Major Agricultural Investments and Inclusion of Small Producers: Lessons From Experiences in 7 Southern Countries

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Land Tenure Working Paper 23
MAJOR AGRICULTURAL INVESTMENTS

AND INCLUSION OF SMALL PRODUCERS:
LESSONS FROM EXPERIENCES IN 7 SOUTHERN COUNTRIES
Study coordinated by
Perrine Burnod (CIRAD)
and Jean-Philippe Colin (IRD)
December 2012
MAJOR AGRICULTURAL INVESTMENTS

AND INCLUSION OF SMALL PRODUCERS:
LESSONS FROM EXPERIENCES IN 7 SOUTHERN COUNTRIES
Coordinated study and summary written by Perrine Burnod (CIRAD)

and Jean-Philippe Colin (IRD)
Case study authors:
Ward Anseeuw (CIRAD)

Emmanuelle Cheyns (CIRAD)
Johanna Clerc
Jean-Philippe Colin (IRD)
Guy Faure (CIRAD)
Sandrine Freguin-Gresh (CIRAD)
Francois Ruf (CIRAD)
Isabelle Vagneron (CIRAD)
Gaspard Vognan (INERA)
December 2012
This report has been produced under contract with the Food and Agriculture
Organization of the United Nations (FAO). The opinions expressed are those of the
authors, and do not represent the views of FAO.
Large agricultural investments and inclusion of small producers
Thanks
This work was funded by the FAO (Food and Agriculture Organization of the United Nations). The authors would
like to particularly thank the following people for their contributions throughout this study and/or on earlier versions
of this document: Paul Mathieu, Pascal Liu, Garry Smith, Clara Park, Nora Ourabah Haddad, Guy Evers, Sylvaine
Lemeilleur , Pierre-Marie Bosc and Estelle Bienabe.
To quote the document:
Burnod, P. and Colin, J.-Ph. (coord.) with contributions from Ruf, F., Freguin-Gresh, S., Clerc, J., Faure, G.,
Anseeuw, W., Cheyns, E., Vagneron, I., Vognan, G. 2012 Major agricultural investments and inclusion of small
producers: lessons from experience in 7 southern countries. Land Tenure Working Paper 23. Rome/ Montpellier:
FAO-CIRAD.
Cover photo: Lindsay, P. - CAMEROON - Drawing of the cotton harvest by women - © Cirad
yl
Acronyms
CIRAD: International Cooperation Center for Agricultural Research and Development
CFA: African Financial Community
FAO: Food and Agriculture Organization of the United Nations
INERA: Institute of Environment and Agricultural Research (Burkina Faso)
WRITE : Research Institute for Development
GOPDC : Ghana Oil Palm Development
GMOs: Genetically modified organism
BEE : non-governmental organization
SALCI : Ivory Coast Pineapple Society
SAPH : African Rubber Plantation Company
SODEFEL : Society for the Development of Fruits and Vegetables
WUFA : Winterveld United Farmers Association
iii
iv
Summary
Thanks ................................................. .................................................. .....................II
Acronyms................................................. .................................................. ............................III
Executive summary................................................ .................................................. ...................... 1
Executive summary ................................................................................................................ 13
1. Introduction ........................................................................................................................ 23
1.1. Objectives of the study ................................................ .................................................. ........ 23
1.2. Questions...................................................................................................................... 24
1.3. Cases studied................................................ .................................................. .................. 24
1.4. Limitations of the study .............................................. .................................................. ........... 25
2. Characterization of the cases ...................................... .................................................. ....... 27
2.1. Brief description of the studies ................................................ ............................................... 27
2.2. Characterization of organizational configurations .................................................. ... 31
2.3. Characterization of contractual configurations ................................................ .......... 35
2.4. Characterization of contractual relationships ...................................................... ....................... 39
2.5. The logic behind the use of contract farming by companies............................... 42
2.6. What do the cases selected for this study teach us? ............................................... 43
3. The effects of contractual schemes ........................................... .................................. 45
3.1. The effects on the trajectories of farms and their access to markets .............. 45
3.2. Effects on production systems ........................................................... ............................ 54
3.3. Governance of the sector .................................................. .................................................. 61
4. The main lessons ....................................................... .............................................. 65
4.1. Adoption and dissemination of contracts and, more broadly, of culture ............................ 65
4.2. Exclusion or inclusion of small-scale producers ............................................. .................. 67
4.3. Improving producers' incomes and investment capacities .............. 71
v
4.4. Land management and equitable access to land ................................................. ..................... 72
4.5. Competition between food crops and new crops under contract............... 74
4.6. Innovation..................................................................................................................... 74
4.7. Governance of the sector .................................................. ................................................ 74
4.8. Consideration of the long term .................................................. ..................................... 75
5. Avenues for sustainable and more equitable contract farming: contributions of the cases with regard
to current recommendations on inclusive practices .................... 76
5.1. The role of the state ............................................ .................................................. .............. 76
5.4. The role of development agencies and research and support support structures (private or public
companies, non-governmental
organizations).............................. .................................................. ........................................ 82
5.5. Challenges................................................ .................................................. ........................ 83
Bibliographical references ................................................ ................................................. 84
Annexes .................................................................................................................................. 87
Annex 1 ................................................ .................................................. ........................... 87
Annex 2 Indonesia – Oil palm ...................................................... ................................... 92
Annex 3 Burkina-Cotton ............................................ .................................................. 95
Appendix 4: South Africa – Citrus and Sugarcane in the study .................................. .99
Appendix 5: Laos ............................................... .................................................. ................ 104
we
Executive summary
The recent scale of the phenomenon of large-scale land appropriations in the countries of the South has revived
debates on food security, land governance and development models for the agricultural sector. Several
international institutions, recognizing the need for private investment in the agricultural sector, insist on
the importance of promoting organizational models (business models) allowing both to maximize the
opportunities offered to rural populations and to minimize the potential risks associated with large-scale
agricultural plantations (Cotula et al., 2009; Von Braun et Meinzen-Dick, 2009; Görgen et al., 2009; World Bank,
2010). Renewed attention is thus paid to production schemes involving local farmers as producers (contract
farming) or shareholders (joint venture)
(Vermeulen et Cotula, 2010).
Contract farming can allow companies to access agricultural production without having to develop their own
plantations or by reducing their land holdings. Respecting a priori the land rights of local producers, it can also
offer them new opportunities in terms of developing new crops and access to markets (credit, inputs, advice).
In order to verify the existence of effectively positive synergies between private companies and rural households
and to promote them, an analysis of past and current experiences in terms of contract farming seems essential.
This forms the core of this document.
The study aims to:
• qualify the effects of certain contractual schemes,

• characterize the factors that limit or promote these different impacts,
• identify ways to promote the emergence of positive synergies.
Its originality is to be part of a long-term analysis (10 to 50 years) and to focus on developments relating to
agricultural holdings, production systems, methods of access to land, labor markets, inputs and products, as
well as the governance of the sectors. The study also analyses, for certain cases, developments outside crop
contracts initially introduced through a contractual scheme.
The study covers seven countries - Côte d'Ivoire, Ghana, Burkina Faso, Kenya, South Africa,
Laos and Indonesia - and focuses on the case of a few major production sectors (oil palm, rubber, fruit and
vegetables, cereals, cotton, sugar cane). It is organized into 4 parts presenting respectively: i) the contractual
schemes studied, ii) the effects of these schemes, iii) the factors which affect the nature and intensity of these
effects and iv) the ways to promote positive synergies. .
The contractual schemes studied differ according to the types of company and producers involved, the
production concerned, the characteristics of the product market, the role of the State and, of course, the
contracts entered into between the company and the
1
farmers. Six main types of contracts are identified through these cases. While all contracts
include clauses relating to the purchase of the harvest, they differ according to: the
existence of specifications, the provision of products and services (inputs, credits and
technical advice), the degree of supervision of the work and the number of tasks carried
out by the company.
Why do companies choose to set up contractual schemes?
The establishment of contractual schemes is primarily the result of the political will of the
State to promote the agricultural sector and rural development1 . This implementation
almost systematically benefited from financing from the State and/or foreign donors.
Companies generally argue this use of contract farming as a means of:
•
develop a production hitherto absent in peasant production systems, in order to
diversify their supplies and make the best use of their processing capacities (canned
pineapple, rubber and selected palm in Côte d'Ivoire), reduce the costs of supply
•
thanks to savings on the costs associated with labor (cotton in Burkina Faso, oil palm
in Ghana, canned pineapple in Côte d'Ivoire, vegetables in Kenya), overcoming a
constraint of access to land in the most cultivated regions (oil palm and rubber in
•
Côte d'Ivoire) or subject to agrarian reform (sugar cane in South Africa), or to
compensate local populations in exchange for the expropriation of part of their land
(oil palm in Indonesia). The companies concerned thus opt for contractual schemes
because they cannot extend their
land take;
• more recently, promoting more inclusive and equitable production methods (vegetables
in Kenya) and, for certain companies, improving their socio-political image (fruits and
sugar cane in South Africa).
The effects
Contracts for all?
The effects of contractual schemes in terms of excluding or including the least factor-
endowed farms vary greatly. It appears depending on the case:
• a dynamic of majority inclusion of small farms (examples of schemes in the fruit and
vegetable sectors in South Africa, Kenya and Côte d'Ivoire);
Oil palm in Côte d'Ivoire, Ghana and Indonesia; rubber in Côte d'Ivoire; cotton in Burkina Faso,
sugar cane in South Africa.
2
• an initial dynamic centered on small or medium-sized farms, which involves

subsequently also large farms developed by executives from the urban environment (oil palm
and rubber in Côte d'Ivoire);
• a dynamic initially including a wide diversity of producers but subsequently excluding the smallest,
unable to meet the economic requirements of production and the contract (oil palm in
Indonesia).
Nevertheless, the analysis gains by going beyond the sole framework of the contractual scheme.
In several cases, a phenomenon of the inclusion of farms and, in particular, small farms, can also
result from the subsequent dissemination and outside contracts of cultivation initiated in a
contractual framework (pineapple, palm, rubber in Côte d'Ivoire, palm tree in Ghana).
Moreover, while the participation of migrants in the development of a new culture is frequent in
certain cases analyzed (Côte d'Ivoire, Indonesia), that of women and young people (under 35) is
rarer.
Improved income?
The increase in producers' incomes is observed but far from being systematic. It can also be only
temporary or only benefit the wealthiest producers (oil palm in Indonesia).
The production, developed or not within a contractual framework, can ensure a regular income
throughout the year (oil palm, rubber; certain fruit and vegetable production) or constitute a source
of income by way of retirement. (arboriculture in South Africa, rubber cultivation in Côte d'Ivoire).
Alternatively, for cotton or pineapple, the producers evoke the interest of receiving a substantial
sum in one go, allowing investments.
Access to credit, through the provision of inputs (cuttings, fertiliser, etc.), or even a turnkey
plantation, is a point common to the majority of the contractual schemes studied. In some cases,
the amount of credit or its cost constitute a source of indebtedness for the most fragile producers
(oil palm in Indonesia). In other cases, access to credit is a factor in improving income (vegetables
in Kenya) and the investment capacity of farms (mechanization for cotton in Burkina Faso).
What effects on the rural labor market?
The effects of the establishment of agro-industry and contracting, little documented on the
management of work within the family, appear clearly on the local labor market. The job offer
increases to meet the needs of the company (for the plantation and its processing unit), and those
of the operators under contract. These jobs do not benefit exclusively, or even are hardly seized,
by the local populations. They are often occupied by migrants who have come specially to occupy
them (oil palm in
3
Indonesia) or already involved in the rural labor market (palm and rubber in Côte d'Ivoire).
Wage rates are those of the local labor market and jobs generally benefit less well-off
households. But the working and remuneration conditions – particularly in agro-industries –
may not comply with the legislation in force in the countries (examples in particular in
Indonesia, Laos and South Africa).
What effects on land rights and markets?
Contractualization schemes represent a major alternative to the establishment of large-scale

farms, insofar as local occupants and landowners retain their access to land. Nevertheless,
the development of agro-industries linking production under contract and own production may
have involved expropriations in the past (possibly on unexploited land, considered as land
reserves by local populations). In the best of cases, these populations have received
compensation in the form of the redistribution of a fraction of their heritage (Indonesia, Ghana,
Laos).
Moreover, the case studies show that contract farming sometimes contributes directly or
indirectly to the commodification of access to land (emergence or multiplication of rental and
sharecropping contracts as well as land sales, see examples in Ghana or in Ivory Coast). It
can then be practiced by migrants who hold user rights to the land through arrangements with
local owners. Contract farming can be the source of intra-family tensions, the establishment
of contracts and crops being likely to weaken the access to land of family dependents.
A harmful specialization of production systems

household food security?
In the cases studied, contract farming does not harm household food security. The
development of crops under contract generally takes place in a logic of diversification of
cropping systems and not of specialization. In several cases, farmers do not develop contract
farming as a substitute for food crops but plant it on land previously allocated to another cash
crop (Côte d'Ivoire, Ghana, South Africa) or forest land (Indonesia , Burkina Faso) - which
poses problems of access to woody resources and maintenance of biodiversity. Some even
manage, thanks to access to inputs, to improve the yields of their food production (cotton in
Burkina Faso). They can also, thanks to income from this crop, buy food on local markets
(Côte d'Ivoire).
4
Technical innovations?
In the case studies, the contractual schemes have effectively enabled producers to master
new crops and new agricultural practices, largely based on the achievements of agronomic
research. The learning process can spread to the benefit of other cropping systems
(plowing in Burkina Faso and Côte d'Ivoire for food crops) and beyond producers under
contract (illustrations with pineapple, rubber and the oil palm in Côte d'Ivoire, the palm in
Ghana). This process has sometimes been facilitated by the peasants who have adapted
the practices recommended by the agro-industry in order to reduce the initial investment
cost (cropping in association, reduction in the quantities of fertilizers, absence of use of
budwood for rubber, etc.).
An intensification of production systems?
The cases selected actually show an intensification in terms of work (not

systematic), intermediate consumption (broad access to improved varieties,
fertilizers and phytosanitary products) and expertise. The only capital-based intensifications
correspond to the creation of perennial plantations from selected varieties
and, in a few rare cases, investment in mechanization equipment.
Dependence or leeway for producers?
Contracting eliminates the marketing risks for producers and ensures them, for certain
sectors, an outlet on international markets (fruit and vegetable sectors in South Africa
and Kenya). In most of the cases studied, a situation of monopsony, the absence of
transparency and information on prices, and sometimes the close relations between the
agro-industry and the government, strongly weaken the bargaining power of producers
(palm in Indonesia, palm and rubber in Côte d'Ivoire). Nevertheless, over time, the
installation of competing agro-industrial or artisanal enterprises can create other marketing
outlets for producers (Côte d'Ivoire, Ghana). Cases show, however, that this competition
weakens the contractual system: it can allow producers, not to better negotiate the terms
of contracts, but not to respect their commitment to agro-industry, by selling the production
to another company. and thus freeing itself from the constraint of repayment… It is the
question of the durability of the contractual mechanism that then arises.
Effects on the structuring of the agricultural world and the defense of

producers' interests?
In most of the cases studied, the creation of producer groups was the work of the State
or companies. These groupings, when they managed to maintain themselves, only had
cooperatives or associations in name (oil palm in Indonesia, pineapple in
5
canned and then exported to Côte d'Ivoire). They have rarely made it possible to defend the
interests of producers. Since the end of the 1990s, groups have been renewed thanks to the
initiative of NGOs or development agencies. Their objectives are to increase the bargaining
power of producers, to reduce transaction costs relating to
contracts and to improve the exchange of information between the parties (independent local
and national organizations in Indonesia, cooperatives and interprofession in the oil palm
sector in Côte d'Ivoire, National Union of Burkinabe Cotton Producers).
The main lessons

