Smallholder farmers’ dissatisfaction with contract schemes in spite of economic benefits: Issues of mistrust and lack of transparency

Anette Ruml and Matin Qaim

No 301006, GlobalFood Discussion Papers from Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development

Abstract: Contract farming is typically seen as a useful mechanism to help smallholders. However, despite economic benefits, high dropout rates from contract schemes are commonplace. We use data from Ghana to show that smallholders benefit from a resource-providing contract in terms of higher yields and profits, but most of them still regret their decision to participate and would prefer to exit if they could. The main problem is insufficient information from the company. Farmers do not understand all contract details, which leads to mistrust. We argue that lack of transparency may explain high dropout rates in Ghana and other situations too.

Keywords: Agribusiness; Agricultural and Food Policy; Community/Rural/Urban Development; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 21
Date: 2020-01
New Economics Papers: this item is included in nep-agr and nep-cta
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:gagfdp:301006

DOI: 10.22004/ag.econ.301006

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