Do land ownership and contract farming matter? Evidence from a large-scale investment in Ghana

Susanne Johanna Väth and Michael Kirk

No 161460, 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia from African Association of Agricultural Economists (AAAE)

Abstract: With the rising demand for agricultural land it becomes incrementally important to design land deals as a win-win for investors and the local population. Accordingly, our in-depth analysis focuses on two aspects: (i) the effects of inclusive business models, and (ii) the importance of secure land use rights for farmers adjacent to large-scale, land-based investment. We analyse empirically the case of an oil palm investment in the Eastern Region of Ghana in 2010 comparing contracted outgrowers and independent oil palm farmers. Although we argue that the contractual treatment was allocated as in a quasi-natural experiment, we introduce an instrumental variable (IV) to remove possible doubts. Thus, we exploit the fact that highly affected outgrowers rather tend to position themselves, whereas less affected independent farmers respond rather in a rather neutral manner to a retrospective question on their satisfaction with the investment’s establishment. To avoid correlations with the error term, we suggest the absolute value of the deviation from a neutral response as instrument. We find that contract farming has a significantly negative effect on short-term measurements like agricultural household income and plot profit per acre, while its effect on long-term measurements like asset endowment and perceived future security is significantly positive. Analyses reveal moreover, that complete property rights, as well as solely the right to use the land as collateral, have a significantly positive effect on both short-term and long-term measurements.

Keywords: Agribusiness; Land Economics/Use (search for similar items in EconPapers)
Pages: 25
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/161460/files/S ... 20MICHAEL%20KIRK.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaae13:161460

DOI: 10.22004/ag.econ.161460

Access Statistics for this paper

More papers in 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia from African Association of Agricultural Economists (AAAE) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().