Adoption and dissemination of contracts and, more broadly, of culture
Long-term analyzes have underlined that contract farming first plays a role in innovation and
crop diversification, then in stimulating a new sector. Farmers are developing non-contract
cultivation, new buyers and transporters are positioning themselves on the market, industries
are setting up, thus generating the development of an entire sector (in Côte d'Ivoire, pineapple,
oil palm, rubber; in Ghana , oil palm tree).
The studies reveal some key factors that promote the adoption and dissemination of culture,
under or without contract:
•
the quality of the system put in place by the agro-industry: extension, the quality of
inputs and the production collection system, the regularity of payments,
•
the evolution, over time, of the net result for the producers,
•
the availability of land on the farm or at the local level, possibly via the interplay of the
land markets,
•
the possibility of extending the technical itineraries recommended by the agro-industry
also influences the non-contractual dissemination of culture,
•
exchanges of information and services between producers within or outside groups
aimed at facilitating the transfer of expertise and reducing production costs.
Exclusion or inclusion of small producers
A diachronic analysis made it possible to highlight the need to break down the phenomena of
selection, exclusion or inclusion of small producers.
A first selection can take place during the implementation phase of the contractual scheme.
Until the 1990s, national agricultural policies, clearly oriented by donors, determined the
profile of farms included in contractual schemes. These policies have thus affected a variety
of farms, including small structures, which in fact make up the vast majority of actors in the
rural sector. Since the
6
1990s, the role of the State remains an incentive but is less decisive. The initiation of contractual
schemes results from the desire of companies to delegate labor-intensive crops (horticultural
products in Kenya) or to guarantee a progressive image (South African companies).
A second selection of producers is likely to occur during the development of the contractual plan.
In the cases studied, the processes of exclusion of small producers from the contractual
organization seem to result more from movement out and in of certain farmers than from an
explicit company policy (in fact, most cases concern products that are not subject to quality
standards, and did not make it possible to study the role of these standards in the exclusion of
certain categories of producers). The exits from the contractual scheme seem to be linked to the
inability of the contractors to repay the loan taken out with the agro-industry (oil palm in
Indonesia). Other exits come from the disinterest of certain producers for the contractual system,
production being deemed insufficiently remunerative – which supposes the presence of an
alternative for the producers concerned. Entry is often made by city dwellers, retirees and/or
executives, attracted by the development of a remunerative agricultural activity (oil palm and
rubber in Côte d'Ivoire).
A third phenomenon corresponds to the spread of cultivation outside the contract, likely to benefit
different categories of farms, including small ones (palm and rubber in Côte d'Ivoire, palm in
Indonesia and Ghana).
Improved producers' incomes and investment capacities
In the case studies, improving the incomes of contracted producers depends on international
prices, the efficiency of the company and the type of contract and, more tenuously and recently,
on the ability of producers to negotiate these contractual terms. This concerns in particular: the
purchase price, depending on national and international prices and the respective policies of the
company and the State; the level of billing for the services provided by the company; and
production standards.
Land management and equitable access to land
The development of agro-industries and contractual schemes has a direct and indirect impact on
local land distribution. The key factors that modulate these effects are national policies relating
to investment promotion and land; the forms of production organization adopted (large plantations
or contractual schemes, including joint ventures) and the activity of the land markets. The case
studies highlight in particular that the indirect tenure market (sharecropping, rental) allows access
to land and contract to a wide variety of farmers (migrants included) without changing the
distribution of ownership. land, more particularly, of course, for non-perennial crops (but the
cases also testify to innovations relating to the possibility of establishing perennial plantations for
non-landowners). Conversely, the market for
7
buying and selling, to the benefit of relatively wealthy individuals (executives, shopkeepers, civil servants, elected
officials), is gradually changing land distribution, particularly in peri-urban areas (palm trees in Indonesia, Ghana and
Côte d'Ivoire; rubber in Côte d'Ivoire).
Innovation
The major innovation, promoted by the contractual scheme but sometimes developing outside of it, is the adoption
and dissemination of new crops and farming practices.
It is favored by: the achievements of research institutions and their support; supply of inputs, credits and technical
support provided by agro-industry and/or State agricultural structures; the informal circulation of information, and
above all, the gradual development of a new sector.
Sector governance
The shift from a simple contractual relationship between the agro-industry and the producers, which is not negotiated,
to representation of the latter on works councils and active participation in contract negotiations, seems to be the
result of: a national political will, a policy of transparency in agro-industry, the existence of effective producer groups,
and, in many cases, support from donors and/or NGOs for the establishment of discussion arenas.
Avenues for sustainable and fair contractual schemes

The role of the state
The State must promote the creation of an environment favorable to contract farming and, above all, "good practices"
in this area, through:
•
securing the land rights of local populations, producers under contract
and agro-industries – which does not necessarily mean by a certificate or a land title;
•
the implementation of systems avoiding unfair contracts and securing contractual commitments;
• support for the organization of producers and the creation of arenas for negotiation and
dispute resolution;
•
the dissemination of information on "good contractual practices" and on prices.
Role of producer organizations
Farmers' organizations can enable the establishment of more efficient contractual schemes by reducing the
transaction costs associated with coordinating dozens,
8
hundreds or thousands of peasants. Above all, they can make these schemes fairer by
improving the negotiation and lobbying capacities of producers. However, several
difficulties limit the activity of these organizations. On the one hand, the company can
refuse to deal with organizations to avoid this balance of power, so as not to have to deal
with problems internal to organizations, or to work with individuals for a better traceability
system. On the other hand, the functioning of organizations can be burdened by problems
of collective action, lead to the exclusion of certain categories of producers or be taken
over by elites. The actual activity and impact of producer organizations seems to have
improved since the 2000s thanks to:
•
the establishment of training and the provision of institutional and organizational
support, a structuring aimed at defending the interests of producers and not the
•
management of services relating to production and marketing, a structuring coupling
local representation and, thanks to a network organization, national representation,
•
•
the effective existence of negotiation arenas, and, almost systematically, support
for their functioning by the government, civil society and development agencies.
Role of private enterprise
Four actions undertaken by agro-industries can promote the establishment of productive,

sustainable and more equitable contractual schemes:
•
the recognition and respect of the land rights of local populations, whatever the
national land policy. This respect for land rights limits the risks of dispute in the short
and medium term that large plantations may experience.
Agribusiness can benefit from greater political acceptability and avoid suspicion at
the local level by clearly announcing the terms of the contract;
•
support for producers, whether or not within the framework of a public-private
partnership, with regard to access to credit, inputs, and above all, expertise and
training so that a diversity of producers can respond to new production standards;
•
the implementation of key elements encouraging producers to respect their contract:
support services and remuneration levels and methods allowing producers to
overcome the constraints that weigh on their operations (cash flow constraint in
particular) and not exclusively those weighing on the company; transparent
•
management and strong communication on the costs charged to farmers under
contract and on the methods for determining the price of the product. In some cases
studied, the quality of the relationship between the agro-industry and the producers
turns out to be more important than the method of formalizing the relationship (ie the
type of written contract).
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Role of development agencies and research and support support structures
Development agencies can play a key role:
• in supporting the financing of national agricultural policies, territorial development, or

protection of the land rights of local populations; • in the establishment of negotiation
arenas such as multi-stakeholder platforms
for the governance of the sectors;
• in supporting structures for the defense of farmers' interests such as inter-branch
organizations or associations representing producers;
• in the establishment of public-private partnerships through support for businesses and
producer organizations;
• for providing grants and bank guarantees to parties engaging in
contractual schemes or joint ventures
Public structures or non-governmental organizations can be provided with essential functions

to ensure capacity building and the transfer of skills for the benefit of producer groups:
• agronomic research institutions for the improvement of crops and agricultural practices
adapted to the constraints of rural households and their environment,
• Organizations capable of providing training and capacity building for producers in the
technical and organizational field, as well as in institutional coordination
• legal structures to provide advice and assistance in case of negotiation

or disputes with the company.
Challenges
National policies, donors and foundations are often at the origin of measures allowing the
development of contractual schemes. Agro-industrialists may indeed be reluctant to initiate a
contractual organization of production with small producers, requiring a substantial set-up time
and involving numerous transaction costs. A challenge is therefore to give sufficient keys to
private entrepreneurs to seize the advantages of contract farming (knowing that the question of
the profitability of contract farming compared to large-scale farming is poorly documented, in
particular because difficulty in evaluating transaction costs in monetary terms) and to support,
technically and institutionally more than financially, private companies towards the development
of contractual schemes.
* *
10
List of case studies
This synthesis is based on the following 9 case studies concerning a total of 7 countries:
Country Production Period
Pineapple 1955-2010
Ivory Coast rubber tree 1967-2008
Oil palm tree 1963-2010
Ghana Oil palm tree 1975-2011
Indonesia Oil palm tree 1980-2005
South Africa Fruits and sugar cane 1990-2010
Kenya Fruits and vegetables 1980-2000
Burkina Faso Cotton 1970- 2005
Laos Rubber, maize, cassava, sugar cane, 2000s
The study was coordinated by Perrine Burnod (CIRAD) and Jean-Philippe Colin (IRD). The precise
titles of the case studies and the authors are as follows:
From canned pineapple to export pineapple. Small-scale pineapple production in Côte d'Ivoire
in relation to agro-industry and the international market - Jean-Philippe Colin (IRD)
The emergence of village rubber cultivation by contract with agro-industry. The case of the
center-west region in Côte d'Ivoire. Francois Ruf (CIRAD)
Contract farming and the oil palm industry in Côte d'Ivoire. Emmanuelle Cheyns (CIRAD), Jean-
Philippe Colin (IRD), François Ruf (CIRAD)
Oil palms and contract farming in eastern Ghana. From Adherence to Conflict. Francois Ruf
(CIRAD)
Relations between agro-industries and dynamics of evolution of family farms and rural areas.
Indonesia – palm oil sector. Johanna Clerc.
The role of cotton companies in the dynamics of family farms and rural areas. Burkina Faso
case study. Guy Faure (CIRAD), Gaspard Vognan (INERA)
Relations between horticultural farms and agro-industries for export in Kenya.

Agro-industries and agricultural producers in South Africa: The case of the citrus and sugar
cane sectors. Sandrine Freguin-Gresh (CIRAD), Ward Anseeuw (CIRAD)
Laos' transition to commercial agriculture: modalities and impacts of agro-investments

in Laos. Isabelle Vagneron (CIRAD)
11
12
Executive summary
The scope of large scale land acquisitions in southern countries has brought back the debates
on food security, land governance and agricultural development models. Various international
institutions, recognizing the need for increased private investments in agriculture but also keen
to minimize potential risks associated with large-scale agricultural plantations, are promoting
business models that allow to both maximize opportunities for rural populations and minimize
the risks (Cotula et al., 2009 ; Von Braun and Meinzen-Dick, 2009 ; Görgen et al., 2009 ; World
Bank, 2010). Thus, a renewed interest has emerged in production patterns involving local
farmers as landholders (contract farming) or shareholders (joint venture)
(Vermeulen and Cotula, 2010).
In order to check and promote the positive synergies between private companies and rural
households, an analysis of past and ongoing experiences of contract farming is required. It
represents the main objective of this report.
The objectives of this study are to:

• describe the effects of contract farming schemes, •
characterize the factors limiting or promoting these various impacts, •
identify key findings to promote the emergence of positive synergies.
The study’ considers a long-term time scale (10 to 50 years) and pays particular attention to
changes in agricultural farming, production systems, access to markets and governance patterns
of value chains. The study also analyzes how crops initially introduced thanks to contract farming
schemes develop “off contract” and induce new value chain.
The study focuses on seven countries - Ivory Coast, Ghana, Burkina Faso, Kenya, South Africa,
Laos and Indonesia – and major commodities such as: oil palm, rubber tree, fruits and
vegetables, cereals, cotton and sugar cane. It is organized into 4 sections: i) the contract
schemes, ii) the effects of these schemes, iii) the factors determining the nature and intensity of
these effects and iv) key findings to promote positive synergies. Case studies are briefly
presented in the appendix.
Contract schemes studied vary according to the type of company and producer, the agricultural
product, product market characteristics, the role of the State and of course, contracts between
the companies and the farmers. Six major types of contracts analyzed in the case studies are
presented. If all the contracts include clauses relating to the purchase of the crop, they
differentiate according to: process and quality specifications, provisions of upfront inputs (seeds,
fertilizers, pesticides, credits and technical advice), degree of labour supervision and number of
technical tasks carried out by the company.
Why do companies choose contract farming?
Setting up contract farming results from, first of all, a political willingness of the State to promote
the agricultural sector and rural development (oil palm in Ivory Coast, Ghana and
13
Indonesia; rubber tree in Ivory Coast; cotton in Burkina Faso; and sugar cane in South Africa).
This setting up has benefited from funding from the State and/or donor agencies.
Whether promoted by national policies or not, companies argued that this resort to contract
farming is a means of:
•
developing a production which was previously absent in farmers’ production systems in
order to diversify and ensure the quantity of their supplies (canned pineapple, rubber tree
and oil palm in Ivory Coast);
•
reducing supply costs, mostly through savings associated with the cost of labour and
supervision (cotton in Burkina Faso, oil palm in Ghana, canned pineapple in Ivory Coast,
vegetables in Kenya);
• overcoming constraints to access land in areas where the land is already cultivated (oil palm
and rubber tree in Ivory Coast) or subject to land reforms (sugar cane in South Africa), or
even further compensating local populations in exchange for the compulsory taking of their
land (oil palm in Indonesia). Thus, companies opt for contract farming since they cannot
extend their control on land;
•
(quite recently) promoting more inclusive and equitable modes of production (vegetables
in Kenya) and, for some companies, improving their socio-political image (fruits and sugar
cane in South Africa).
Effects
Contracts for all?
The impacts in term of exclusion or inclusion of smallholders are quite different in various cases.
The following features are observed according to the cases:
•
inclusive dynamics for a majority of small farms in some cases (examples are the fruit
value chains in South Africa, Kenya and Ivory Coast) ;
• dynamics initially including small or medium farms and involving later on larger farms developed
by small and medium domestic urban investors (oil palm and rubber tree in
Ivory Coast) ;
• processes including initially a wide range of producers but excluding at a second stage the
smaller ones, unable to meet the production and contract economic requirements (oil palm
in Indonesia).
Nevertheless, the analysis benefits from going beyond the single framework of the contract
scheme. In many cases a phenomenon of participation and, in particular, of smallholders can
also result from further dissemination and outside contracts of the contract crop within a
contractual framework (pineapple, palm trees, and rubber tree in Ivory Coast; palm trees in
Ghana).
14
Moreover, whereas the participation of migrants in the development process of a new crop is
in certain cases commonly analyzed (Ivory Coast and Indonesia), that of women and young
people (under 35) is less common.
Increasing incomes?
An increase in smallholders’ incomes is observed in many cases, but not all, and is certainly
not a ‘systematic’ impact. In some cases, this increase is only temporary or it only benefits
the better-off farmers (oil palm in Indonesia).
The production, whether or not in contract farming schemes, can generate a permanent
income throughout the year (oil palm, rubber tree; some fruit and vegetables), or it can be a
source of delayed incomes for the time of retirement (oil palm, rubber tree in Ivory Coast).
Alternatively (pineapple or cotton), some producers appreciate to obtain a substantial
monetary income at once, which can fund investments.
Access to credit through the provision of inputs, even turnkey plantation, is a common feature
of the majority of contract schemes. In some cases, the reliance on credit or its costs constitute
a source of debt for vulnerable smallholders (oil palm in Indonesia). In other cases access to
credit is a factor which has improved incomes (vegetables in Kenya) and the farms’ investment
capacities (mechanization for cotton in Burkina Faso).
What effects on the rural labour market?
The effects of contract farming, poorly documented particularly with respect to labour
management within the family, are clearly visible on the local labour market. Job opportunities
increase to meet the needs of the companies (plantations and processing units), as well as
those of the contract farmers. These opportunities neither exclusively benefit nor are they
seized by the local population. These jobs are often taken by migrants who have specifically
come for them (oil palm in Indonesia) or who are already involved in the local labour market
(oil palm and rubber tree in Ivory Coast). The pay rates are those of the local labour market
and these jobs bring benefits to less-resourced households. However, working and pay
conditions– notably in the companies’ plantation or processing unit– are often not complying
with national labour legislations (Indonesia, Laos and South Africa).
What effects on land rights and land markets?
The development of contract farming is a major alternative to large-scale land acquisitions so

