Center for Effective Global Action

To sell their surpluses of maize, the main staple in Benin, farmers may choose among three modes of transaction: they may sell under a contract with itinerant traders, or they may sell without a contract at the farmgate or on distant markets. It has been postulated that farmers may choose a profitable mode of transaction if they have good access to information on the prevailing market conditions. Using detailed farm household survey data from Benin, this paper applies the Nested Logit model to test this hypothesis. The results show that farmers are likely to opt for selling at the farmgate without a contract if they have good access to information. However, such a decision may not be related to access to information through the government supported 'Public Market Information System' but rather it is likely to be induced by access to information through farmers' own social networks.

The objective of this introduction is to put the May 2009 conference "on Agriculture for Development" in perspective of current and expected changes in the broad process of using agriculture for development in Sub-Saharan Africa. This is to help the conference achieve its two main purposes: assess the frontiers of research in economics applied to agricultural development and smallholder competitiveness; and establish research priorities for future efforts in that direction. It uses the WDR 2008 as a starting point for this task.

For many poor farmers in developing countries, vulnerability to risk is a dominant feature of their livelihoods. Households' desires to protect themselves against shocks is thought to affect their production and savings decisions. Farmers who are fearful of future loss of earnings may be reluctant to adopt technological innovations with a variable or unknown return. This paper examines the relationship between agricultural development, vulnerability to shocks, and the risk management practices of small farmers in developing countries. It finds that adoption of new agricultural inputs and practices is a combination of both rational and behavioral motives, with peer effects appearing more important through studies of social networks and reinforcement and diffusion effects.

This paper examines the informational origin of the low adoption rates of modern agricultural technologies frequently observed in smallholder agriculture in Sub-Sahran Africa. The paper argues that a large part of these observed low adoption rates can be explained by a simple fact: The lack of awareness of the existence of the technology by a large proportion of the smallholder farming population. The paper analyzes the structure of the adoption gap resulting from this lack of awareness and presents a methodology for estimating that gap and truly informative adoption rates and their determinants. This methodology is then used to provide estimates of the New Rice for Africa (NERICA)

population potential adoption rates and gaps as well as estimates of the determinants of NERICA exposure and adoption in four West African Countries: Cote d’Ivoire, Guinea, Benin and Gambia.

The implied estimated adoption gaps of 21% in Cote-d’Ivoire, 41% in Guinea, 28% in Benin and 47% in Gambia suggest that there is potential for increasing NERICA adoption significantly in these four countries. The results of the analysis of the

determinants of NERICA adoption highlight the importance of Participatory Varietal Selection (PVS) trials and farmer access to extension services in promoting the adoption of NERICAs beyond their beneficial effects in making farmers aware of the existence of the varieties. The findings also points to some possible gender biases in the dissemination of NERICA varieties in Guinea.

International development agencies have renewed interest over agriculture’s pro-poor potentials. South Africa’s agriculture though contributes less than 3% to GDP, has the highest employment per unit of GDP. The sector is sharply divided into small and large farms. Data reveals an increasing land productivity gap between both types of farms. Using data from various sources1, this paper assesses the agricultural production impacts of inequality and land redistribution, first in the whole agricultural sector, then the sugarcane sub-sector, comparing small-scale and largescale farm performances and considering the causes of the productivity gap. It also analyses the comparative poverty effects of both farm-types. Time series are corrected for unit roots and estimated using robust estimation, which corrects for heteroskedasticity and outliers. Specification tests help to determine the right panel model for sugarcane. The results suggest that inequality (land redistribution) is associated with slower (enhanced) agricultural productivity. This positive effect of land redistribution can be because land constraints in South African large farms may not be binding and therefore the negative impact on large-farms does not dominate. The impact of land redistribution though negative for large-scale and positive for small-scale producers is not significant. This implies that redistribution efforts must be accompanied by significant ease of other constraints facing small farmers. Other inputs like fertiliser and irrigation facilities show more significant impact on small farm production than land alone. Much of the difference in productivity arises from disparity in input use, specifically fertiliser and irrigation. There is possibility of positive external effects from large-scale chemical and labour use to small-scale production as they attenuate the gap in productivities. The finding also suggests the need to strengthen the human capital (particularly education) of small-scale producers. Both large and small-scale sugarcane production have significant poverty reduction effects, but the effect from small-scale production is clearly higher.

The long-term effects of shocks are examined in the context of a traditional pastoral community. The impacts are empirically examined in connection with the micro-level poverty trap hypothesis and the associated minimum poverty threshold estimates reported in previous studies. We argue that these estimates cannot be taken as definitive and the core explanations behind them are incongruent with the institutional realities of the pastoral community for which they are reported. The reality is that shocks have implied long-term community-wide deprivation with a lasting effect of deterioration in the indigenous capacity to cushion those who slide into permanent destitution. This is evident in the empirically identified increasing loss of confidence in the indigenous social support structures. The findings rather highlight the need for policy interventions to focus on system level community-wide development issues rather than the commonly emphasized individual targeting implied by such exercises as asset-based poverty threshold estimates.

