Market Structure, Outgrower contracs and Farm Output. Evidence from Cotton Reforms in Zambia

Irene Brambilla and Guido Porto

No 11804, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates the dynamic impacts of cotton marketing reforms on farm output in rural Zambia. Following liberalization and the elimination of the Zambian cotton marketing board, the sector developed an outgrower scheme whereby cotton firms provided credit, access to inputs and output markets, and technical assistance to the farmers. There are two distinctive phases of the reforms: a failure of the outgrower contracts, due to farmers' debt renegation, firm hold up, and lack of coordination among firms and farms, and a subsequent period of success of the scheme, due to enhanced contract enforcement and commitment. We find interesting dynamics in the sector. During the phase of failure, farmers were pushed back into subsistence and cotton yields per hectare declined. With the improvement of the outgrower scheme, farmers devoted larger shares of land to cash crops, and farm output significantly increased.

JEL-codes: O12 O13 Q12 (search for similar items in EconPapers)
Date: 2005-11
New Economics Papers: this item is included in nep-afr, nep-agr, nep-dev, nep-eff and nep-mkt
Note: AP
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Citations: View citations in EconPapers (17)

Published as Irene Brambilla & Guido G. Porto, 2011. "Market structure, outgrower contracts, and farm output. Evidence from cotton reforms in Zambia," Oxford Economic Papers, Oxford University Press, vol. 63(4), pages 740-766, December.

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