that local land rights are not jeopardized. Nevertheless, companies combining both contract
farming and direct large-scale plantations have been involved in the expropriation of some
local populations from customary lands. In some cases, this was through the allocation of non-
cultivated land (considered as land reserves by local populations) to the company. In the
15
best case scenario, these populations have received compensation in the form of official
redistribution of a smaller part of the previously owned land (Indonesia, Ghana and Laos).
Moreover, case studies show that contract farming contributes sometimes directly or indirectly
to the “commoditization” of land and the emergence of monetary land markets (emergence
or multiplication of lease contracts, sharecropping and land sales; examples in Ghana or
Ivory Coast). Migrants can get involved in contract farming due to diverse arrangements with
local landowners to enjoy land use rights. Contract farming can be the source of intrafamily
tensions, as contracts and cash crops controlled by household heads may encroach upon
lands previously allocated to the family members.
A specialization of production systems detrimental for household food security?
In case studies, contract farming is not harmful to the households’ food security. Farmers
generally develop the contract crop in a strategy of crop systems diversification but not in a
strategy of specialization. In many cases, famers did not develop the contract crop in
substitution for food crops but they cultivated it on land previously allocated to another cash
crop (Ivory Coast, Ghana, and South Africa) or in forests (Indonesia and Burkina Faso) –
which may induce problems of access to firewood and biodiversity maintenance.
Nevertheless, due to access to inputs, farmers can improve food crop production (cotton in
Burkina Faso). Finally, through the incomes from the contract crop, farmers can buy foodstuffs
in local markets (Ivory Coast).
Technical innovations?
As a result of contract farming, smallholders have mastered new crops and new agricultural
practices largely based on the achievements of agricultural research. The learning process
can spread the benefit of other crop systems (labour in Burkina Faso and Ivory Coast for
food crops) and beyond contract holders (pineapple, rubber tree and oil palm in Ivory Coast,
palm in Ghana). It has also been facilitated by innovations from farmers who adapted the
practices recommended by agribusinesses to cut production costs (companion crops,
reduction in the quantities of fertilizers, absence of graft wood for rubber tree, etc..).
An intensification of production systems?
The case studies showed more intensive production in terms of labour (although not in all
cases), inputs (broader access to improved varieties, fertilizers and chemical products) and
in expertise. The only capital-based intensification results from perennial plantations of new
varieties and, in some rare cases, investing in mechanized equipment.
16
Smallholders’ dependence or room for manoeuvre?
Contract farming avoids commercial risks for producers and sometimes provides them with
an outlet to international markets (fruits and vegetables value chains in South Africa and
Kenya). But in most of the case studies, a monopsony situation, lack of transparency and
information on prices and (often) close relations between the company and the government
severely undermine smallholders’ negotiating power (oil palm in Indonesia, palm and rubber
tree in Ivory Coast). Nevertheless, the creation of agribusiness or transformation plants can,
over time, open new commercial alternatives for the producers (Ivory Coast, Ghana). More
marketing opportunities does however often weaken the contractual relationships. As a
result of the diversification of buyers, smallholders have increased opportunities to be paid
in cash and evade their contractual obligation (most notably, to reimburse their credit). It
does not systematically confer a better negotiating power to smallholders but puts them in
tense relations with the contracting company... and jeopardizes the sustainability of the
contractual scheme.
Effects on farmers’ organisations and representation of the interests of producers
In the majority of cases studied, the creation of farmers’ organisations was the action of the
State or of companies. These organisations, when they managed to remain intact, were not
effective cooperatives or associations (oil palm in Indonesia, canned and exported pineapple
in Ivory Coast). They seldom defended the smallholders’ interests. Since the late 1990s,
local organisations are renewed from support by NGOs or development agencies. Their
objectives are to increase their bargaining power with government and investors, reduce
transaction costs related to contracts and improve information sharing among farmers and
stakeholders (local and national independent organizations in Indonesia, cooperatives and
joint-trade organization in the oil palm sector in Ivory Coast, National union of cotton
producers in Burkina Faso).
Major lessons learnt
Adoption and dissemination of contracts and, more broadly, crops
Long term analyses have emphasized that contract farming first played a role in innovation
and diversification of crops, and then in the impetus to a new value chain. Farmers develop
crops cultivated independently of any contract scheme; new buyers and brokers position
themselves on the market; new rural industries or agro-processing plants are created, thus
generating the development of a whole value chain (in Ivory Coast, pineapple, oil palm,
rubber tree; and in Ghana, oil palm).
The case studies identified five key factors that promote the adoption, success and
dissemination of crops (on or off-contract):
17
•
the quality of the support activities by the agribusiness companies: regular payments,
credits’ terms and conditions, the kind of inputs provided as well as the transparency and
clarity of contractual commitments;
•
the evolution, in the long term, of the producers’ net earnings;
•
land availability within the farm or locally, possibly through local land markets;
•
the characteristics of the crops entailing various payment modes (number of months and/
or years to get the first harvest, steadiness in harvests, etc.) and the level of investment
in terms of capital, labour and expertise;
•
information and service sharing among producers, within groups or not, intended to
facilitate expertise transfers and reduce production costs.
Exclusion or inclusion of smallholders
Diachronic analysis emphasises that the phenomena of selection, inclusion or exclusion of

smallholders need to be broken down.
A first selection can occur right from the implementation phase of the contract scheme. Until
the 1990s, national agricultural policies, clearly directed upstream by the donors, determined
the profile of farmers included in contract schemes. These policies have thus affected a wide
range of farmers including smallholders which actually make up the large majority of the farms
in the rural sector. Since the 1990s, the role of the State remains important to define incentives
but is less directly important. Companies develop contract farming to delegate labour intensive
crops (horticultural products in Kenya) or to guarantee them a progressive image (South
African enterprises).
A second selection of smallholders might step in during the development of the contract
scheme. In the cases studied, the process of exclusion of smallholders of the contractual
organization seemed more to be the result from entrance or exit of some smallholders rather
than an explicit policy of the companies (in fact, all studied contract crops were not subject to
high quality standards, therefore the role of these standards in the exclusion of certain
categories of smallholders was not analysed). On the one hand, farmers leave the contract
scheme when they are unable to reimburse their credit to the company (oil palm in Indonesia)
- some can also leave the scheme when they have a more profitable alternative. On the other
hand, farmers, often urban people retired and/or executives attracted by the development of a
remunerative agricultural activity, get involved in the contract schemes (oil palm in Ivory Coast).
A third phenomenon corresponds to dissemination of the crop outside the contract scheme. It
might bring benefits to various categories of farmers, including small ones (oil palm and rubber
tree in Ivory Coast, palm in Indonesia and Ghana).
Improvement in smallholders’ incomes and investment capacities
In case studies, improvement of smallholders’ income depends on international rates, the

efficiency of the company, the type of contract and, in a more tenuous and recent manner, the
18
smallholders’ capacity to negotiate the terms and conditions of these contracts. This concerns
in particular: the purchase price, based on national and international rates and especially on
the company and State’s policies; the level of billing services provided by the company and
production standards.
Land management and equitable access to land
The implementation and development of agribusinesses and contract schemes have direct
and indirect impacts on local land distribution. Some key factors influencing these effects are
the following: national policies related to investments and land tenure; the organization of
production (large farm or contract schemes, including joint ventures); and the type and activity
of land markets. Case studies particularly underline that rental markets (sharecropping, lease)
allow access to land and contracts for a wide range of farmers (including migrants) without
changing the distribution of land property. A contrario, the land sales markets mostly benefit
the better-off and relatively wealthy individuals (executives, traders, government officials, local
and national elected representatives). They gradually transform land distribution (usually
towards more concentration of land ownership), notably in peri-urban areas (oil palm in
Indonesia, Ghana and Ivory Coast; rubber tree in Ivory Coast).
Innovation
The major innovation, promoted by the contract scheme but developing sometimes outside
it, is the adoption and dissemination of new crops and farming practices. It is promoted by:
the achievements of research institutions and their support; the provision of inputs, credits
and technical support provided by agribusiness and/or the State agricultural services; informal
circulation of information and most importantly the progressive development of a new value
chain.
Governance of the value chain
The transition from a simple contract, imposed by the agro industry, to a representation of
smallholders within committees of enterprises and an active participation in the negotiations
of the contract terms, seems to result from: a national political willingness, a policy of
transparency from the part of the agribusiness, the existence of effective smallholders’ groups,
and in quite a number of cases, the donors’ support and/or NGOs’ support for the
establishment of arenas of discussion.
19
Ways forward for sustainable and equitable contract schemes

The role of the State
The government plays a major role in setting up a legal and economic environment conducive to contract farming and, a
particularly major role in promoting and providing political support to contract schemes, through:
•
the recognition and respect of local populations’ land rights and consequently, by limiting abusive land appropriation.
The main thing is that land rights are secured, whether they are property rights or use rights, so that agribusiness
and smallholders (owners and tenant farmers) can have the guarantee of return on investments. The security
mechanisms need not necessarily be made formal by a land title or certificate, they can be local and founded on
social recognition;
•
the development of devices to prevent unfair contracts and securing the contractual commitments; the strengthening
of smallholders’ organizations and the creation of an arena of negotiation and mechanisms of dispute settlement;
•
•
the dissemination of information on "contract good practices" and on prices.
Role of smallholders’ organizations
Farmers’ organizations (FO) can reduce the transaction costs of dealing with a large number of farmers and, more generally,
the cost of implementing the contractual scheme. Above all, farmers’ organizations can present a cohesive position, address
asymmetries in bargaining power with investors and government and then, design more collaborative and equitable
schemes.
Nevertheless, famers’ organizations can encounter various difficulties. First, the company may refuse to deal with
organizations in order to avoid their cohesive position and strong bargaining power or, on the contrary, their internal
dissensions. It may also refuse to deal with organization to implement better individual traceability system. Secondly,
farmers’ organisations may encounter collective action problems, lead to the exclusion of some smallholders or be
opportunistically used by elite members.
Since the 2000s, smallholders’ organizations have been empowered thanks to:
•
sustained investments in capacity building; a shift in
•
their functions from furnishing technical services to protecting smallholders rights and interests;
•
strong and complementary linkages between local farmers’ organizations and national
ones;
•
national or local arenas for negotiation, often created and supported by the government, civil society and
development agencies.
20
Role of private enterprise
Agribusinesses can promote sustainable and inclusive contract schemes through:

•
recognizing and respecting local land rights regardless of the national land policy.
Contract farming limits the social and political risks associated with acquiring land and running
large-scale plantations. Agribusinesses can enjoy better political acceptability and avoid suspicion
at the local level by stating clearly the terms and conditions of the contract;
•
supporting smallholders, within or outside a public-private partnership, in relation to access to
inputs (from seeds to credit) and, particularly, access to expertise and training so that a wide range
of smallholders can conform to new standards of production;
•
setting up key elements encouraging smallholders to respect their contract: diverse and concrete
services, and remuneration arrangements allowing smallholders to overcome their financial
constraints; transparent management and effective communication on terms and conditions
•
determining the purchase prices and the costs charged to the producers. In certain cases analysed
in the report, the quality of the relationship between agribusiness and smallholders proves to be
more important than the method of formalising the relationship (i.e. type of written contract).
Role of development agencies, research institutions and groups supporting smallholders
Development agencies can play a decisive role in supporting:
• national agricultural, territorial development and land reform policies,

• arenas of negotiation such as multi-stakeholder platforms for governance of agricultural value chains;
• organisations protecting the interest of smallholders such as intersectoral organizations

or national platform of farmers’ organisations;
• provision of grants and bank guarantees for stakeholders of collaborative business
models;
• dissemination of information and lessons on successful contractual schemes and joint
ventures.
Other support structures can provide essential functions in order to carry out capacity transfer:
• agricultural research institutions can improve agricultural practices adapted to households’

environment and constraints;
• organizations providing learning and capacity building for smallholders (legal issue, market analysis,
team management, etc); • law organisation furnishing legal advice and assistance.
21
Challenges
National policies, donor agencies and/or foundations’ incentives generally encourage the implementation of contract
schemes. Without these incentives, agribusiness companies are reluctant to initiate contract farming schemes with
smallholders due to high transaction costs.
A challenge is therefore to provide appropriate ‘keys’ and ways for private entrepreneurs to grasp the advantages of contract
farming (profitability of contract farming against large-scale farming being poorly documented) and to provide them with
technical and institutional support rather than financial support.
* *
List of case studies
Country Crop Period
Pineapple 1955-2010
Ivory Coast Rubber tree 1967-2008
Oil palm 1963-2010
Ghana Oil palm 1975-2011
Indonesia Oil palm 1980-2005
South-Africa Fruit, sugar cane 1990-2010
Kenya Vegetables and flowers 1980-2000
Burkina Faso Cotton 1970- 2005
Laos Rubber tree, corn, cassava, sugar cane, 2000- 2010
The study was coordinated by Perrine Burnod (CIRAD) and Jean-Philippe Colin (IRD). The titles of specific case studies,
and their authors, are listed in the French version of the Executive Summary.
22
1. Introduction
1.1 Objectives of the study
The dynamics of land appropriation in the rural sector in the countries of the South are
not new. However, the scale recently taken by the phenomenon, in terms of surface
areas and geographical coverage as well as the diversity of origin and objectives of
investors, have revived debates on food security, land governance and development
models. of the agricultural sector.
Several international institutions, recognizing the need for private investment in the
agricultural sector, insist on the importance of promoting organizational models (business
models) allowing both to maximize the opportunities offered to rural populations and to
minimize the potential risks. associated with these large-scale agricultural projects (Cotula
et al., 2009; Von Braun and Meinzen-Dick, 2009; Görgen et al., 2009; World Bank, 2010).
Particular attention is paid to production schemes involving local farmers as producers
(contract farming) or shareholders (joint venture) (Vermeulen and Cotula, 2010).
Contract farming can allow companies to access agricultural production without having
to develop their own plantations or by reducing their land holdings. Respecting a priori
the land rights of local producers, it can also offer them new opportunities in terms of
developing new crops and access to markets (credit, inputs, advice).
The analysis of past experiences associating agro-industry2 and family farming seems
essential in this respect to qualify the effects of these investments and identify the factors
that limit or promote these different impacts.
This study commissioned by the FAO from CIRAD aims to analyze, from a diachronic
perspective, the effects that can be generated by the establishment of companies on the
production systems of agricultural holdings and, more broadly, on the development of
rural area. She is particularly interested in changes in terms of access to land, rural labor
and local socio-political organizations –
especially producer organizations. The study also aims to identify the socio-economic
and political factors that have influenced the nature and intensity of these effects over
time. The conclusions of this analysis are intended to fuel discussions on the policies to
be implemented to promote synergies between agro-industries and the territories in which
they are established.
2
We understand "agro-industry" in a broad sense, including companies that transform the
agricultural production, but also those who market it without transformation.
23
1.2 Questions
The questions addressed are:
- What have been, over time, the effects of agro-industrial enterprises on the
transformation of the production systems of family farms and, more broadly, on
rural development in a given region or country? This question presupposes
characterizing the forms of organization of relations between agro-industry and family
farms and their evolution, as well as their effects on the rural world. The originality of this
study is in this respect to analyze these effects over the medium or long term (over time
periods between 10 and 50 years).
- What are the main factors that have influenced the nature and intensity of the
effects mentioned above? It is a question of discussing the influence of the modes of
organization of agricultural production and supplies, forms of public governance (role of
the State, public policies), the socio-economic context as well as the balance of power
between different interest groups.
- What elements of the context or factors have contributed to the development of
positive synergies between agro-industries and family farms? On this basis, what
recommendations can be made to promote synergies conducive to rural
development? In the context of the debates raised by the phenomena of large-scale land
acquisitions in the countries of the South, international institutions and experts formulate
recommendations in favor of contract farming. It will be a question here of re-reading and
commenting on these recommendations in the light of the lessons learned from the case
studies carried out in a diachronic perspective.
1.3 Case studies
This synthesis is based on 9 case studies concerning a total of 7 countries: Côte d'Ivoire,
Ghana, Burkina Faso, Kenya, South Africa, Laos and Indonesia. It deals with a few major
production sectors (palm, rubber, fruit and vegetables, cereals, cotton, sugar cane),
involving private or public companies, national or foreign, whether or not they have their
own production unit and/or of a processing unit, and sourcing at least part of it from farmers.
The cases were worked for some on the basis of the own experience of the contributors
and a complementary review of the literature, for others on the sole review of the literature.
The choice of cases (country, sector and, in some studies, agro-industries) was reasoned
in a combined way on four main criteria:
o the availability of information, combining: ÿ
the long-term expertise of socio-economists and agronomists from the team on
contractual schemes in southern countries in order to enhance their research work
and their network of people resources for obtaining additional information not
24
published, their knowledge of the socio-economic and political evolution of the country,
and of the existing literature (from scientific articles to unpublished reports);
ÿ the diversity of published works;
o priority has been given to case studies on the African continent, where the renewal and
development of large-scale land investments is most important (eg World Bank, 2010).
Case studies in West, East and Southern Africa were selected. Case studies were then
selected in Asia in order to have counterpoints on African dynamics and to highlight the
lessons learned (especially for oil palm in Indonesia, a major economic sector for the
country and constantly evolving in terms of land take and forms of organization of
production);
o the age and economic importance of the sectors for the countries (oil palm,
rubber, cotton, horticulture);
o the existence of contrasting forms of organization of production (from large-scale plantations
managed by agro-industries to joint ventures via various contractual schemes).
Case studies (countries or companies) carried out as part of the study
Achievement of
Country Cultures Reporting period Type of study
studies
Canned and fresh export Personal empirical research

1955-2010 J.-Ph. Colin
pineapple base + bibliographic
Ivory Coast E. Cheyns, J.-Ph. Personal empirical research

Oil palm tree 1963-2010
Colin, F. Ruf base + bibliographic
Personal empirical research

rubber tree 1967-2008 F. Reputation
base

Ghana Oil palm tree 1975-2011 F. Reputation
base
S. Freguin-Gresh, P.-
Kenya Vegetables, flowers 1970s-2000s Bibliographic
M. Bosc
Rubber, cassava, sugar

Laos 2000s I. Wagneron Bibliographic
cane, corn, etc.
Indonesia Oil palm tree 1980s-2000s J. Clerc Bibliographic

Burkina Faso Cotton Years 1970-2000 G. Faure, G. Vognan,
base + bibliographic
South Africa Citrus, cane S. Freguin-Gresh, W. Personal empirical research

1990s-2000s
South sugar Anseeuw base + bibliographic
1.4 Limitations of the study
This study is not the result of a specific field investigation built in a comparative perspective
and aimed at systematizing the collection of data (including quantitative). The case studies
were carried out under strong time constraints on the basis of a review of the literature and,
most often, of a mobilization of an experience of
25
direct search for authors3 . They are therefore dependent on the information and analyzes
available, which could be incomplete with regard to some of the questions of this project.
The production conditions of the cases (see above) do not allow a systematic comparison
either (the same sector in all the countries, or different sectors and production organization
schemes in the same country). However, they allow fruitful cross-examinations: analysis
of the oil palm sector in 3 different countries; analysis of 3 sectors in the same country;
analysis of contrasting organizational schemes implemented at different times; analysis
of contractual schemes based on perennial and annual crops, etc.
This synthesis, which aims to draw the main lessons from the case studies, obviously
cannot restore their richness, beyond their limits.
The bibliographical references used in the case studies are not included in this summary, for
obvious volume reasons.
26
2. Case characterization
Relations between agro-industry and family farms are most often organized through contract
farming, sometimes described as a "hybrid" form of governance, between cash market and
vertical integration4 . These relations between agro-industries and family farms are qualified,
firstly, by specifying the parties involved and their respective roles (organizational configurations),
then, in a second phase, the contractual relations (contractual configurations). A preliminary
section presents the studies very briefly (presentations developed are in the form of a summary
sheet in the appendix).
It will be noted that in the following text, the present tense used is most often a present tense of
narration.
2.1 Brief description of the studies
The emergence of village rubber cultivation by contract with agro-industry.

