Contract farming has often been associated with an increase in the income of participating households. It is unclear, however, whether contract farming increases other aspects of household welfare. We use data from six regions of Madagascar and a selection-on-observables design in which we control for a household's marginal utility of participating in contract farming, which we elicited via a contingent valuation experiment, to show that participating in contract farming reduces the duration of a household's hungry season by about eight days on average. Moreover, participation in contract farming makes participating households about 18% more likely to see their hungry season end at any time. Further, we find that these effects are more pronounced for households with more children, and for households with more girls. This is an important result as children - especially girls - often bear the burden of food insecurity.
Bibliographical noteFunding Information:
The authors are grateful to the National Institute of Food and Agriculture for funding this work through grant MIN-14-061, "Smallholder Participation in Agricultural Value Chains: Evidence from Madagascar." The authors thank Teevrat Garg for invaluable help getting the data organized. We also thank Benjamin Wood, Ali Hill, Travis Lybbert, Matthieu Stigler, two anonymous reviewers, seminar participants at Cornell, as well as participants at the 2014 AAEA annual meetings, the 2014 POLICOFA conference in Dar es Salaam, and the 2015 CSAE conference at Oxford for comments and suggestions that made for a much-improved manuscript. All remaining errors are ours.
© The Authors 2017.
- Agricultural value chains
- Contract farming
- Food security
- Grower-processor contracts
- Outgrower schemes