Development Studies Archives

Contract farming is everywhere, but how does it affect agrarian relations in the Global South?

By Caroline Hambloch, Mark Vicol and Helena Pérez Niño 19 May 2023

Contemporary debates in agrarian studies have been predominantly focused on land and property issues, at times to the detriment of questions about production and exchange. The large and expanding footprint of contract farming is one example of a relatively neglected – yet significant – dimension of contemporary agricultural systems in the Global South. Farming contracts are one of many forms of coordinating production and exchange that seek to avoid the uncertainty for producers and buyers of finding each other more spontaneously in open markets. Contract farming involves a non-transferable agreement between farmers and buyers that specifies the terms of production and marketing, typically relating to the price, quantity, quality and delivery of the product.

Decades of research and case studies suggest that contract farming is widespread in local, domestic and export-oriented agricultural commodity markets, both linked to large multinational corporate buyers, as well as within the informal networks of small-scale traders. Research on contract farming in the Global South consistently attributes this expansion to two intertwined effects: one is the liberalization of agriculture due to structural adjustments that stripped states from their coordinating roles in production. The other is the active promotion of contract farming by multilateral development agencies, who proposed it as a win-win alternative after the demise of state-led coordination.

International organizations, governments and agribusinesses have promoted contract farming as key tool to integrate smallholders into markets and modernize agricultural sectors. Contract farming is hailed as a source of jobs, income and stable markets for smallholders, and for providing a stable supply base and profits to agribusiness. However, whether contract farming actually does lead to win-win outcomes remains highly contested. Political economy studies reveal that unequal power relationships are inherent to contract farming arrangements, demonstrating that (i) buyers tend to benefit more than smallholders, (ii) not all producers benefit equally (small producers are highly differentiated and many hire labor), and (iii) many smallholders actually lose out from these schemes as they bear the brunt of production risks and enter vicious cycles of indebtedness. As a result, we often see a mosaic of winners and losers.

Contract farming, an avenue for rural development?

Since the 1990s, international organizations such as the FAO and the World Bank have been promoting contract farming as a tool for inclusive growth in rural areas. Responding to criticisms that these arrangements tend to disproportionately benefit buyers and may expose small producers to indebtedness and impoverishment, international organizations have put their weight behind the promotion of “fair contracts” and better governance and transparency in contractual arrangements. However, political economy studies still question this rebranding of contract farming as an inclusive business model by showing how “fair contracts” focus solely on the unequal power relations between small producers and agribusinesses, while missing the range of inequalities that exist among and between farmers, agricultural workers, unpaid household labor and those who provide ancillary services to small-scale producers. Moreover, many contract farming schemes rely on monopsony power, often leaving producers unable to renegotiate or withdraw from contracts, let alone benefit from price spikes. The monopsony position of the contracting firm refers to a situation where it is the only buyer of the crops produced by the contract farmers. This gives the contracting company exclusive access to the crops of the contract farmers.

Supermarkets, food multinationals and small traders: the new cast of actors in contract farming

With the ongoing restructuring of the global food system, contract farming and a cast of new actors have come to the fore. On the one hand, corporate buyers are expanding their customer base and sourcing geographies. For these actors, contract farming arrangements are a way to ensure standardized and steady supply of agricultural commodities in globalized markets. Most notably, supermarkets make use of contract farming arrangements to supply high quality and standardized vegetables and fruits to consumers around the world. Even though smallholders who are able to comply with the standards set by supermarkets tend to benefit from supermarket contracts, poorer farming households tend to benefit less and may even be excluded from such arrangements altogether.

On the other hand, specialist traders and local procurers increasingly use contract farming (both formally and informally, i.e. with and without written contracts) to source directly from smallholders or act on commission as intermediaries between smallholders and agribusinesses. In the absence of government support, these intermediaries may take on a seemingly developmental role by offering informal extension services, providing road infrastructure and loading necessary materials and machineries to smallholders.

