, and farmers’ marketing preferences: The case of sweet pepper in Thailand," Food Policy, Elsevier, vol. 36(5), pages 667-677.
    33. Abebe, Gumataw K. & Bijman, Jos & Kemp, Ron & Omta, Onno & Tsegaye, Admasu, 2013. "Contract farming configuration: Smallholders’ preferences for contract design attributes," Food Policy, Elsevier, vol. 40(C), pages 14-24.
    34. Rao, Elizaphan J.O. & Qaim, Matin, 2011. "Supermarkets, Farm Household Income, and Poverty: Insights from Kenya," World Development, Elsevier, vol. 39(5), pages 784-796, May.
    35. Henson, Spencer & Masakure, Oliver & Boselie, David, 2005. "Private food safety and quality standards for fresh produce exporters: The case of Hortico Agrisystems, Zimbabwe," Food Policy, Elsevier, vol. 30(4), pages 371-384, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christina-Ioanna Papadopoulou & Efstratios Loizou & Fotios Chatzitheodoridis & Anastasios Michailidis & Christos Karelakis & Yannis Fallas & Aikaterini Paltaki, 2023. "What Makes Farmers Aware in Adopting Circular Bioeconomy Practices? Evidence from a Greek Rural Region," Land, MDPI, vol. 12(4), pages 1-17, April.
    2. Hanna Ihli & Ronja Seegers & Etti Winter & Brian Chiputwa & Anja Gassner, 2022. "Preferences for tree fruit market attributes among smallholder farmers in Eastern Rwanda," Agricultural Economics, International Association of Agricultural Economists, vol. 53(1), pages 5-21, January.
    3. Mai Chiem Tuyen & Prapinwadee Sirisupluxana & Isriya Bunyasiri & Pham Xuan Hung, 2022. "Stakeholders’ Preferences towards Contract Attributes: Evidence from Rice Production in Vietnam," Sustainability, MDPI, vol. 14(6), pages 1-21, March.
    4. Tim K. Loos & Marlene Hoppe & Beloved M. Dzomeku & Lilli Scheiterle, 2018. "The Potential of Plantain Residues for the Ghanaian Bioeconomy—Assessing the Current Fiber Value Web," Sustainability, MDPI, vol. 10(12), pages 1-18, December.
    5. Murillo Vetroni Barros & Rômulo Henrique Gomes Jesus & Bruno Silva Ribeiro & Cassiano Moro Piekarski, 2023. "Going in Circles: Key Aspects for Circular Economy Contributions to Agro-industrial Cooperatives," Circular Economy and Sustainability, Springer, vol. 3(2), pages 861-880, June.
    6. Nirvana Angela Marting Vidaurre & Ricardo Vargas-Carpintero & Moritz Wagner & Jan Lask & Iris Lewandowski, 2020. "Social Aspects in the Assessment of Biobased Value Chains," Sustainability, MDPI, vol. 12(23), pages 1-27, November.
    7. Wanglin Ma & Awal Abdul‐Rahaman & Gazali Issahaku, 2023. "Welfare implications of participating in agri‐value chains among vegetable farmers in Northern Ghana," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 793-811, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Poku, A.-G. & Birner, R. & Gupta, S., 2018. "How To Make Contract Farming Arrangements Work: Evidence From A Public And A Private Cassava Outgrower Scheme In Ghana," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277471, International Association of Agricultural Economists.
    2. Bellemare, Marc F. & Bloem, Jeffrey R., 2018. "Does contract farming improve welfare? A review," World Development, Elsevier, vol. 112(C), pages 259-271.
    3. Ba, Hélène A. & de Mey, Yann & Thoron, Sylvie & Demont, Matty, 2019. "Inclusiveness of contract farming along the vertical coordination continuum: Evidence from the Vietnamese rice sector," Land Use Policy, Elsevier, vol. 87(C).
    4. Viet Hoang, 2021. "Impact of Contract Farming on Farmers’ Income in the Food Value Chain: A Theoretical Analysis and Empirical Study in Vietnam," Agriculture, MDPI, vol. 11(8), pages 1-16, August.
