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Paper Abstract
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Before
In recent decades contract farming has emerged as a popular mechanism to encourage vertical coordination in developing country agriculture. The goal of such coordination is to better integrate smallholder farmers into the modern agricultural food system, fostering rural transformation. We use panel data from a randomized control trial to quantify the impact of different contract attributes on rural transformation and welfare of smallholder rice farmers in Benin. We vary the terms of contract, with some farmers being offered a contract that only guarantees a price, while other contracts add extension training or input loans. While all three types of contracts had positive and significant effects, we find that contracts which only included an agreement on price had nearly as large of an impact as did contracts with additional attributes. This suggests that once price uncertainty is resolved, farmers are able to address other constraints on their own.
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After
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.
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Field
Paper Citation
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Before
Arouna, A., Michler, J.D., and Lokossou, J.C. 2019. "Contract Farming and Rural Transformation: Evidence from a Field Experiment in Benin." NBER Working Paper No. 25665
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After
Arouna, A., Michler, J.D., and Lokossou, J.C. 2021. "Contract Farming and Rural Transformation: Evidence from a Field Experiment in Benin." Journal of Development Economics 151: 102626.
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Paper URL
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https://www.nber.org/papers/w25665
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After
https://doi.org/10.1016/j.jdeveco.2021.102626
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