Various works have demonstrated that small-scale agricultural producers from developing countries do not generally obtain the potential gains linked to marketing. What can be done to help them obtain better prices? In this article, we examine two different solutions: increasing the bargaining power of individual producers and collective marketing through producer organizations (POs). We use data on 2,487 cocoa transactions undertaken by producers in Cameroon during the 2005/2006 season (IITA survey 2006). We first of all explore bargaining theories to identify the determinants of the price received by producers who sell their produce individually, and the, analyse the effect of collective marketing. We show that when the bargaining situation is least favourable to the producers (because the prices are nonnegotiable and there is information asymmetry which favours the traders), the traders seize the entire surplus generated by the trade. In order to improve the prices received by producers, it should be necessary to manage their access to credit (so that they will not be bound to any buyer the had obtained credits from, thus ameliorate arbitrate and negotiate the price), and enable them delay their sale until after the start of the school year (so that traders could no longer know the producers financial need). We also show that selling produce via the POs generally results in a price increase of 9% caused by improvement in a reduction in transaction costs (through economies of scale) and improved bargaining power. The article also examines whether or not the mere presence of a PO in a specific zone enables all the producers in this zone (even those who sell individually) to benefit from higher prices. However, a clear conclusion does not arise in this respect.

This paper analyzes the use of improved agricultural technologies, and implications for food security and poverty reduction in rural Mozambique. The results are drawn from a nationally representative household survey covering the agricultural season of 2004/05. As a robustness check, the paper uses three econometric approaches: the doubly robust estimator, regression and matching, and sub-classification and regression. The results show that the impact of improved technologies is positive, conditional on irrigation use. Additionally, the results attest to the importance of increasing agricultural productivity in tandem with improvements on farmers’ ability to store food.

Contract farming has expanded in Uganda due to the promotional efforts of various actors: private, public, and/or international aid agencies. While motives for promoting contract farming may vary by actor, it is argued in this study that contract farming is crucial in the commercialization of smallholder agriculture and hence, poverty reduction in Uganda. However, smallholder farmers in Uganda have reportedly experienced some contractual problems when dealing with large agribusiness firms, resulting in them giving up contract farming. Similarly, agribusinesses have also reportedly encountered some contractual problems when dealing with some smallholder farmers that could have led to the exclusion of the latter from contract farming. Therefore, the main objective of this study was to examine the role of contract farming in the commercialization of smallholder agriculture in Uganda by using sunflower, sorghum, and rice contract schemes as case studies. Specifically, the study sought to characterize the sorghum, sunflower, and rice contract schemes as well as identify benefits and problems associated with them. Primary data were collected by a combined use of survey and informal interview methods. A survey of both contracted and non contracted farmers was conducted in Soroti District (Sorghum), Apac District (Sunflower), and Bugiri District (Rice). Informal interviews were held with agribusiness firms (Nile Breweries Limited, Mukwano Industries, and Tilda (U) Limited), their agents, and support organizations. Data were then analyzed using descriptive statistics and non parametric tests (Chi-square and F-tests). While most of the findings from this study are general in nature, some of them are idiosyncratic to the case studies investigated. It was generally found contract farming contributed a great deal to the commercialization of smallholder agriculture in Uganda, especially in the sorghum (Epuripur) and sunflower sub-sectors. While agribusinesses obtained assured supply of raw materials for their processing needs, smallholder farmers on the other hand had access to critical inputs such as improved seeds and extension services, in addition to access to a guaranteed market for their produce. However, there were still some challenges in the organization and operation of the contract farming schemes. Thus, both agribusinesses and policy makers have separate roles to play in making sure contract farming is properly nurtured for the benefit of smallholder farmers in Uganda.

The transition from subsistence to commercial agriculture, often referred to as the commercialization of agriculture, has long been considered an important part of the agrarian transformation of low income economies and a means of ensuring food security, enhanced nutrition, and enhanced incomes. However, in the face of imperfect markets and high transaction costs, smallholders are rarely able to exploit all the potential gains from commercialization. With the objective of better understanding smallholder participation in markets, the paper proceeds in Section 1 to examine the impact of early reforms on smallholder market participation. In Section 2, we characterize the dimensions of smallholder agriculture that constrain market participation. In Section 3, a conceptual framework for understanding market participation through the lens of market institutions is proposed, followed by an exposition to recent efforts to promote market development in Section 4 and an overview of participation through the market institution of a commodity exchange in Section 5, before proceeding to conclusions in Section 6.