The case of the center-west region in Côte d'Ivoire. Francois Ruf (CIRAD)
The study traces the evolution of village rubber cultivation in the central western region of Côte
d'Ivoire. It analyzes in particular the case of a processing company, SAPH, (a semi-public
company privatized in 1994) and its changes in strategy from the end of the 1960s to the end of
the 2000s. This company, in addition to its own plantations, ensures its supply from village
producers, under contract and out of contract.
The study analyzes the effects of these contractual relations on rural farms and analyzes the
factors underlying the massive development of rubber in rural areas.
4
In the neo-institutional economics literature, "vertical integration" refers to the endogenization, under a
single structure of ownership and authority, of various stages of supply, production or distribution of a given
product (integrations upstream or downstream) (see especially Williamson, 1985). In the literature dealing
specifically with contract farming, we find this meaning (see for example MacDonald et al., 2004; Birthal et
al., 2005; Sauttier et al., 2006; Bijman, 2008; Vermeulen and Cotula, 2010) .
Other authors equate vertical integration with vertical coordination, ie any form of organization of the
production and distribution process (see for example Dannson et al., 2004). Still other authors, implicitly in
the same line, specify " complete vertical integration" to qualify the organization within the same structure of
ownership and authority of the different phases of the production-marketing process (see example Da Silva,
2005). We retain here the usual neo-institutional meaning.
27
From canned pineapple to export pineapple. Small-scale pineapple production in Côte d'Ivoire
in relation to agro-industry and the international market. Jean-Philippe Colin (IRD)
The study focuses on the evolution of the small-scale pineapple production sector in Côte d'Ivoire
from the 1950s to the end of the 2000s, structured for canned production and then for fresh export. It
presents the contracts linking the processing or marketing companies to the producers and the effects
of these relations on the dynamics of farms, markets and the structuring of the agricultural world.
During the canned pineapple period, the study analyzes the organization and its effects:
- the Salci-Sodefel system combining: (i) a private company, then a mixed economy company (Salci)
with a processing unit and its own plantation; (ii) small producers under contract (around 4,000),
without land control, organized into cooperative groups (GVC); (iii) a development company
(Sodefel) overseeing the GVCs; - the Siaca-Socabo scheme involving: (i) a production cooperative
(Socabo) bringing together around 500 cooperators, (ii) a private factory (Siaca), in which the
cooperative is a shareholder, which does not have its own plantation and supplies exclusively from
the cooperative.
During the Pineapple-export period, the study focuses on the links, and their effects, between export
cooperatives (about ten), small growers (cooperators or non-cooperators), and buyer-exporters (who
can be cooperative growers, large growers or traders).
Contract farming and the oil palm industry in Côte d'Ivoire. Emmanuelle Cheyns (CIRAD), Jean-
Philippe Colin (IRD), François Ruf (CIRAD)
The study analyzes the evolution of the oil palm sector in Côte d'Ivoire over the long period
(1960-2010). She studies the impacts of the introduction of a new crop (the hybrid palm), and of a
new method of organizing production (contracting with village planters) on family farming, the
structuring of the agricultural world and rural development. The main parties involved are:
- companies that have industrial plantations and processing units, with a focus on the evolution of
Palmindustrie, a mixed economy company (1969 -1979), becoming a State company (1979 -
1997) then being bought out by 3 private companies at the time of liberalization (by Palm-CI,
SIPEF-CI and Palmafrique);
- village growers under contract and out of contract as well as growers from urban areas. While
plantations began in the 1960s, there were around 8,000 planters in the early 1980s and around
35,000 in 2010;
- groups of producers (the GVCs, which in the early 2000s became
cooperatives).
28
Oil palms and contract farming in eastern Ghana. From Adherence to Conflict.
Francois Ruf (CIRAD)
The study presents the effects of contract farming organized around oil palm in eastern
Ghana. It focuses on the case of the processing company (the GOPDC) over the period
1975-2011, a company both producing palm on its own plantations and engaged in
production contracts with surrounding producers.
The study sets out in particular to analyze the factors of evolution of the contractual
relations between the company and the planter, as well as the effects of the establishment
of the agro-industry on the farms and the development of a sector structured around rubber.
Relations between agro-industries and dynamics of evolution of family farms and

rural areas. Indonesia – palm oil sector. Johanna Clerc.
The bibliographic summary covers the evolution of the Oil Palm sector in Indonesia from
the 1950s to the 2000s. the establishment and development of agro-industries on rural
households and the rural environment. The main parties involved are public and private
companies, which have a processing unit, manage an industrial plantation and establish
contracts with the farmers.
In 1981, barely 1,000 ha were held by small producers, 100,000 ha by private companies
and 200,000 ha by public companies. In 2001, 1.1 million ha were planted by small
producers, 1.9 million ha were owned by private companies and 0.5 million ha were
managed by public companies.
The role of cotton companies in the dynamics of family farms and rural areas.
Burkina Faso case study. Guy Faure (CIRAD), Gaspard Vognan (INERA)
The study traces the evolution of cotton companies, farmers' organizations and cotton-
producing farms across Burkina Faso in the period 1960-2000.
It analyzes changes within cotton-producing farms linked to cotton companies by a
production contract, including a purchase guarantee and access to inputs and technical
advice via farmers' groups. It also pays particular attention to the evolution and roles of
farmers' organizations. The parties involved are:
- initially, a public company which was then privatized to give birth to three private
companies. These companies have processing units (ginning and oil mill) but no
plantations and establish contracts with the farmers,
- producers, mostly at the head of small-scale farms, organized into groups from the 1970s.
Seed cotton production increased from 35,000 t in the late 1960s to 75,000 t in the late
250,000 t at the end of the 1990s. In 2005-2006 the record figure of 713,145 t was
reached. The number of producers
29
concerned, from 70,000 in the 1980s, varies between 280,000 and 550,000 depending
on the year from 2000.
Relations between horticultural farms and agro-industries for export in Kenya.

The literature review focuses on the horticultural sector in Kenya. After presenting the
political measures and economic factors that have had a major impact on the horticultural
sector over the past two decades, it analyzes two cases of private companies, Frigoken and
Homegrown, which have been active since the 1980s. These companies partly ensure their
supplies by delegating production, under different modalities, to thousands of small producers
under contract.
Agro citrus and sugar cane sectors. Sandrine Freguin-Gresh (CIRAD), Ward Anseeuw
(CIRAD)-industries and agricultural producers in South Africa: The case of
The study focuses on the analysis of the relationships between agro-industrial companies
and agricultural producers in the sugar cane and citrus sectors in South Africa. Based on
case studies, it analyzes from a diachronic perspective (since the 1990s) the methods
according to which three agro-industries enter into contractual relations with small
producers:
- TSB Sugar, a private cane-to-sugar processing company, obtains its supplies from its
own plantations and from cane producers of various sizes and this, according to
different methods, one of them being integrated within the framework of joint ventures;
- Magaliesberg Citrus Company Ltd (Magalies), a private fruit juice processing company,
does not have its own production and sources its supplies from citrus producers, who
are also company shareholders;
- Lona Ltd, a private company producing and exporting citrus fruits, obtains its supplies
from its own plantations and from producers under contract, in particular "cooperatives"
of beneficiaries of the land reform whose production takes place under the
management of a third (another private company, Du Roi, until 2010, then Lona).
Laos' transition to commercial agriculture: modalities and impacts of agro-investments

in Laos. Isabelle Vagneron (CIRAD)
This study, based on a synthesis of the bibliography, analyzes the recent dynamics of
development of concessions for the benefit of foreign investors and contractual sectors,
articulated mainly through marketing contracts. Examples come from the production sectors
of rubber, cereals, sugar cane or even cassava.
30
2.2 Characterization of organizational configurations

The cases analyzed5 can be positioned initially with regard to the three main categories
of coordination models proposed by Eaton and Shepherd (2002: 53-58):
• the company obtains its supplies from producers through contracts and also ensures
its own production (centralized coordination model with own production);
• the company sources only from producers through contracts (centralized coordination
model without own production);
• the company obtains its supplies on the local market and the transactions can give
rise to marketing contracts (which the authors describe as an "informal"
coordination model).
TYPE D’APPROVISONNEMENT
through contracts and

Country Production
the company's own through production
by the market
production contracts
Salci, then Salci

Canned pineapple Siaca-Socabo
Sodefel
Rating
Pineapple export
ivory
after privatization of
rubber tree
companies
Oil palm tree
Ghana Oil palm tree GOPDC
Indonesia Oil palm tree
Sugar cane TSB Company

South Africa
South
Citrus Enterprise Iona Magalies Company
Kenya Fruits and vegetables Frigoken Company
Burkina
Cotton
Faso
Rubber, sugar
Laos
cane, maize
The shaded boxes correspond to the studied configurations - text inside the boxes for clarification
5
We refer to the case studies for the descriptions of these systems and their evolution (after privatization, etc.).
31
To go beyond this too general characterization for this study, the contractual schemes studied can be positioned according to
6
five criteria :
• With or without industrial processing unit

Type of company
• With or without own agricultural production (on land owned, granted by the State or taken as indirect
tenants)
• Private, public or mixed economy company
• Small/medium/large in terms of local standards and type of production • Natives or migrants

Type of producers
involved
• Having land control or dependent on agro-industry for access to land
• Individual or organized in groups or cooperatives
• Perennial crops or not; perishable product or not

Kind of production
• Crucial role or not of quality, compliance with standards • Production
intended for processing or not; intended for the national market or for export
• Strict monopsony (or existence of parallel sales opportunities, but with an effective risk of strong
Type of "market"
sanctions in the event of non-delivery of production to the company)
• Presence of local outlets other than the contracting company
• Direct actor (public agro-industry or mixed economy) • Involved in a hybrid

Role of the State
system with the private sector (providing direct support for supervised production: research,
extension, technical supervision) • Incentive policies (fiscal, political price, credit, etc.) • Simple
regulator (legal framework)
Type of company
TYPE OF COMPANY
Without unit of
With local industrial processing unit transformation
Country Production
local industrial
With own agricultural Without own With own agricultural

production agricultural production production
Salci-Sodefel
Canned pineapple
Salci before state Siaca-Socabo
Ivory Coast participation
buyer-exporters who are

Pineapple export also producers
6
The combination of these criteria potentially leads to a multitude of configurations that would be illusory
to seek to specify.
32
before privatization
rubber tree
after privatization
Palmindustrie
Oil palm tree
after privatization
GOPDC before
privatization
Ghana Oil palm tree
GOPDC after
privatization
Pir / Nes
Pir / Trans, KKPA
Sugar cane TSB

South Africa
South
Citrus Magalies Iona
Kenya Fruits and vegetables Frigoken
Burkina Faso Cotton ginning
Box in dark gray = private company; in very light gray = public enterprise, in light gray = mixed economy
Type of producers involved
PRODUCERS INVOLVED
Country Production
small Medium to large Mixed size
producers without
Canned pineapple
land control
land control via FVI

Ivory Coast Pineapple export
rubber tree
Oil palm tree
Pir/Nes devices,
Pir/Trans (once debt repaid);
device
KKPA
TSB (joint ventures with TSB

Sugar cane
South Africa communities)
South
Citrus Iona and Magalies
Frigoken (contracts with Frigoken

Kenya Fruits and vegetables
groups)
Burkina Faso Cotton
Box in dark gray = individual producers; box in light gray producers organized in groups,
33
Kind of production
Persistent Not sustainable
Product no Product Product no

perishable product
perishable perishable perishable
Crucial quality Fruits and vegetables

standards Kenya(Frigoken)
Intended for
transformation Standards of
Oil palm tree Canned pineapple
non-critical rubber tree
Citrus Af. of the South (Magalies) Ivory Coast
quality1
Pineapple-export
Crucial quality
Citrus South Africa (Iona) Ivory Coast
standards
Without (2000s)
transformation
Standards of Pineapple-export
non-critical Ivory Coast Burkinabe cotton
quality (1980s-90s)
1
"Crucial" and "non-crucial" are obviously assessed in relative terms. "Non-critical" does not mean that the quality of
the production has nothing to do with the possibility of disposing of the production and with the price of the product.
Type of "market"
TYPE OF MARKET
Monopsony then Existence of

Country Production local outlets
development of
Monopsone strict
alternative outlets other than the contracting
company
Canned pineapple Salci-Sodefel, Siaca-Socabo
Ivory Coast Pineapple export
rubber tree
Oil palm tree
Indonesia Oil palm tree Undeveloped sector area Highly developed sector area
Sugar cane what TSB

South Africa
South
Citrus cas Iona & Magalies
Kenya Fruits and vegetables Frigoken case
national monopsony before

Burkina Faso Cotton privatization, regional monopsony
since
34
Role of the State
ROLE OF THE STATE
Direct player Involved in a hybrid

Country Production Incentive
(including via system with the
policies Single regulator
mixed economy sector
strong
enterprises) private
Pineapple Salci device Siaca device

conserve Sodefel Socabo
Ivory
Coast Pineapple export
rubber tree Before privatization After privatization
Oil palm Before privatization After privatization
Ghana Oil palm Before privatization After privatization
Oil palm Before privatization KKPA device devices

Indonesia
Pir / Trans and KKPA
Sugar cane
Of. you
South
Citrus
Fruits
Kenya Frigoken
and vegetables
Burkina Cotton Before privatization zone Sofitex After privatization

Faso
2.3 Characterization of contractual configurations
Types of contracts
The types of contracts organizing the coordination between contract farming actors vary according to the degree of control
exercised over production by the company that implements this type of governance. Our typology, which is inspired by that of
Mighell and Jones (1963) without taking it up directly7

