Productivity, Market Access and Incomes for Small farming businesses through Contracts

project summary

One of the recent innovations and new approaches for addressing the problem of market access and inadequate farm income amongst smallholder commercial farmers in developing economies is the development of integrated systems of agricultural production, extension and marketing to enable smallholder farmers access international product market. Many studies see the promotion of smallholder out-growers through contract farming as a promising strategy for countries like Tanzania aimed at improving product quality in the value chain, improve technical efficiency in production and providing assured market for smallholders (Eaton and Shepherd, 2001, Birthal et al (2008). This approach has the potential of not only enabling the smallholder agricultural producers to respond to global market conditions, but nationally this is also seen as a strategy for improving the livelihoods of smallholder farming businesses in the agricultural sector and hence reduce poverty through agriculture industrial linkage. While contract farming is taken as one of the strategies for enhancing production efficiency and enhancing marketing access for small farming business, not many studies has been undertaken in Tanzania to assess the effect of the existing limited deployment of this approach. Little rigorous work has been undertaken to quantitatively study and assess the efficiency levels of existing crop technologies with a purpose of identifying whether or not maximum productivity. It is important to describe and analyze the contract arrangements in order to suggest possible improvements of the contracts.