Agency and resistance

Despite the uneven contribution of contract farming to rural development and productive upgrading for small scale producers and agricultural sectors of the Global South, political economy studies highlight that smallholders are not passive victims of corporate buyers and merchants (whether large or small), but often resist and challenge the contract farming relation. This may take the form of overt resistance through protests and strikes, but also of informal and often hidden strategies that take the form of everyday struggles. For example, oil palm contract farmers in the Philippines have reacted to a lopsided contract, unsustainable levels of indebtedness, and the risk of losing their land by side-selling their produce to other agribusinesses, refusing to harvest, or burning oil palm trees. Tobacco contract farmers in Zimbabwe have responded by switching to other crops or diversifying their sources of finance. However, both cases show that contract farmers’ agency and resistance is limited by available resources and alternatives.

Towards a new research agenda

Over the past three decades, political economy studies have contributed to a much better understanding of the differentiated impact of contract farming in the Global South. Yet, important questions remain. For example about the interface of contract farming and changes in land tenure; the prevalence of unpaid household labor and the exploitation of hired labor among small-scale producers; contract farming as a form of extractivism (of the resources and labor contained in the commodity); and the ecological burden of the expansion and intensification of agriculture associated with contract farming. To move towards this new contract farming research agenda, we have founded the Contract Farming Initiative, a network that brings together a diverse group of critical contract farming scholars and activists. The initiative is geared to support cross-country analyses of contract farming schemes. As one of our first tasks, we are mapping contract farming arrangements in the Global South to get an overview of where contract farming scholarship is concentrated and where more research is needed. We warmly invite other scholars to contribute to this project.

As part of our activities this year, we will host a panel at the EADI CEsA General Conference 2023 to bring together scholars from different geographies and critical perspectives to discuss contract farming’s potential for rural development by focusing on dynamics of financialization, resistance from smallholders, social differentiation as both a cause and outcome, and labor exploitation dynamics.

This article was first published on EADI’s blog, Debating Development Research.

Opinions expressed in Bliss posts reflect solely the views of the author of the post in question.

About the authors:

Caroline Hambloch (Humboldt-Universität zu Berlin), Mark Vicol (Assistant Professor, Rural Sociology Group, Wageningen University) and Helena Pérez Niño (Assistant Professor, International Institute of Social Studies, The Hague) are co-editors of the recent special issue in the Journal of Agrarian Change The Political Economy of Contract Farming: Emerging Insights and Changing Dynamics (January, 2022), and co-founders of the Contract Farming Initiative research network.

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EADI/ISS Series | Empowering African Universities to have an impact by Liisa Laakso

By Admin 6 February 202016 May 2020

Discussions on the impact of higher education and research have increased, together with the rise of strategic thinking in the management of universities during the last decade. Governments, taxpayers and private funders want to know which benefits they get from universities. Academic Institutions, in turn, want to prove how their work is beneficial to society in multiple ways. This tells us much about the global management culture in public services – and about a new pressure against the academic authority and standing of universities.

For example, the government of Zimbabwe’s new plan for higher education, the so-called 5.0-University vision, stipulates that universities must also include innovation and industrialisation in their activities – in addition to their three academic tasks education, research and community service.

The stated purpose of this plan is to reconfigure the education system of the country to create jobs and economic growth along with the fourth revolution “to transform the country’s economy into an upper-middle income by the year 2030”. Simultaneously, however, political turmoil and rampant corruption have created an economic crisis that is dramatically weakening the previously good working conditions at the universities in terms of resources, infrastructure and salaries.

Zimbabwe might be an extreme case, but it is not alone. The rhetoric of the importance of industry and ‘value for money’ invested in universities and the simultaneous cuts in their public funding resonates both with the technocratic and populistic views of higher education, if not reactionary voices against educated elites all over the world.

What does this rhetoric mean for the production of scientific knowledge in different disciplinary fields and in governance and development studies in particular? For medical sciences or engineering, identifying and measuring their impact and relevance can be quite straightforward. But for sciences focusing on policies and their critiques, such a task is complex, as their impacts are diverse, often indirect, slow and long-term.

Making disciplinary knowledge on governance and development relevant again

Research-based disciplinary knowledge on governance and development is not directly connected to innovation or industrialisation, but it has very much to do with the legitimacy and functioning of the social, political and economic organisations and structures that enable them. In a context of political transitions or struggles for democratisation happening in large parts of the Global South, one could assume that such a role is very important. But how to show that? Judgments about the importance of particular degree programs and research fields are also judgments about the marginalization of others. It is easy to give concrete examples of the usefulness of administrative studies, but not of political theory. The whole exercise relates to very fundamental values and epistemological premises of university disciplines.