, is built on the basis of:
7
Mighell and Jones (1963: 13-14), in their classic typology often used in the literature (Minot, 1986; Key and Runsten, 1999;
Baumann, 2000; Bijman, 2008, etc.) distinguish the following contracts: (i) market specification (“ establish some of the terms
(quality, quantity, price, etc.) of a future transaction ”); (ii) production management (“ are like market-specification contracts but
call for more direct participation by contractor in production management. This management usually takes the form of cultural and
resource specifications and field inspections during the production period ”); (iii) resource providing (“ contractor not only furnishes
a market and participates in production management; also provides important inputs). This typology is not directly used here
because it does not allow us to specify with sufficient finesse the contractual practices that interest us.
35
• the object of the coordination: marketing only (collection conditions, price, quality, quantity), or production and marketing;
• contributions from the company or the buyer (provision or not of factors of

production: inputs, credit, technical advice);
• the control exercised by the company over the production process, in decision-making terms: technical itineraries, etc.;
(imposition of some standards or tight control)8 .
The table below summarizes the different forms of contract (the asterisks designating their characteristics), then described
one by one.
* * * * * *
Purchase of the product
Production standards (with possibly technical advice) * * * * *
* * * *
Supply of inputs, credit, technical advice
* * *
Directive technical assistance
* *
Tight control over production (work supervision)
*
Production support
Type of Contract abcde f
Marketing contract (a) : establishes more or less completely the conditions of sale of the production to the company
(collection conditions, price, quality, quantity).
Pineapple-export Côte d'Ivoire, case of a sale to a buyer without the latter providing credit in kind. When he is not a
cooperator, the small pineapple grower
markets its production to a buyer-exporter. If he does not seek the credit in kind that the buyer could provide, he
concludes a simple marketing agreement some time before the harvest, which provides for the price per kilogram
of market quality (without distinction according to the size of the fruit). The value of production is established on the
basis of the farm gate price per kilogram of fruit, after sorting.
Marketing contract with specifications (b) : additionally includes a few production standards that the producer must follow
(type of variety used, inputs, crop calendar, etc.), but without the company providing any input (possibly other than technical
advice) or carry out strict control of production conditions.
Citrus South Africa, Magalies/WUFA case. The contract specifies the inputs to be applied (dosages, application
schedules). Magalies does not provide any resources
excluding technical assistance. Planters undertake to deliver a certain quantity of
8
For a similar perspective, but which does not lead to a typology of contracts, see Eaton and Shepherd
(2002: 2).
36
fruit, of a specific quality (ripe fruit, of the valencia variety), at a price fixed at the start
of each season.
South African sugar cane, TSB case, contracts with individual growers: same type of
contract.
Assisted production contract (c) : the company provides (in addition to the outlet for
production) assistance to the producer, in the form of inputs, the means to acquire them, or
non-directive technical assistance. It does not exercise direct control over production.
Pineapple-export Côte d'Ivoire, case of a sale to a buyer with credit in kind. The
producer can look for the buyer from the planted plot, if he wishes to benefit from help
from him: supply of fertilizer and calcium carbide, for the floral induction treatment.
The planter must himself ensure access to the suckers, their transport, any costs of
renting the plot, the costs of plowing and manual labor up to the pre-harvest stage.
The price of the fruit is determined as soon as the agreement is made (without
distinction according to the size of the fruit). At the time of payment, the buyer deducts
the advance in fertilizer and calcium carbide from the value of the production.
Burkina cotton. The contract offers a guaranteed purchase of seed cotton to farmers,
at a price announced in advance. It organises, via the producer group, access to
inputs on credit and technical advice.
Sugar cane South Africa, case TSB joint ventures with communities. The
planters must follow a specific technical itinerary. The company provides free technical
assistance, as well as campaign loans. Profits are equally divided.
Controlled production contract (d) : the company provides support for production (inputs,
credit) and exercises fairly strict supervision of production.
Oil palm Ivory Coast Palmindustrie. The company provides technical advice and all
the inputs and services necessary for production (selected plants, fertilizers, etc.),
collects palm seed bunches (with an obligation to deliver all production to
Palmindustrie ) and ensures the monthly payment, on the basis of a fixed price and
after deduction of a deduction made for the reimbursement of a fraction of the aid for
the creation of the plantation and the advances for the campaign. Supervisors ensure
compliance with the specifications (no associated crops, pruning and regular
maintenance).
Same types of contracts: oil palm Ghana GOPDC before privatization, rubber in Côte
d'Ivoire before privatization9 , fruits and vegetables Kenya case Frigoken.
Production contract with quasi-integration of the pseudo-salaried type (e) : contracts
providing technical support, the supply of inputs, the outlet for production, but also organization
and supervision of the work by the supervisory structure, resulting to quasi-integration. The
status of the producer can be likened to that of a paid worker who would be interested in
profits and losses.
9
After privatization: farm gate sales, without contract.
37
Canned pineapple Ivory Coast, SALCI/SODEFEL system. SODEFEL (public

development structure) brings together planters on mechanized cultivation blocks and
organizes them into Cooperative Vocation Groups (GVC). For each campaign, the GVC
– in fact, SODEFEL – allocates the plots of the cultivation block to the planters,
establishes the production and harvesting schedule, organizes the performance of
mechanized work and ensures the latter, provides the inputs, organizes and controls
carrying out manual tasks, or even replacing planters by ensuring cultivation methods
that are not carried out on time. SODEFEL organizes the harvest, in coordination with
the usinier (SALCI). In this system, the planter brings only his labor force. It depends on
the GVC for access to land and inputs and has no control over cropping operations, the
cropping calendar and production costs.
Citrus production on irrigated perimeters, Agricultural Rural Development Corporation

(ARDC) of the North Province of South Africa, before privatization. Planters in rural
communities had very little control over their production, with most decisions being
transferred to the ARDC, which advanced seasonal loans to planters enabling them to
cover their production costs (labour, maintenance of the system, shaft replacement,
etc.) and as warranty. Marketing of all fruit produced was handled by the ARDC who
exported through Outspan, with repayments of credits advanced being deducted after
delivery. The planters were more agricultural workers than individual producers.
Management contract with quasi-integration of the annuitant type (f) : production is taken
care of by the company, the "producers" becoming beneficiaries of the campaign results by
virtue of their contribution to the land. They become de facto annuitants.
Citrus South Africa, Lona cases and "cooperatives". After the liberalization of the citrus
sector and the dismantling of the ARDC, the planters, whose activities were more those
of agricultural workers than of individual producers, were not in a position either
technically or financially to continue the exploitation of the plantations which rapidly
deteriorated. This situation coincided with demands for land redistribution to local
communities as part of land reform programs (in 1998). In 2001, under the supervision
and with the support of the Limpopo Department of Agriculture, the outgrowers signed
an agreement delegating production management to a private company, DuRoi. In
2006, the “cooperatives” achieved EurepG.AP (GlobalG.AP) and Tesco Nature's Choice
standards, and in 2008 they achieved fair trade certification.
Once the production has been certified, the producers enter into contracts with the
exporters. During the 2009/10 season, Lona Citrus Ltd, one of the citrus exporters with
whom the producers were in contact, took over the management of the plantations and
marketing. Crops are fully managed by Lona.
A professional manager is appointed to oversee production with the help of assistants,
and all cultivation operations are carried out by agricultural workers.
38
Some of these managers are appointed by Lona from among the members of the
"cooperatives", and paid on a monthly basis, in addition to their share of the profits from
the sale of fruit in proportion to the size of their plot.
To these different types of contracts, we must add what appears in certain titles as a chronological
combination of management contracts (f) and assisted production contracts (c):
"Turnkey plantation" production contract, concerning perennial plantations:

the company realizes the plantation before transferring it to the producers, either with a
subsequent reimbursement by the latter of the establishment costs, or by returning to the former
landowners, in the form of planted area, only part of the land that had been deducted from their
land holdings. It provides assistance to the producer in the form of inputs, credit, technical
assistance, and provides an outlet for production.
Oil palm Indonesia, PIR/NES and PIR-Trans cases. The planter receives a plantation
already established (on land granted by the State) by the public (PIR/NES) or private
(PIR/Trans) company (which also has its own plantation). He
maintains and harvests it, the production being purchased by the company. It reimburses
the costs incurred on the plot (preparation of the land, planting, fertilizers, transport, etc.)
as well as management costs, through a deduction of 30% of the sums due to the
producer by the company upon purchase of the harvest (until the debt is fully repaid).
Once the debt has been repaid, the planter receives a private title deed to the land
bearing his plantation.
Hevea Laos. Once the plantation has been carried out by the company, it retains 70%
and returns 30% to the villagers, who are required to sell their latex to the investor at the
market price.
Oil palm in Ghana: village plantations initially carried out by the GOPDC.
2.4 Characterization of contractual relationships

In line with Sykuta and Cook (2001) and Vermeulen and Cotula (2010), we will characterize the
contractual relationships between companies and producers under contract through the following
elements:
• Who owns the property rights to land and infrastructure?
• Who has the decision-making power with respect to the production and
marketing?
• Who bears the production and market risks?
• What are the room for maneuver of producers under contract, apprehended through the
alternatives available to them in terms of marketing the harvest, and the specificity of
assets.
39
Another fundamental element mentioned by the cited authors is the distribution of value,
but unfortunately the case studies do not allow, except for exceptions, to take it into
account.
Land ownership rights
In all the cases studied here, the producer under contract exercises control of the land,
except for canned pineapple in Côte d'Ivoire10 and oil palm in Indonesia or rubber in Laos
as long as the plantation creation debt is not reimbursed (case of the Indonesian PIR/NES
and PIR/Trans schemes).
Ownership rights to infrastructure
In the majority of cases, the company owns the infrastructure (processing plants, packaging
centres). In 3 cases, the group of producers or the producers are shareholders of the
company: in Côte d'Ivoire, for canned pineapple in the case of
SIACA-SOCABO scheme (the SOCABO producers' cooperative is a shareholder in the
SIACA factory), in South Africa, in the case of citrus production under contract with Magalies,
and since the beginning of the 2000s in Burkina Faso in the cotton sector (the national union
of producers holds, depending on the company, 20 to 30% of the capital).
Decisional control over production
The producer has very broad decision-making power in the case of marketing contracts,
marketing with specifications and assisted production.
Its decision-making power is more restricted with controlled production contracts. It is almost
nil with production contracts with pseudo-employee type quasi-integration. It simply does
not have to be exercised in the case of management contracts (quasi-integration of the
rentier type) or "turnkey plantation" production contracts, in the initial phase of these
contracts (creation of the plantation).
Production risk
This risk is borne by the producer in all types of contracts11 .
10
In the case of pineapple-export, the grower generally accesses the land through an indirect tenure contract, but
independently of the buyer of the production with which he contracts or of the cooperative through which it exports.
11
It should be noted, however, that if there has been credit, in the event of low production, the weight of unpaid
debts, which legally weighs on the producer, can in fact be borne by the State – as in Burkina Faso where the
debts of farmers have been mopped up following years of crisis.
40
Market risk
This risk is insured by the company when the contracts determine in advance a fixed purchase
price to the producer and a purchase guarantee12 . The fact that the price to the producer is
determined in advance covers a priori the market risk for the latter, but provided that the system
for collecting production (when this collection is provided by the company) does not experience
any malfunction . Moreover, hedging against the risk can take place at a price deemed low by
the producers.
Other contracts provide for short-term price determination on the basis of the world price
and therefore transfer the market risk to the producer13 .
Marketing alternatives
The absence of an alternative in terms of marketing the product places the producer in a
relationship of dependence on the company, which may be unfavorable to him - but at the
same time this absence of an alternative avoids non-compliance with the contract by the
producer and therefore ensures the durability of the contractual mechanism. The alternatives
for selling part of the production on the "parallel" market (in the sense of not accessible to the
producer according to the terms of the contract) may arise before the contract is entered into
or at the time of the harvest.
In the cases covered by this study, all scenarios are present: strict monopsony of the company
(absence of outlets other than the company)14 , existence of parallel markets15,
alternativeexistence
outlets of
ensuring the producer a choice at the time contractual commitment, for non-perennial
productions16 .
Asset specificity
Investment in specific assets by producers, because of their involvement in a contractual

arrangement, is likely to place them subsequently in a position
12
See the following cases: pineapple-export Côte d'Ivoire (small-producer/buyer-large planter contracts), canned
pineapple Côte d'Ivoire; South African citrus, Magalies and Iona cases; oil palm Côte d'Ivoire, rubber Côte
d'Ivoire before privatization, sugar cane South Africa case TSB, cotton Burkina Faso.
13
See the Ghana and Indonesia oil palm cases. In the case of oil palm in Côte d'Ivoire after privatization, the
price fixing mechanism distributes the risks, in the event of a drop in prices, between planters and millers. In the
case of post-privatization village rubber cultivation in Côte d'Ivoire, production is sold on the field, without a
contract, on the basis of a regulated price indexed to the international price.
14
Canned pineapple Ivory Coast, oil palm Indonesia (areas where the sector is underdeveloped), rubber
Ivory Coast before privatization, sugar cane South Africa case TSB, cotton Burkina Faso.
15
Oil palm Côte d'Ivoire, Ghana and Indonesia (areas where the sector is highly developed), rubber Côte d'Ivoire
post-privatization.
16
Pineapple-export Côte d'Ivoire (small-producer/buyer-large planter contracts); fruits and vegetables kenya
Frigoken case; citrus South Africa case Magalies.
41
disadvantageous in their relationship to the company. In the present case, the establishment
of perennial plantations (oil palm, rubber, citrus) constitutes the most notable asset
specificity. The plantation can of course potentially be felled in the event of breach of
contract, but this supposes the loss of the investment made for its creation, in terms of
inputs and work but also of loss of earnings before the start of production.
The intensity of this asset specificity is however reduced by the fact (i) of having alternative
outlets, at least for part of the production: citrus fruits in South Africa, oil palm in Côte
d'Ivoire or Ghana, due to the existence of small-scale oil production units, and (ii) being
able to take advantage of the felling of the plantation: oil palm in Côte d'Ivoire and Ghana
again, with the production of wine palm and alcohol.
2.5 The logic behind the use of contract farming by

companies
It is generally considered that the use of contract farming generates the following
advantages:
• It allows the company to be assured of a continuous supply in order to make the best
use of processing capacities (and therefore to develop significant fixed investments),
by avoiding the risks induced by a supply on the spot market and by reducing the
constraints of exclusive direct production (ie, vertical integration) (see Glover, 1984;
Glover and Kusterer, 1990; Jaffee, 1994; Little and Watts, 1994; Key and Runsten,
1999; Eaton and Shepherd, 2001 ).
• Contracts made with producers can make it possible to specify cropping calendars
and therefore harvest dates and volumes produced. They thus make it possible to
control the production process and the quality of the product (advantage compared
to recourse to the market).
• The company avoids or reduces the difficulties related to access to land, the
employment of hired labor and the day-to-day management of production
(advantages compared to direct production). For foreign firms, contract farming
reduces investment (no land acquisition) and therefore the risk of expropriation.
• Contract farming can project the image of a socially responsible enterprise
progressive and avoids problems with labor unions.
In return, the use of small producers translates into high transaction costs and the company
runs the risk of producer practices that some authors qualify as opportunism and others as
acts of resistance: sale of a part of the production on the parallel market (when a local
market exists for production under contract), diversion of inputs supplied by the company,
fraud during the delivery of the product, failure to respect the quantity and quality planned .
17
It is obvious that companies also have specific investments that link them to the territory, from
when they implement heavy infrastructure.
42
2.6 What do the cases selected for this study teach us?
The establishment of a contractual relationship can first come from a political will
responding to the needs of rural development and regional planning. We obviously find
this logic at work in the cases of initial development of contract farming by public structures
or mixed economy (oil palm in Côte d'Ivoire, Ghana, Indonesia; rubber in Côte d'Ivoire;
cotton in Burkina Faso). In South Africa, the post-apartheid government is implementing a
policy that facilitates the establishment of relationships between "small black farmers" and
businesses. In Laos, at the end of the 2000s, the government advocated the development
of contract farming but, in the absence of marked political and economic measures, the
granting of concessions for the development of large-scale agricultural holdings persisted.
The establishment of contract farming by companies (including public ones), rather than
recourse to the cash market or to own production (farming in direct exploitation with
employees) is to be related to a set of factors:
• shortcomings of the spot market : the company does not plan to obtain supplies
on the market because it does not exist (canned pineapple in Côte d'Ivoire, oil palm
in Côte d'Ivoire when the first Plan palm, cotton in Burkina Faso) where the supply
is too variable (passion fruit for export to Kenya);
• the origin of the company : the latter may exclude own production. For the production
of canned pineapple in Côte d'Ivoire, the SIACA/SOCABO system was designed
from the outset by local elites, providing for production by cooperators and
participation of the cooperative as a shareholder in the factory. .
For processed fruits and vegetables in South Africa, Frigoken Ltd is a limited liability
company established by the Aga Khan Development Network (AKDN); because of
its origin, Frigoken has a social mandate and AKDN requires it to source from local
producers;
• a strategy for building a positive socio-political image

by demanding more inclusive and equitable production methods: in South Africa
In the South, ten years after the end of apartheid and little land redistribution,
private companies want to display their social commitment by resorting to small
black producers;
• beyond the incentive mechanisms, a restriction of organizational choices can be
imposed by public policies : the project of the leading Kenyan company in
horticulture and in the transformation of passion fruit which plans to develop its own
plantations cannot succeed because of the veto of the authorities. It must therefore
move towards seasonal contracts with a few large producers. In Indonesia, for the
production of oil palm, the State and then certain local authorities require companies
to (retro)transfer planted land to farmers;
43
• for at least part of the needs, a supply at a lower cost motivates the choice of contract
farming rather than direct farming (contractualisation being all the more interesting
when the profit margins are low) , due in particular to labor costs: cotton in
Burkina Faso, oil palm in Ghana (GOPDC), canned pineapple (SALCI) in

Ivory Coast ;
• transfer of production risk to farmers under contract: cotton in Burkina

Faso ;
• the constraints of access to land encourage companies to develop contract farming

