Smallholder participation in modern agri-food chains Economic organization and impact in Sub-Saharan Africa
Linking smallholders in developing countries to modern food chains is considered important for reducing rural poverty and food insecurity. In sub-Saharan Africa, contract farming arrangements involving high-value export cash crops have been the traditional pathway for smallholder participation in modern food chains. In recent decades, however, domestic food chains in the sub-region are also modernizing. This dissertation analyzes the drivers and effects of smallholder participation in these domestic modern food chains in two sub-Saharan countries. Using case studies in the wheat and tomato sectors in Zimbabwe, the dissertation shows that contract farming arrangements can be differentiated by transaction cost characteristics and the intensity of vertical coordination. In the Malawian context, the dissertation shows that a soybean buyer concurrently sources through multiple contract farming arrangements due to ambiguity of transactions, but the persistence of plural governance is explained by the buyer’s strategic behaviour. Finally, the dissertation shows that soybean contract farming through producer organizations did not have statistically significant impact on smallholder economic outcomes or satisfaction with production and marketing arrangements. Among other reasons, this is attributed to plural governance by the contractor and low margins in the soybean chain.