Contract farming as a last-resort option to finance rice cultivation in Senegal

Guillaume Soullier and Paule Moustier ()
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Guillaume Soullier: UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - CNRS - Centre National de la Recherche Scientifique - UM - Université de Montpellier, Cirad-ES - Département Environnements et Sociétés - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement
Paule Moustier: Cirad-ES - Département Environnements et Sociétés - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement, UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement

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Abstract: We investigate the role of contracts in farmers' access to credit over time using the conceptual framework of livelihoods and the economics of rural organisations. We applied multi-component analysis to a dataset of 594 rice farms in the Senegal river valley, analysed changes in 72 producer organisations' funding strategies over time, and conducted 85 semi-directed interviews. Results show that individual farmers' participation in contract farming varies over time, mainly depending on the availability of their financing capital. While bank creditworthy farmers use tripartite marketing contracts to remain in the formal segment of the credit market, indebted farmers use production contracts as a last-resort credit option before they are excluded from the credit market. We discuss the positive contributions contracts make to farmers' livelihoods as they correct failures on the credit market, but they can also trap farmers in less economically profitable relationships.

Keywords: Contract farming; Livelihoods; Rice; Transaction costs; Finance; Africa (search for similar items in EconPapers)
Date: 2022
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Published in The Journal of Development Studies, 2022, 58 (5), pp.1014-1031. ⟨10.1080/00220388.2021.2013466⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03507943

DOI: 10.1080/00220388.2021.2013466

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