(case of oil palm and rubber in Côte d'Ivoire for the most anthropized regions, case of
sugar cane in South Africa after restitution of land to communities). Contract farming
can also represent a form of compensation for local populations affected by the
establishment of industrial plantations (oil palm in Ghana and Indonesia);
• a strategy for access to labour : in Indonesia, the development of the nucleus-plasma

scheme was a means of ensuring that industrial society had a reservoir of labour;
• a strategy to reduce the cost of labor control : in Kenya, for export horticultural
production marked by strong demand requirements in terms of norms and standards,
companies are developing their own production for the heaviest and most expensive
products. perishables which require a very high level of technicality (cut flowers) and
they set up contract farming with significant control for fruits and vegetables (processed
or fresh) which require
great care and delicate manual operations.
44
3. The effects of contractual schemes
This chapter aims to observe the effects of the activity of agro-industrial companies on the
transformation of the production systems of family farms and, more broadly, on rural
development in a given region or country. The following chapter will offer an analysis of the
factors explaining these differential effects.
3.1 The effects on the trajectories of farms and their access

to markets
3.1.1 Question of fairness: contracts for all?
A recurrent question relating to contractual schemes concerns their effect in terms of excluding
or including farms with the least factor resources. Although the qualifiers of "small" and "large"
farms refer to different realities according to national agrarian structures, the findings are very
contrasting in the literature according to the periods, countries and sectors studied: contractual
arrangements involving the
best endowed farms (Key and Runsten, 1999; Baumann, 2000; Dolan and Humphrey, 2000;
Singh, 2002; Simmons, 2002) or, on the contrary, essentially small producers (Birthal et al.,
2005). However, the inclusive or exclusive effect of contractual schemes is neither systematic
nor fixed. The use of farms of various sizes can result from company strategies and evolve
over time, from large to small farms (eg Reardon et al., 2009), as well as from small to large
(eg Key and Runsten, 1999).
The cases studied here reflect this diversity of situations marked by inclusive processes
or exclusive during the implementation of the contractual scheme, during its evolution over time
and even once the latter has disappeared.
at. A dynamic mainly involving small farms (which does not exclude the use of agro-industry on
large farms).
In South Africa, an inclusive dynamic appears in the case of the sugar and fruit and
vegetable sectors, strongly supported by public policies for the benefit of “ colored ” and
black communities.
In Kenya, most fruit and vegetable suppliers to the company studied (Frigoken) are
smallholder farmers. Nevertheless, the company also contracts with medium or large
farms.
In Côte d'Ivoire, the adoption of pineapple cultivation, both for canning and for export,
was essentially due to foreign migrants and not to local producers, large or small. It was
therefore very inclusive, but of a deterritorialized "inclusiveness", by attracting the "poor"
from elsewhere, who initially came as laborers for canned food production, but who
later became small
45
pineapple-export growers on land taken as indirect tenants. This dynamic offered

the opportunity to some of these producers to capitalize and significantly increase
the size of their operations. However, these inclusive dynamics came to an end
with the collapse of cultivation for canning (1980s), then production for fresh export
(2000s), due to the inability of small planters to meet the requirements European
market news.
b. An initial dynamic centered on small or medium-sized farms, then subsequently also

involving large farms.
In Côte d'Ivoire, for palm and rubber, the first contractors are producers at the head
of small or medium-sized farms and sometimes from various socio-professional
backgrounds (to the main farmers are added traders and frames). The spread of
off-contract culture was then marked by the increasingly massive entry of well-to-
do individuals into production, generally executives from urban areas. The process
is therefore globally inclusive but tends to benefit mostly the wealthiest individuals,
who are generally multi-active.
vs. A dynamic initially including a wide diversity of producers but subsequently inducing a
process of exclusion of the smallest, unable to meet the economic requirements of
production and the contract.
In Indonesia, the contract for palm plantations being a consideration for companies'
access to land, a large majority of users and customary owners of the land
concerned are included in the initial contracting scheme.
Many migrants, whose movement is organized within the framework of national
programmes, also enter into these contractual relations. In the following years,
some producers, generally the smallest ones, withdraw from the contract scheme
voluntarily (migrants) or under duress (producers unable to repay the initial loan).
They sell the rights to the plots to wealthier producers or to the company, thus
reinforcing the preponderance of the best-endowed farms among the contractors.
Beyond the characteristics of the size of the farms, the profile of the contractors (migrants/
natives; men/women; young/old) varies according to the contexts studied.
While the inclusion of migrants in contractual schemes is frequent in the cases analysed,
that of women and young people (under 35) is rarer.
3.1.2 Effects on farm incomes, savings, access to credit and investment
The contract usually secures outlets and purchase prices to the producer. Added to these
guarantees, contract farming can be a source of increased income. However, this increase
may sometimes be only temporary and/or only benefit
46
wealthier producers (Minot, 1986; Glover and Kusterer, 1990; Little, 1994; Baumann,
2000; Singh, 2002; Reardon et al., 2009).
The case studies illustrate the variety of effects of contractual schemes on revenues.
In Côte d'Ivoire, contract farming initiated by the agro-industry for the cultivation of
pineapples for canning contributed to the increase in income for the early stages of
the cultivation's development (early 1960s ), but the stagnation of the purchase
price to the producer then leads to a net deterioration of these incomes. The
subsequent spectacular development of cultivation for fresh export (based on a
more diffuse and multiplexed contractual system) unquestionably had a positive
impact on producers' incomes through their direct (exports via cooperatives) or
indirect (sales to buyer-exporters) on the European market, until the crisis of the
2000s which led to the virtual disappearance of production.
For oil palm, the increase in producers' incomes is observed in Indonesia for only
some of the producers and for certain agro-industrial complexes, in Côte d'Ivoire,
for all the producers, but only at certain periods.
In Kenya, producers under contract with the Frigoken company for the production
of fruit and vegetables benefit from a higher price than that on the local market,
which implies an increase in the income of producers under contract.
In Laos, in the context of rubber growing in the north of the country (province of
Luang), only small independent producers see their living conditions improve, while
those of producers under contract tend to decline, due to of very unfavorable
harvest sharing, due to a lack of bargaining power.
Independently of the increase in income allowed by the production developed or not within
a contractual framework, the interest of the latter can be to ensure a regular income
throughout the year (oil palm, rubber; certain fruit productions and vegetables) or to
constitute a source of income by way of retirement (arboriculture in South Africa with the
Magalies/WUFA case, rubber cultivation in Côte d'Ivoire). Alternatively, for cotton or
pineapple, the producers evoke the interest of receiving a substantial sum in one go,
allowing investments.
Initial stage conditioning the improvement of incomes, access to credit, through the
provision of all the necessary inputs (cuttings, fertiliser, etc.) by the agro-industry – even
of a key plantation in hand – is a point common to the majority of the contractual schemes
studied. It is a success factor in some cases (oil palm in Ghana and Côte d'Ivoire), it
sometimes becomes a handicap in others (oil palm in Indonesia).
In some localities in Indonesia, the credit rate imposed on oil palm growers, added
to the high amount of charges imposed on them for various services, have pushed
the less well-off producers to sell their plots. Such a constraining effect of credit
was not observed in the case of the oil palm sector in Ghana initiated by the
GOPDC. The company, just like the olive industries
47
Indonesian companies, takes 30% of the income from the harvest in return for the credit granted.
Ghanaian farmers manage to profit from the production for two main reasons: (i) the services
provided are invoiced at a lower cost compared to those offered to Indonesian farmers and,
above all, (ii) alternatives are found to escape reimbursement obligations of their debt. Some
producers in fact deliver their production to informal alternative markets, at prices that are mostly
equal to those charged by the GOPDC, and in this way avoid the 30% "tax" applied by the
company on delivery.
The improvement of producers' incomes can also be made possible by the possibility of savings and
credit (not linked to the contract) offered by more regular income, by the creation of plant capital that can
be mobilized at the end of the life of the plantation ( production, after the felling of oil palm, palm wine
and alcohol plantations in Côte d'Ivoire and Ghana), or even, more specifically, through access to formal
credit through integration into the banking system induced by the contractual system (rubber in Côte
d'Ivoire).
The effects on income induced by the production developed within a contractual framework can also be
expressed in terms of investment: acquisition of land (Indonesian palm planters), purchase of cultivation
or transport equipment (Burkinabe cotton producers, small planters of pineapple-export in Ivory Coast).
3.1.3 A process of social differentiation between contractors but also between

contractors and non-contractors
Through their different effects at the household level, the contracts signed with agro-industries can
generate or, conversely, reduce the economic and social differentiation between
contractors (Glover and Kusterer, 1990). In the absence of state intervention, the differences between
large and small producers tend to widen, with small producers using their income to cover their basic
needs, while larger ones invest to improve their productivity ( ibid). In the cases studied and documented
on this question, the socio-economic differentiation between producers under contract, which existed
before the signing of the latter, was reinforced.
In Indonesia, contracting for oil palm production has enabled the best-endowed producers to
improve their income, while it has put the poorest households in difficulty (failure to repay the
plantation creation debt ).
In Côte d'Ivoire and Ghana, while the various producers under contract for the production of
rubber and palm saw their incomes improve in the 1990s, differentiation between contractors has
tended to increase in recent years due to the a craze for these crops by urban executives,
including outside the contractual scheme. The latter, thanks to their economic and social capital,
manage to cultivate large areas, generating a more marked process of accumulation than that
experienced by other producers.
48
A contracting mechanism is also likely to widen the gaps between contractors and non-
contractors within the local community18 (Glover and Kusterer, 1990; Little and Watts,
1994; Baumann, 2000). This dynamic is observed in most of the situations studied (palm in
Indonesia, Ghana and Côte d'Ivoire; rubber in Côte d'Ivoire; pineapple-export in Côte
d'Ivoire; citrus in South Africa).
Original case, in Côte d'Ivoire, pineapple producers, mostly migrants
burkinabè, went from the status of quasi-labourers (canned pineapple) to that of
micro or small entrepreneurs (pineapple-export) between the 1960s and the 2000s.
This success story was not without provoking strong resentment from natives with
regard to foreign planter-tenants.
In South Africa, the contracts signed with the citrus processing and exporting
company studied have contributed to reinforcing the differences between agricultural
producers. This contractual mechanism has in fact provided secure and regular
income to so-called emerging producers, who have also benefited from various
support and subsidy programs and who already had economic (land allocation) and
social (good level of training, integration into networks). Those
Contractual schemes reinforced the gaps between emerging producers and other
black rural households but attenuated the differences between these producers and
white farmers.
In Laos, the development of commercial and contract farming triggered a movement
of land privatization, whereby productive communal lands were gradually converted
to cash crops. This process of land privatization has exacerbated pre-existing
inequalities. It mainly benefited those who were able to mobilize labor and capital
and negotiate with local authorities to obtain more productive land.
Contractual schemes, at the source of multiplier effects resulting in the development of

infrastructures as well as markets for services and products (Key and Runsten, 1999) can
also cause binding secondary effects for non-contractors (Simmons, 2002) , such as price
increases in commodity and input markets (Bijmann, 2008). The information available in
the case studies did not identify such effects.
3.1.4 Effects on the labor market
Little attention has been paid in the literature to the effects of the development of contract
farming on the management of family and extra-family labor within
18
The establishment of agro-industry can be done in a locality where the differences between producers are
already marked and anchored in the local social structures. It is therefore difficult to identify to what extent the
social and economic differentiation between contractors and non-contractors results from the effects of the
contracting scheme alone (Little, 1994).
49
farms19 (Watts, 1994). Little information is also available in our case studies. Changes in
the distribution of labor within the household seem to depend more on the biology of the
culture, the physical difficulty of the tasks or their technicality, the sexual division of labor
in the local society and the eventual existence of phase of processing, as well as the
nature of the contract (delegation of the tapping of the rubber tree and the harvesting of
palm seeds, collection of palm bunches by women wishing to process them, the most
physical work carried out by men) . One will simply note, in the case of oil palm in Côte
d'Ivoire, the development of a local female activity of palm oil production (within households
with plantations, but not exclusively).
A consensus appears, in the literature (Little, 1994; Glover and Kusterer, 1990; Reardon
et al., 2009) as in our case studies, on the effects of contracting on the local labor market.
The job offer increases to meet the needs of the company's own plantation and its
processing unit, such as contract farmers.
Producers under contract sometimes become employers (palm growers in Ghana and
Côte d'Ivoire, rubber in Côte d'Ivoire, certain pineapple-export growers in Côte d'Ivoire). In
Ghana and Côte d'Ivoire, work on oil palm or rubber plantations is often delegated to
laborers due to a lack of skill or interest on the part of producers, and not because of a
lack of time on the part of the latter. These jobs, contrary to the findings of some authors
(Singh, 2002; Glover and Kusterer, 1990), are not necessarily less paid than those not
linked to the contractual scheme20 .
The various case studies also share the observation that the establishment of agro-
industries has generated jobs for permanent and seasonal workers (the data unfortunately
do not allow a quantitative analysis, even approximate, to be carried out by reducing the
number of jobs permanent and seasonal per planted hectare). These jobs do not
exclusively benefit indigenous people, and are even rarely taken up by them. They are
often occupied by migrants who have come specifically to occupy these positions (oil palm
in Indonesia) or available for lack of an alternative (palm and rubber in Côte d'Ivoire).
When these employment opportunities generate or reinforce migratory flows, the case
studies do not allow us to conclude on the impact of this dynamic on wage rates on the
local labor market (which according to Glover and Kusterer, 1990, and Little, 1994, would
then tend to decrease). Working conditions and remuneration can sometimes
not comply with the legislation in force in the countries (palm in Indonesia, all agro-
industries in South Africa).
19
The few authors who have studied this theme have highlighted the fact that the signing of the contract by
a single member of the household, often the man with the status of head of household, could be the source
of intra-family conflicts (Guyer and Peters, 1987; Watts, 1994). The work overload generated by production
under contract can indeed be disputed by family members, who see their obligations increased without
benefiting from additional rights or advantages.
20
Little information is available on the effects of this more frequent recourse to the labor market on a
possible difficulty in mobilizing self-help groups, the latter being likely to ask for remuneration in the same
way as paid laborers (eg Simmons, 2002 ).
50
Laos, impacts of concessions on employment. Producers who have lost their land are
often forced to sell their labor on the plantation to be able to buy the rice they produced
before. However, not all villagers can be employed by the plantations, which establish
quotas per village and set an age limit for plantation workers. In addition, some
plantations (such as pulpwood plantations) employ little labor (low number of permanent
jobs and many daily jobs only a few days a year) thanks to mechanization and the use
of herbicide; others bring in their workforce from other parts of Laos,
even other countries. Among the villagers who work in the plantations, there are many
who are not satisfied with their remuneration (insufficient, late, partial pay, non-payment
of transport and food costs), nor with the number of hours of work. . In most cases,
they have neither a contract nor the possibility of taking charge in the event of a health
problem (exposure to chemical products). Producers who are unwilling or unable to
work in the plantations clear new forest land or are forced to migrate to urban areas,
to other provinces of Laos, or even to neighboring countries (Thailand).
3.1.5 Effects on land distribution, land markets and

intra-family land management
The development of contracting schemes is currently regularly presented as a major

alternative to the establishment of large-scale farms,
so that local occupants and landowners maintain access to land.
Nevertheless, at different timescales, this development can have effects (or reinforce
dynamics already in progress) on land tenure security for local populations, the activity of
land markets and land distribution.
The development of agro-industries linking production under contract and own production
has involved (or involves), in certain cases, a prior expropriation of holders of customary
land rights. Land, considered in many countries as state property, is sold or more often
granted to agro-industries, often without recognition and, therefore, without compensation,
of the rights of the occupants.
In Indonesia, the first public oil palm plantations initiated
under the Suharto regime, generated such expropriations, which are a source of
conflict and dispute today. The establishment of contracting schemes
(nucleus/plasma) then allowed the initial occupants to recover part of their land
heritage planted with palm trees, but the proportion of land actually "re-transferred"
to them decreased drastically from the 1980s to the 1990s.
In Ghana, the GOPDC agro-industrial complex, specializing in rubber, is located on

