SGAG-Preis / Prix SSGA
Manuela Stiffler: The Impact of Contract Farming on the Livelihoods
of Smallholders. A case study of small-scale cotton producers in the
Duthumi area of Morogoro Rural District, Tanzania.
(Zusammenfassung der Masterarbeit, Universität Zürich)
In developing countries, smallholders frequently face difficulties accessing profitable and sustainable markets for their products. In order to facilitate market development in these countries, contract farming has been applied as a development tool of the agricultural sector since the 1960s. However, the application of contract farming is controversial. On the one hand, contract farming schemes are seen as systems having the potential to integrate small-scale farmers into export and processing markets. On the other hand, this system is criticised for being another form of exploitation of smallholders.
In this Master’s thesis, the case of a specific contract-farming project in Tanzania is analysed. The study aims at establishing the impact of contract farming on the livelihoods of small-scale cotton producers, by identifying changes in their livelihoods since the introduction of contract farming in the study area. Furthermore, the focus lies on the importance of cotton production for the rural households studied. In addition, the household expenditure pattern is identified in order to see how income is used to build livelihood assets. Finally, the critical aspects, which have contributed or hindered the improvement in the livelihoods of the rural households studied, are examined.
This figure shows the possible impact of contract farming on livelihood assets.
In order to collect information on the impact of contract farming on the livelihoods of smallholders a mixture of quantitative and qualitative research methods were used. The core method was a household survey (Phase I Survey) based on a Baseline Survey that was done before the implementation of the contract-farming project in the area. Change is established by comparing the Baseline Survey and the Phase I Survey. Additionally, expert interviews and complementary methods, i.e. participatory observation, informal conversation and the analysis of project documents were applied.
The findings show that there has been little change in the livelihoods of the rural households studied since the implementation of the contract-farming project. However, the impact of contract farming on the livelihoods of smallholders is difficult to measure due to other decisive factors that produce changes in the livelihoods of farmers. Nonetheless, the study provides evidence that contract farming has produced some positive changes. The most important change is the increased average income of the studied rural households, whereby cotton, the contracted crop, emerged as an important income earner. Additionally, there is some evidence of increased mechanisation due to contract farming. However, the access to physical assets remained low. Regarding human assets, there has been a worsening over time due to increasing financial difficulties. This has occurred despite the increased average household income.
This figure shows the household expenditure pattern by livelihood assets.
Cotton production has been identified as playing a major role for rural households due to its high-income generation. The study shows that smallholders earn much more per acre by planting cotton than by cultivating other crops. In addition, cotton has other advantages compared to other crops, e.g. the whole produce can be sold at once. Finally, the households studied assign much importance to cotton due to their long positive experience with the production of this cash crop in the past.
In reference to the household expenditure pattern, the study shows that the rural households concerned spend their money largely on human and physical assets. In the six months preceding the Phase I Survey, the largest amount of household income was spent on education, followed by phone bills. Income earned from cotton production is predominantly spent on housing and education. Thus, the investment of money in education appears to be crucial for the rural households studied.
Concerning critical aspects, which have contributed or hindered the improvement in the livelihoods of the studied rural households, it is clear that a sustainable functioning partnership between the contracting company and contract farmers is critical for improving the livelihoods of the contract farmers. This outlines that the fulfilment of promises by the contracting company and knowledge transfer between the contracting company and small-scale farmers have been identified as crucial factors in producing positive change in smallholders’ livelihoods. Furthermore, it is suggested that a lack of communication and transparency has caused distrust between the contracting parties which hinders the improvement in the livelihoods of the contract farmers. Therefore, communication and transparency are critical for a sustainable functioning partnership between the contracting company and smallholders.