    5. Sebastian Kunte & Meike Wollni & Claudia Keser, 2017. "Making it personal: breach and private ordering in a contract farming experiment," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(1), pages 121-148.
    6. Ragasa, Catherine & Lambrecht, Isabel & Kufoalor, Doreen S., 2018. "Limitations of Contract Farming as a Pro-poor Strategy: The Case of Maize Outgrower Schemes in Upper West Ghana," World Development, Elsevier, vol. 102(C), pages 30-56.
    7. Ochieng, Dennis O. & Veettil, Prakashan C. & Qaim, Matin, 2017. "Farmers’ preferences for supermarket contracts in Kenya," Food Policy, Elsevier, vol. 68(C), pages 100-111.
    8. Senakpon F. A. Dedehouanou & Johan Swinnen & Miet Maertens, 2013. "Does Contracting Make Farmers Happy? Evidence from Senegal," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59, pages 138-160, October.
    9. Viet Hoang & Vinh Nguyen, 2023. "Determinants of small farmers' participation in contract farming in developing countries: A study in Vietnam," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 836-853, July.
    10. Abebe, Gumataw K. & Bijman, Jos & Kemp, Ron & Omta, Onno & Tsegaye, Admasu, 2013. "Contract farming configuration: Smallholders’ preferences for contract design attributes," Food Policy, Elsevier, vol. 40(C), pages 14-24.
    11. Susanne Väth & Michael Kirk, 2014. "Do property rights and contract farming matter for rural development? Evidence from a large-scale investment in Ghana," MAGKS Papers on Economics 201416, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    12. Maertens, Miet & Vande Velde, Katrien, 2017. "Contract-farming in Staple Food Chains: The Case of Rice in Benin," World Development, Elsevier, vol. 95(C), pages 73-87.
    13. Minot, Nicholas & Sawyer, Bradley, 2016. "Contract farming in developing countries: Theory, practice, and policy implications," IFPRI book chapters, in: Devaux, André & Torero, Maximo & Donovan, Jason & Horton, Douglas E. (ed.), Innovation for inclusive value-chain development: Successes and challenges, chapter 4, pages 127-158, International Food Policy Research Institute (IFPRI).
    14. Susanne Väth & Simone Gobien, 2014. "Life Satisfaction, Contract Farming and Property Rights: Evidence from Ghana," MAGKS Papers on Economics 201415, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    15. Fanny Widadie & Jos Bijman & Jacques Trienekens, 2021. "Farmer preferences in contracting with modern retail in Indonesia: A choice experiment," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 371-392, April.
    16. Girma, Jony & Gardebroek, Cornelis, 2015. "The impact of contracts on organic honey producers' incomes in southwestern Ethiopia," Forest Policy and Economics, Elsevier, vol. 50(C), pages 259-268.
    17. Bhanot, Disha & Kathuria, Vinish & Das, Debabrata, 2021. "Can institutional innovations in agri-marketing channels alleviate distress selling? Evidence from India," World Development, Elsevier, vol. 137(C).
    18. Schipmann, Christin & Qaim, Matin, 2011. "Supply chain differentiation, contract agriculture, and farmers’ marketing preferences: The case of sweet pepper in Thailand," Food Policy, Elsevier, vol. 36(5), pages 667-677.
    19. Khan, Muhammad Fawad & Nakano, Yuko & Kurosaki, Takashi, 2019. "Impact of contract farming on land productivity and income of maize and potato growers in Pakistan," Food Policy, Elsevier, vol. 85(C), pages 28-39.
    20. repec:oup:apecpp:v:40:y:2018:i:3:p:379-401. is not listed on IDEAS
    21. Arouna, Aminou & Michler, Jeffrey D. & Lokossou, Jourdain C., 2021. "Contract farming and rural transformation: Evidence from a field experiment in Benin," Journal of Development Economics, Elsevier, vol. 151(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:10:y:2018:i:5:p:1604-:d:146802. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.