land previously occupied by local communities.
In the case of oil palm and rubber in Côte d'Ivoire, the industrial plantations of
public enterprises were established for the most part, in the 1960s, on
51
classified forests previously established on lands that were considered as land reserves
by the villagers. As in Indonesia, due to the authoritarian nature of the political regime in
place when the plantations were created and the hope of positive spin-offs for the
communities, the populations did not show any direct protest. But the conflicts emerge a
few decades later, in a context of change of political regime, land pressure and exacerbation
of the feeling of injustice of the local populations – a feeling exacerbated when there was
privatization of the old public plantations. .
In Laos, the granting of concessions to agro-industry has often resulted in the loss of
access to land for local populations whose land rights are rarely secured, without
compensation. In many cases of rubber plantation development, when the plantations are
set up, the villagers provide the land and work in exchange for a salary financed by the
company (the producer becomes an agricultural worker on his own land) . As soon as the
trees produce (7-8 years), there is partition of the trees or the land: generally, 70% for the
investor and 30% for the villagers. Each of the parties then exploits the land or trees that
belong to it. The proportion of land or trees that remain the property of producers is low.
The case studies demonstrate that contract farming directly or indirectly contributes to the
commodification of access to land.
The enthusiasm for a given crop, stimulated by contract farming set up by an agro-industry and
then, sometimes, by the entry into play of multiple players, has in some cases contributed to the
emergence or the dynamics of the indirect tenure land market
(various forms of sharecropping and rental).
In Côte d'Ivoire, the boom in pineapple production has contributed to the emergence and
remarkable development of the indirect tenure market. It has thus had an undeniable
impact on farming structures, with a significant flow of land on a regional scale between
landowners and landless migrants. The boom in palm and rubber crops has also
contributed to temporarily strengthening the market for indirect tenure. During the Palm
Plans and the supervised development of rubber cultivation, a plot occupied by an old
coffee or cocoa plantation could be leased or leased to producers who went there to do a
cycle of food crops, which ensured the clearing of the land. and its preparation for the new
contract plantation. This type of practice is still observed after the privatization of
companies, but henceforth the owners almost systematically cede in addition to the rights
of use on their young palm and rubber plantations so that the lessees develop there in
association food crops and do not ensure the maintenance of the plot in this way (this
association was prohibited or strongly constrained by the management structures in the
previous period).
The enthusiasm for productions developed (at least initially) under contract with the agro-
industry may also have led to the emergence or development of
52
new contracts, such as "Planter-Partager" in Côte d'Ivoire for palm and rubber plantations, or
the reverse abunu and abusa contracts in Ghana for palm21 .
The attraction of a crop introduced within the framework of contract farming (then possibly experiencing
a more autonomous dynamic) may also have boosted the purchase-sale market and thus had an
impact on the local distribution of land ownership.
In Indonesia, the development of the palm on previously collectively managed lands favored
the individualization and privatization of land rights and subsequently facilitated the activation
of the purchase-sale market through sales made by small growers unable to meet contract
requirements.
In Côte d'Ivoire, the current vogue for rubber is reflected in land acquisitions by executives. In
the early 1990s, SAPH, a mixed-economy agro-industry producing rubber, and donors launched,
in parallel with the development of contracts with small producers, a specific program for
executives, aimed at financing and enter into contracts for farms of the order of 20 to 50 ha.
Currently, many executives in Abidjan are acquiring land to plant rubber trees. Beyond the
problem of equity, the resulting land pressure at the expense of family farming can become
worrying for the social balance of the country, which has already been undermined in recent
years.
The development of contract farming and, more broadly, of the crops it introduces, is likely, in certain
contexts, to weaken access to land for family dependents of the farm manager. Here we find an
observation established by Guyer and Peters (1987), Watts (1994), Eaton and Shepherd (2001).
In Côte d'Ivoire, for example, a conflict in 2001 between growers of Burkinabè export pineapples
and young native Abouré people had its source in the contestation, by the cadets, of the rental
practices of the native elders, which were considered excessive.
In Ghana, young people reproach their uncles or their father for having committed too much of
the family land assets under contract to develop the cultivation of oil palm and this, for too long
periods (25 years).
This effect is obviously potentially stronger in the case of the development of perennial crops, which
once planted freeze the use of the soil for several decades.
Moreover, tensions can arise between the agro-industry and the producers after a parcel under
contract in perennial cultivation has been inherited, the new holder of the parcel not knowing the terms
of the contract or not wishing to respect it ( a point mentioned in the Ghana oil palm case study).
21
Through these types of contract, a landowner provides the land to a farmer who creates a permanent
plantation and maintains it until production begins. At the time of entry into production, a sharing is carried
out: sharing of the plantation for the life of the latter, sharing of the harvest or sharing of the plantation and
the land.
53
3.2 Effects on production systems
3.2.1 New crops that compete with food production and

undermine food security?
When the effects of the development of contract farming on the improvement of the living
conditions of producers are studied, the question of competition between contract farming
and crops intended for household food emerges (Glover, 1984; Baumann , 2000; Singh,
2002). The findings that emerge from the cases studied are generally positive in this
regard.
In the vast majority of cases, the development of cropping under contract takes place in a
logic of diversification of cropping systems and not of specialization22. Producers maintain
food production, to ensure their food, to spread the risk but also to have income while
waiting for the income from cultivation under contract or in addition to the latter. This is
evidenced by the readjustment of areas under contract by producers according to the
economic context (cotton in Burkina).
Cultivation under contract is generally established on land previously allocated to another
cash crop (palm and rubber replacing coffee in Côte d'Ivoire and Ghana; palm instead of
rubber in Indonesia) or plots trees and (savannas for cotton in Burkina Faso and
sometimes for oil palm and rubber in Côte d'Ivoire,
agro-forests in Indonesia, pastures in Laos) but not in place of food crops.
A reduction in areas under food crops due to the allocation of land to cropping under
contract may not be seen as problematic by producers if they plan to use the market for
all or part of the food for the family (particularly with purchases of rice) – an explicit
strategy among some rubber and palm growers in Côte d'Ivoire, who however tend most
often to keep a small area for a food crop-fallow system. There remains the real risk of
dependence on the market for food for the domestic group, in the event of a sharp rise in
cereal prices.
Contract farming can boost food production. In Burkina Faso, cotton growing and food
crops are closely linked due to a rotation system; the increase in areas devoted to the first
mechanically leads to those devoted to the second. This effect can be temporary, as in
Côte d'Ivoire with the association of food crops with young palm and rubber plantations.
In the cases studied, the development of contract farming has not reached such a
threshold that it poses food security problems at a regional level due to the reduced area
available for food crops and livestock, and less supply to local markets (as envisaged by
Little and Watts, 1994).
22
With the exception of the small production of pineapples in Côte d'Ivoire. Migrants accessing land by
renting specialize in growing pineapples, although many of them produce some food. On the other hand,
when pineapple cultivation is adopted by landowners, it most often corresponds to a strategy of diversification
of the cultivation system.
54
The problem associated with the extension of crops under contract may be less that of food
security, than of the protection of biodiversity and the continuity of social and economic
practices for the development of agro-forestry resources (firewood, non-food products).
(palm in Indonesia, compared to agro-forests; rubber and palm in Côte d'Ivoire, compared
to coffee and cocoa plantations; development of concessions in Laos).
3.2.2 Innovation
A recognized major benefit of contract farming is to promote technology transfer and

learning by producers about new crops or farming techniques (Glover, 1984; Glover and
Kusterer, 1990), or even farmer innovation.
In the case studies, the establishment of contractual schemes on the basis of plant material
and technical itineraries based largely on the achievements of agronomic research, has
effectively enabled producers to master a new or little-used crop.
The learning process is all the more marked as it has spread beyond the producers under
contract. In Indonesia and Ghana for oil palm, in Côte d'Ivoire for palm, rubber and
pineapple, contract farming enabled the first adoption of the crop which then spread widely,
outside the scheme. contractor, within farms with a wide variety of profiles.
In Côte d'Ivoire, on the same site, pineapple areas multiplied by 8 between 1983
(era of canned pineapple and emergence of export pineapple) and 2002
(peak of pineapple-export production). In the Gagnoa region, at present, for 1 ha
planted under rubber tree contract, there are 4.3 ha planted outside the contract.
In all the oil palm production zones, the average area planted annually outside the
contract in the village sector over the period 1995-2000 would be greater than that
planted over the period 1985-1990 during the second Palm Plan.
This dissemination of culture outside a strict contractual framework has been made possible
by transfers of information and knowledge between employees of the agro-industry and
peasants, between peasants (palm in Indonesia disseminated thanks to the know-how of
migrants from formerly producing regions ) and in some cases through ongoing technical
support from utilities. It has also been facilitated by adjustments in practices such as they
were popularized by the agro-industry, aimed at reducing the cost of initial investment or
production in the exploitation phase.
For perennial crops (rubber, palm), growers combine young plants with
on non-contract plots, food crops (rice, maize, vegetables, plantain, taro) and not
cover crops. This adaptation allows them to earn an income from the plot from the
first years. Producers limit or eliminate fertilizer applications, increase plant density
per hectare or find alternatives to reduce the cost of plant material (in Côte d'Ivoire,
no use of budwood for rubber trees).
55
For pineapple-export in Côte d'Ivoire, we noted the absence of bottom fertilization,

sanitary treatments of plant material, preventive phytosanitary treatments, unbalanced
fertilization of potash/nitrogen inputs, packaging in cardboard carried out directly on the
plot, etc.
However, this strategy is not without consequences when the market becomes more
demanding in terms of quality.
The drastic deterioration in the market share of fresh pineapples from Côte d'Ivoire on
the European market came not only from competition from Costa Rica and the
downgrading of the Smooth Cayenne variety, but also from a structural lack of quality
production from smallholders.
The impact of contracting in terms of learning can go beyond agricultural practices related to
the crop under contract or initially developed under contract.
In Burkina Faso, access to inputs, credits and technical support set up for cotton
production, as well as monetary income from this crop, have encouraged the use of
inputs for maize, adoption of animal traction and, for a minority of producers, the
purchase of a tractor.
In Côte d'Ivoire, the development of pineapple over other crops has led to the
generalization of tractor plowing for soil preparation in the region concerned.
3.2.3 Intensification
Contractualisation, thanks to facilitated access to selected varieties, agrochemical inputs and

the extension of optimized technical itineraries, is likely to induce a process of intensification
of the production system based on labour, intermediate consumption or capital.
The cases selected actually show an intensification in terms of work (but not systematically),
intermediate consumption and the level of expertise of the producers. The only capital-based
intensifications that can be identified correspond to the creation of plant capital through the
establishment of perennial plantations from selected varieties, and the acquisition of operating
equipment (cotton producers in Burkina Faso , some pineapple-export growers in Côte d'Ivoire).
In the case of pineapple production in Côte d'Ivoire, it is difficult to speak of intensification

of the production system when the producers are migrants, since this production system
is based from the outset on the cultivation of pineapple . In the case of producers who
own land and are also planters of tree crops, there is on the other hand a major
intensification of the production system in terms of manual and motorized labour, inputs
and expertise.
In those of rubber in Côte d'Ivoire and oil palm in Côte d'Ivoire and
Ghana, the fact that these crops are planted most often after the felling of
56
cocoa or coffee plantations that have become unproductive obviously corresponds

to an intensification (in all respects) of the production system. On the other hand, if
we compare the cultivation of selected oil palm to other tree crops practiced in Côte
d'Ivoire or Ghana, including coffee and cocoa in so-called "traditional" management,
the introduction of this crop cannot be seen as leading to an intensification of labour-
based production (whether in relation to the creation of the plantation or to its
exploitation in the current year). On the other hand, there is intensification based
on intermediate consumption, in particular due to the use of seedlings of selected
varieties.
The production under contract of vegetables in Kenya (Frigoken case) supposes
an intensification in inputs (controlled use of seeds, fertilizers and pesticides
specified in the specifications), in labor (harvesting by hand), and in human capital
(training in compliance with standards and quality norms).
The subsequent development of off-contract production may correspond to a certain
extensification of the production system diffused by agro-industry (pineapple, oil palm,
rubber in Côte d'Ivoire; oil palm in Ghana, outside the intervention of the GOPDC – the
planters of this zone having integrated the interest of using hybrid varieties): use of second
quality plant material, less use of inputs, etc. (see below).
In the cases studied, the inputs provided by the agro-industry are sometimes diverted, to
be resold or used on food crop plots (diversion of fertilizers from palm trees to food crops
in Indonesia, from cotton to maize in Burkina Faso). The intensification of the contract
farming production system is then reduced. The combined use of fertilizers, improved
seeds, even phytosanitary products, as well as the implementation of different agricultural
practices (soil planting density, adjustment of agricultural calendars), have in some cases
enabled producers to obtain good yields or quality products. In Burkina Faso, support for
the cotton sector has led to a real increase in yields thanks to regularly renewed improved
varieties (with the introduction of GMOs from the end of the 2000s), to better mastery of
technical itineraries by producers (work of the more careful soil, row sowing, ridging),
greater consumption of inputs (herbicide, mineral fertilizer and insecticide). This increase
in yields was not limited to cotton but also concerned maize.
3.2.3 Production standards and producer autonomy in the decision-making process
The development of contract farming gives producers access to an outlet for production
at a generally guaranteed price and, in its most integrated version, to inputs and new
farming techniques. In return, it presupposes compliance with certain production and
marketing standards. Among the situations studied, the degree of constraint/control
exerted directly on the producer depends on the type of contract.
57
If we take the typology described above, it increases from the marketing contract to the management
contract.
The situation of dependence of the producer under contract vis-à-vis the company or the supervisory
structure is due to the exclusive control of the latter over access to the material.
selected plant, inputs, technical training, production outlets, even land, in certain situations (canned
pineapple). However, the analysis must be nuanced. Depending on the farming system, two
extreme ideal-types can be distinguished, namely the "proletarian" producer (canned pineapple in
Côte d'Ivoire) and the "rentier" producer (citrus production in South Africa under contract with
Lona), the "village" producer (palm or rubber planters in Côte d'Ivoire and Ghana) falling somewhere
in this continuum.
Two types of constraints influence the intensity of control exercised by the company (Colin and
Losch, 1990). The first, qualified as absolute constraints23 are linked to the
,
characteristics of the product and the industrial process (biological cycle, weighty and/or perishable
nature of the product) and not to the mode of organization of the sector or to an economic strategy.
The second, qualified as relative constraints, are linked to the mode of organization of the sector,
to the technical and economic choices of companies or the State, to the production standards
required for its industrial transformation or its marketing. Thus, the choice of capital-intensive
production reinforces the financial constraints, which take on a
particular acuity in the context of contractual arrangements aimed at compensating for the lack of
cash flow of small farms. The transfer to the producer of a share of the loans contracted translates
into the need for a technical control supposed to ensure a minimum production threshold and the
reimbursement of advances in inputs. It also implies the prohibition to cut down perennial plantations
as long as the creation debt has not been fully reimbursed.
With the "non-contract" development of certain crops initiated within the framework of contract
farming, the constraints of the second type are relaxed or disappear. As soon as production is
ensured without any contribution from the company, the constraints aimed at ensuring the
reimbursement of costs incurred and an optimization of yields disappear.
The choice of the degree of production intensity is up to the producer alone and his production
strategy. The autonomous development of village palm and rubber plantations in Côte d'Ivoire
provides a good illustration here. On the other hand, a development of the “out of contract” culture
which ignores the constraints imposed by quality standards, or which is not reactive in the face of
the emergence of these constraints, is condemned.
The illustration here is given by the small production of pineapples for fresh export which
had taken over from the production of canned pineapples in Côte d'Ivoire. Small export
pineapple production experienced impressive expansion for two decades, as long as Ivorian
production (from companies and small growers) reigned over a very demanding European
market. This production then
23
In the final analysis, there is obviously no absolute constraint expressed outside a context
economic, technological and institutional given.
58
virtually disappeared when quality standards tightened and when Central American competition
introduced a new variety (of delicate control).
One can wonder about the leeway available to producers under contract, in the face of the standards imposed
by the contractual mechanism. The latter is expressed, in the cases studied, in a classical way:
• diversion of inputs (canned pineapple in Côte d'Ivoire: diversion, towards