Much of this epistemological discussion has centered on the necessity of state-led development or on decolonisation. The first one formed an important part of the expansion of higher education after the independence of African states and again in late 1970s and 1980s with the heyday of the dependency school. It resulted in the establishment of institutes or university departments of development studies, often with a political economy or an explicitly stated socialist orientation. One of the forerunners was the University of Dar es Salaam. In Zimbabwe, the Institute of Development studies ZIDS was first established under the government and later integrated into the University of Zimbabwe. But ZIDS does not exist anymore. In order to respond to today’s demands of the government, the profile of development studies apparently is no longer as relevant for the university as it used to be.

Do University curricula respond to the societal needs in the Global South?

Calls for decolonisation in the aftermath of ‘Rhodes Must Fall’ and ‘Fees Must Fall” student uprisings at the University of Cape Town have drawn attention to the fact that a decades-long evolution of higher education in the independent South has not abolished global asymmetries in knowledge production. Western traditions and theorizing still dominate much of the academic literature, including that on governance and development. Thus the concern that imported content of university curricula or models of analysis do not grasp the real problems of societies in the Global South. One example of how to respond to it, again from the University of Zimbabwe, is to bring a module of local inheritance into all degree programs.

New demands and pressures provide unique constraints but also unique opportunities for universities and scholars to develop university teaching and research. Research funders and development cooperation agencies should react to this looming backlash for development studies in social sciences in the South. It requires close interaction with public authorities from the local level to intergovernmental organizations, private stakeholders and academic associations. What is certain is that there are plenty of issues that can be clarified by development knowledge: the widening inequalities, international corruption, discontent amongst marginalized groups, simultaneous political apathy and new modes of radical mobilization by social media. This alone should be enough to justify the role of universities in these fields.

This article is part of a series launched by the EADI (European Association of Development Research and Training Institutes) and the ISS in preparation for the 2020 EADI/ISS General Conference “Solidarity, Peace and Social Justice”. It was also published on the EADI blog.

About the author:

Liisa Laakso is a senior researcher at the Nordic Africa Institute in Uppsala, Sweden. She is an expert on world politics and international development cooperation. Her research interests include political science, African studies, democratisation of Africa, world politics, crisis management, foreign policy, EU-Africa policy and the global role of the European Union.

Together with Godon Crawford from Coventry University, UK, she will be convening the panel ”Production and use of knowledge on governance and development: its role and contribution to struggles for peace, equality and social justice” at the 2020 EADI/ISS Conference.

Image Credit: Tony Carr on Flickr.

How do we decide what we research? by Terry Cannon

By Admin 11 October 201718 May 2020

About the author:
Terry Cannon is Research Fellow in Rural Futures, Institute of Development Studies at University of Sussex, UK.

This blog is based on the Development Research Seminar presentation by Terry Cannon, held on 10 October 2017 at the International Institute of Social Studies, during the 65^th anniversary week of the Institute.

As ISS celebrates its 65^th anniversary, I want to share some concerns about what we in development studies institutions are facing. Most of us might assume that we are ‘free’ to research what we want. ISS and similar institutions like my own at IDS work in what is loosely defined as development studies, and choose to research what we believe will support understanding of the issues involved. My concern is that we are increasingly deluded about our ability to make independent and self-determined choices.

Was there was once a golden age in which there was a complete lack of constraint in what we could research? No – the problem is rather a narrowing of scope, determined by changes that have happened in the last three decades in funding arrangements and institutional demands (for example the UK “Research Excellence Framework”), contractual pressures (e.g. for minimum publication outputs and external funding), and the emergence of what has been called the ‘neoliberal university’. These changes have been incremental, and have the appearance of rationality. But they are dangerous, and cumulatively they form a punitive framework in which staff are fearful for their place, their progression and survival within the system. It is also impossible for many younger colleagues to imagine that the world was ever different, or that a change to this system is even possible. Those who recognise some of the problems are forced – by the threats inherent in the system – to adopt a state of passive acceptance.

Bangladsh (140).JPG — Source: The author

When I mention the label neoliberalism, I am very aware that it is possibly misunderstood or seen as a knee-jerk, unspecific buzz word. I have little space to be more specific here, but will approximate it as an ideology that claims to be supporting free markets for the benefit of all, and yet fosters a situation in which wealth is transferred from the majority to the minority, while corporations increase their monopoly behaviour in very anti-market ways. Universities increasingly behave as corporations, competing for ‘customers’ and pushing down wages and conditions of their workforce (53% of UK academics are on casual contracts[i]), with cleaners and catering staff from outsourced companies at the ‘bottom’ of the pile on oppressive contracts and minimum wages. Meanwhile, in the UK the average salary of Vice-Chancellors (the “CEO” title of most university directors) is £274,000 a year.[ii] Universities have shifted from being institutions that support the social goals of the wider society into businesses that promote themselves. They are no longer capable of providing the role model for how society might be improved for the benefit of the majority, through ideas of equity, fairness and commentary on the excesses of governments.

What does this mean for development studies? My greatest fear is that the framework of institutional corporatism and funding models has undermined our ability to ask questions about what causes a problem. Poverty, hunger, vulnerability (to hazards or climate change) are not just ‘characteristics’ of different groups of people. But this is how they are increasingly portrayed, as with ‘lifting people out of poverty’, or ‘building resilience’. The SDGs (Sustainable Development Goals) say nothing about what is causing problems of poverty, ill-health, hunger, poor water and sanitation and so on. But these problems are largely the result of processes of exploitation and oppression that must be understood and explained. In earlier times, that is exactly what development studies was doing.[iii]

Increasingly it is difficult to seek explanations for these problems: it is more awkward, and we cannot make ‘free’ choices to research them. Development studies institutions are now almost completely reliant on funding from governments and development banks. These institutions are often beneficiaries of the processes that are causing the problems, and have little desire to investigate their origins. The issues that we are ‘allowed’ to research often come ready-framed in ways that disguise the causes of the problems they supposedly address. NGOs are also sucked into this framework to ensure their funding pipeline is healthy, and have much less motivation than in the past to assess the power relationships that are involved in causing problems. This is very relevant for us in development studies, because we work a lot with international and local NGOs.

And a great deal of previous research is also largely ignored, because it is ‘awkward’: class analysis (which is a primary basis for understanding poverty and inequality) that was a significant source of explanation in the past (for example in relation to land tenure in much of Asia and Latin America) hardly gets a mention. Structural problems faced by women and girls are now dealt with through ‘female empowerment’. Donor conditionality on ‘gender’ expects development organizations to change oppressive male behaviour entrenched for centuries through projects that last just a few years. Vulnerability is addressed not by understanding what leads people to suffer from a natural hazard or climate change (processes related to class, gender, ethnicity, age and belief systems), but by focusing on technical fixes and not challenging the status quo.

In my work in Bangladesh, staff involved in adaptation or disaster risk reduction projects rarely discuss land tenure and landlessness as a cause of vulnerability. The donors and NGOs know that they cannot deal with the root causes and so engage in a game of mutual patronage to fulfil each short-term projects and then move on to the next (IFRC 2014 p.203). While these two related issues are more in the realm of NGO and DRR institutions, my argument is that development studies falls into similar traps. We are in danger of ignoring the processes within power systems that are the causes of many of the problems. When we are coerced and motivated to engage in research that comes with ready-made framings that discourage or make it difficult to identify what is causing a problem, do we become part of the problem rather than making arguments for what would be a proper solution?

[i] https://www.theguardian.com/uk-news/2016/nov/16/universities-accused-of-importing-sports-direct-model-for-lecturers-pay

[ii] https://www.theguardian.com/education/2017/feb/23/university-vice-chancellors-average-pay-now-exceeds-275000

[iii] See my blog on the myth of community: http://vulnerabilityandpoverty.blogspot.nl/2014/04/why-do-we-pretend-there-is-community.html

Tag Archives Development Studies

This blog is based on the Development Research Seminar presentation by Terry Cannon, held on 10 October 2017 at the International Institute of Social Studies, during the 65th anniversary week of the Institute.

This blog is based on the Development Research Seminar presentation by Terry Cannon, held on 10 October 2017 at the International Institute of Social Studies, during the 65^th anniversary week of the Institute.