pineapple-export plots, plant material and fertilizers) ;
• sales of all or part of the production on the parallel market or to competition, when the opportunity exists:
sale of part of the production of palm seeds for artisanal processing in Côte d'Ivoire and Ghana; sale of
latex to non-contracting companies in Côte d'Ivoire;
• creation of "non-contractual" plantations, carried out without supervision using plant material diverted from
the company's distribution circuit, recovered from existing plantations (second-generation hybrids) or
purchased, constitutes another form of reaction to the restrictive nature joining a supervised program.
These "non-contractual" plantations, carried out in particular in Côte d'Ivoire for oil palm at the
Palmindustrie era, may also reveal the company's insufficient response capacity to peasant
demand in terms of new creations.
• Abandonment of the culture, on the condition however of being able to practice another
crop for the market.
In the case of tree crops (documented for the palm tree in Côte d'Ivoire), this abandonment
results in less maintenance, a reduction in the harvest rate or a total cessation of exploitation
of the plantations. The premature culling of the latter remained hampered, at the time of close
supervision by Palmindustrie, by the pressure exerted by the latter, with the prohibition of
access to any other development program when there was prior felling of a supervised crop.
In Burkina Saso, the cotton producer can easily modify his rotation from one year to the next,
depending in particular on the evolution of the relative price of cotton.
3.2.4 Sustainability of production systems
The dependence of the producer on the company for the supply of inputs and the marketing of the product makes
the farms under contract particularly sensitive to possible difficulties in the functioning of the sector or the
organization in which they are integrated, induced by economic hazards (crisis on international markets) or
internal management problems of agro-industry or groupings of
59
established producers (Colin and Losch, 1990). Sustainability can be facilitated by national
political support.
In Burkina Faso, the government has granted a de facto subsidy to the cotton sector by
canceling the debts of producers who, for the most part, are in critical financial situations.
In South Africa, contractual relationships between agribusinesses and farms are often
presented as "strategic partnerships" referring to a tripartite alliance between farmers,
an agribusiness and the government acting as a facilitator and, often, as a donor. or
service provider (training). The positive aspect of this "partnership" is based on
efficiency in terms of commercial profitability and productivity, but producers frequently
do not control production or any stage of the decision-making process in the supply
chain.
Their position therefore becomes marginal and, the more the markets are demanding
in terms of norms and standards, the more this marginal position is reinforced.
Generally, their capital (land) and their labor force are made available to the company.
This situation creates a subordinate position to the producer and develops dependence,
because without agro-industry, producers are unable to market, or even produce, even
if they retain access to public support. This type of transfer of management questions
the economic, social and political sustainability of these "partnerships".
The issue of sustainability viewed from a more environmental perspective is only addressed
in a few of the case studies.
The risk of soil depletion by intensive cultivation is sometimes mentioned in the literature
(Glover 1984, Singh 2002). In the case of pineapple-export in Côte d'Ivoire, we note
the drastic drop in average yields per hectare on a site studied over time. However, it
seems that the latter comes less from the practice of pineapple cultivation as such,
than from short-term land management by landowners who lease their land for
pineapple production cycle after cycle, without fallowing or rotation, with all the negative
effects induced by monoculture.
Also in Côte d'Ivoire, industrial oil palm and rubber plantations have been partly set up
on intact forest massifs, and partly on savannah areas or former coffee plantations.
Apart from industrial plantations, the adoption of these crops can contribute to
deforestation when "big executives" looking for large areas for the realization of their
plantation, have been able to have access, because of their privileged socio-political
status, to forest reserves (village forest reserves or classified forests). The more strictly
village sector of the plantations, developed in conversion of old plantations and fallow
land, cannot be considered as the vector of the disappearance of the forest. However,
it contributes to an impoverishment of flora and fauna, the monospecificity of a palm or
rubber plantation contrasting with the exuberance of aging coffee and cocoa plantations.
60
In Laos (Bokeo province), the development of maize under contract based on

unsustainable agricultural practices (demanding variety of maize and unsuitable
cultivation methods) has caused soil fertility to drop, leading to a decline in yields and
incomes. producers. Still in Laos, deforestation and the loss of biodiversity caused by
the conversion to intensive monoculture, in particular of rubber, are denounced by
many authors.
3.3 Sector governance
3.3.1 Product markets: strong dependence or leeway for the producer?
Contracting usually allows producers to benefit from a guaranteed outlet at a guaranteed

price, sometimes higher than alternative markets24 (Birthal et al., 2005). Contracting can
even allow producers to access niche markets (Glover and Kusterer, 1990; Eaton and
Shepherd, 2001; da Silva, 2005).
In the case studies, contracting in fact cancels the marketing risks for producers and
ensures them, for certain sectors, an outlet on international markets. This appears in
particular for the fruit and vegetable sectors in South Africa, horticulture in Kenya and
Laos.
In several cases studied, a situation of monopsony appears. This situation is likely to place
producers in unfavorable situations in their relationship to agro-industry (Glover and
Kusterer, 1990; Porter and Phillips-Howard, 1997 ; Key and Rusten 1999; Eaton and
Shepherd, 2001). In the cases concerned, the weakness of the producers' bargaining
power is underlined, the asymmetry of power being sometimes reinforced by the links that
the agro-industry maintains with the government in place: public agro-industrial structures
or mixed economy , close relations between private interests and public authorities (oil
palm in Indonesia, palm and rubber in Côte d'Ivoire, various contractual productions in
Laos). The lack of transparency and information on the part of certain agro-industries also
reinforces the asymmetry of power between stakeholders and prevents the establishment
of a relationship of trust (oil palm in Indonesia and Ghana).
This monopsony situation does not necessarily last over time. In the palm or rubber case
studies, similar dynamics of product market evolution emerge. Initially, the contracting
agro-industry is the only buyer in a relatively large territory (often thanks to a territory
allocation policy put in place by the government and/or the industries). Producers have no
alternative nearby and the heavy and perishable nature of the product (in the case of oil
palm) limits the
24
According to some authors, farmers could be ready to obtain a price lower than those existing on the
competitive markets in exchange for this purchase guarantee (Birthal et al., 2005).
61
search for buyers outside the micro-region of production (outside national monopsony).
Producers have a weak bargaining power, all the weaker because they do not necessarily
understand the formulas for calculating the price of production and the net result
(depending on the level of billing for services provided by the company and loan repayment
rates) (palm in Indonesia, Côte d'Ivoire and Ghana). Added to this, arenas for negotiation
are absent or inaccessible (in Indonesia, palm growers are represented by agents appointed
by the government to participate in price fixing commissions).
Outlets can then open up due to the installation of competing agro-industrial companies
(rubber in Côte d'Ivoire, oil palm in certain regions in Indonesia) or small-scale companies
(mini-oil mills in the palm in Côte d'Ivoire and Ghana).
Some producers deliver part of their production to these new entities, not necessarily to
obtain a higher price, but to be paid in cash and escape their obligation to repay the loan
contracted. This type of practice obviously creates tensions with the contracting agro-
industry.
It should be noted that in the case of vegetable producers under contract in Kenya
with the Frigoken company, the latter pays more attractive prices than the local
market, which obviously considerably reduces the temptation to sell on this market.
Finally, more recently, governments, often supported by international donors, are trying on
the one hand to strengthen competition legislation and on the other hand to create arenas
for discussions on prices (cotton in Burkina, palm in Côte d'Ivoire).
3.3.2 Structuring of the agricultural world and defense of producers' interests
Organizing contract growers is generally seen as necessary to put farmers in a more

balanced position vis-à-vis agribusiness.
The emergence of collective action can be favored by the presence of a common
interlocutor for the various producers, a degree of interdependence and a contract as a
tangible and common object of negotiation (Little and Watts, 1994).
In most of the cases studied, in the early stages of device development
contractual, the creation of the groups of producers was the fact of the State or the
companies. These groups, when they manage to maintain themselves, are cooperatives or
associations only in name (oil palm in Indonesia, pineapple for canning and then for export
in Côte d'Ivoire). For the different sectors studied, these groups do not always sufficiently
inform small producers and the local population about the terms that bind them to the
company and above all, about the terms of remuneration. Nor do they always allow
producers' complaints to be relayed and their interests to be asserted. This lack of
information weakens the position of small producers and exposes them to
significant risk of being "cheated" by the company.
Note however, on the contrary, the case of village groups in Burkina Faso created
around cotton on a massive scale in the 1970s.
62
largely at the initiative of these groups, interfaces between producers and state
structures, perceived as a means of improving the quality of services in terms of
credit, input supply and collection. For the cotton company, the creation of the
groups was above all an opportunity to transfer to the producers tasks that it had
previously assumed and therefore to reduce its costs.
But like many cases, the effective functioning of these groups and their role in
negotiations with the industrialist can be burdened by the lack of skills of the
representatives of these groups.
More generally, collective action is likely to be hindered by various individual actions
(Little and Watts, 1994; Baumann, 2000), such as the use of patronage relationships to
obtain better benefits (oil palm in Indonesia) or non-compliance with contractual
commitments (lack of repayment of credit for cotton in Burkina Faso).
Since the end of the 1990s, however, new dynamics have emerged. Groups are renewed
and take other forms, particularly under the impetus and thanks to the presence of
projects in support of the construction of these collectives. The objective is to improve
the bargaining power of producers, to reduce transaction costs relating to the negotiation
of contracts, to improve the exchange of information between the parties and the
effectiveness of technical assistance25 .
In the 2000s in Indonesia, independent organizations representing small producers
at the local and national level were created, notably the Association of Small Oil
Palm Producers.
During the same period in Côte d'Ivoire, the privatization of the palm sector under
the impetus of the IMF was accompanied by the creation of cooperatives
responsible for the tasks of supplying inputs, supervision and collection,
interprofessional and spaces for negotiation and intra-industry consultation to
resolve the issue of the purchase price of plans and redefine the contractual bases.
Headed by former executives of Palmindustrie (ex-public company), also owners
of palm plantations, benefiting from skills and information on the functioning of
agro-industrial complexes, the planters' bargaining power has increased, as was
seen during negotiations on plan pricing.
In Burkina, the National Union of Cotton Producers of Burkina is created, which

enters the capital of certain processing industries. It therefore contributes to the
definition of the strategy of these companies, to the supervision of calls for tenders
for inputs and to various negotiation tables associating, as the case may be, the
State, donors, or other organizations. farmers at the national level. As an
administrator, she ensures that the principle of the producer price security fund is
maintained.
25
On this point, see Glover, 1984; Key and Runsten, 1999.
63
In Laos, the cases of producer organizations having succeeded in functioning

remain limited. In general, these are groups in which: (1) it is the producers who
have decided alone on the objectives of their organization with the support of the
government or their partners; (2) producers began by organizing themselves
around fairly simple technical activities (extension, etc.) before adding more
complex activities (financial management); (3) collective management of the
activity yielded more benefits than individual management; (4) these producer
organizations received three types of support: organizational support (training of
leaders, assistance during the registration process), financial support (start-up
grants), technical and thematic support.
In South Africa, in the arboriculture sector, the two cases analyzed are contrasting.
In one case, a producers' cooperative on the initiative of a driving individual and
widely integrated into institutional and commercial networks, works in close
collaboration with a fruit processor and exporter. The links are established between
the company (Magalies) and the managers of the cooperative (WUFA) and not all
the producers. In the other, the management of the cooperatives and the
production of all the producers is in fact ensured by a private company (the Du Roi
company which then deals with the Lona company). The members of the
cooperatives have in fact more a status of rentier than of producers and active
members of the cooperative.
64
4. The main lessons

4.1 Adoption and dissemination of
contracts and, more broadly, of culture
The success of contract farming is, among other things, considered from two perspectives: the
sustainability of the contractual system and the realization of distributive effects (Glover, 1990).
The case studies show that the positive effects of contract farming are not strictly linked, in the
long term, to the maintenance of contracts. Widespread adoption and dissemination of a
remunerative culture in rural areas, thanks to the initial impetus given by the contractual
organization of production, can represent a success factor for rural development.
A major result of the case studies, thanks to a diachronic analysis, is to have underlined that
the implementation of a contractual plan can thus be at the source of the development of a
structuring sector involving a large number of producers (under contract and non-contract) and
a diversity of operators on the market for products (multiplication of buyers) and services
(transport) (in Côte d'Ivoire, pineapple, oil palm, rubber; in Ghana, oil palm). Contract farming
first plays a role in innovation and crop diversification, then in the creation of a new sector.
Eight main factors can promote or, on the contrary, constrain the adoption and dissemination
of culture in the peasant environment within or outside contractual systems:
• The evolution of the prices of the crop concerned and of alternative crops. The level of
crop purchase prices is a clear incentive factor, in absolute value but also in its relation to
the prices of other crops grown locally and intended for the market. In Côte d'Ivoire and
Ghana, the drop in cocoa prices, coupled with a drop in yield from cocoa plantations
(phytosanitary problems, age of plantations), has opened up a real window of opportunity
for the development of palm and rubber tree. The stagnation in current CFA francs (the fall
in constant francs) in the price of canned pineapple in Côte d'Ivoire has contributed to the
disaffection of producers. In Indonesia, the diffusion of the palm increased when rubber
prices fell. At
Burkina, producers modulate cotton areas according to the remunerative nature of the crop.
This price trend encourages farmers to engage in new production or to substitute one cash
crop for another. Nevertheless, the responsiveness of producers is far from mechanical.
• The guarantee of an outlet. The presence of agro-industry seems necessary to encourage

producers to develop a new crop on their farm. The continued presence of the agro-industry
initiating contracts is not however necessary to ensure the sustainability of production. The
initiating agro-industry can indeed be replaced by the emergence of local structures. In
addition, the case studies attest that the multiplication of out-of-contract plantations has
been strong in contexts
65
characterized by a diversity of potential buyers. The diversification of buyers is all the

more incentive for producers as it offers them local outlets, cash payment and, for
producers who are also involved in plantations under contract, the possibility of
escaping the obligations to reimburse their credit contracted with agro-industry (mini-
oil mills for the purchase of palm bunches in Ghana and Côte d'Ivoire, rubber in Côte
d'Ivoire).
• In addition to the remunerative nature of culture, there are the methods according
to which it makes it possible to obtain an income. These methods will be judged
advantageous or not according to the profiles of the producers. For many producers in
Côte d'Ivoire, Ghana or Indonesia, the development of crops such as rubber and palm
trees aims to provide them with "a retirement". The constraint constituted by a late
entry into production is subsequently offset by regular income (harvests throughout the
year), the perennial nature of the plantations and, for the palm tree, the opportunity to
have capital in end of life of the plantation (slaughtering for the production of alcohol).
For migrants in Côte d'Ivoire, investing in a crop such as pineapple, a non-perennial crop
highly intensive in labor and inputs but very profitable per hectare (in the 1990s), is
part of a logic of research into profitable crops on long-term cost and on limited areas.
• The quality of the system put in place by the agro-industry : this includes the quality
of the supervision system, the inputs provided, the system for supplying them, the
collection of production and the payment of producers (deadline ). Access to inputs
and capital is often a decisive criterion in the choice to engage in a contractual
relationship, particularly for investment in perennial crops. The other criteria play a
crucial role in the sustainability of the relationship between agribusiness and producers.
All these criteria played a particular role in the adoption of oil palm and rubber in Côte
d'Ivoire (era of Palmindustrie and SAPH) as well as for oil palm in Ghana (GOPDC).
The lack of transparency and information on the part of the agro-industry with regard
to the system of remuneration and invoicing of services (credits and inputs) are on the
contrary a source of tension (oil palm in Ghana and Indonesia) and a brake on the
establishment of new contracts.
• The possibility of reducing initial investment costs. This factor is essential in

explaining the rate of diffusion of culture under and without contract, in particular when
access to inputs is no longer ensured by the relationship established with the agro-
industry. The lower the initial investment costs for setting up the crop, the greater the
diversity of producers who adopt it. This reduction in the cost of investment is the fruit,
in several cases, of the innovative capacity of farmers. In Côte d'Ivoire, the distribution
of rubber and pineapple-export outside the contract was possible due to an
extensification of the technical itineraries compared to those of cultivation under
contract. It was also possible thanks to the use of certain social practices that made it
possible to limit monetary disbursements (mobilization of solidarity networks to obtain
pineapple suckers or carry out certain works, etc.).
66
• The level of specific skill required and the possibility of access to information on
new farming practices. The dissemination of a culture appears possible, on the basis
of the case studies:
o thanks to technical support provided by agro-industries (rubber, palm, initially
canned pineapple in Côte d'Ivoire) or State services (cotton in Burkina,
canned pineapple in Côte d'Ivoire after the creation of Sodefel);
o circulation of information ensured by employees of industrial and family

plantations or exchanges between neighboring producers; o in some cases,
it is even the possibility of delegating technically difficult tasks to experienced
laborers which facilitates the expansion of the crop (rubber tapper).
A strong constraint, illustrated by the collapse of small export pineapple production in

Côte d'Ivoire, remains the ability to meet increasingly stringent quality standards for
certain products (we will come back to this point).
• Land availability. Except when the new crop is adopted as a substitute for a previous
crop in decline, the development of contract and non-contract speculation is constrained
by the availability of land on farms. The extension of cultivated plots can then take
place to the detriment of wooded plots (secondary forests in Indonesia or Laos, wooded
savannah in Burkina Faso, pastures in Laos). When the land reserves of the producers
concerned are exhausted (or when the producers do not have land –
immigrants in particular), access to land is through land markets. In this case, the
indirect tenure market seems to offer the possibility to a wide variety of actors to access
the land to develop the new crop (pineapple in Côte d'Ivoire). In Côte d'Ivoire and
Ghana, "Planter-Share" type contracts represent institutional innovations that allow
migrants to overcome the constraint of access to land to carry out permanent
plantations, and landowners to develop cultivation. by offloading the investment in labor
(oil palm, rubber). The buy-sell market seems to favor wealthier economic operators
more generally.
• The use of inexpensive labour. For some landowners, the commitment to a production
contract and, consequently, the evolution of the agricultural production system, have
been facilitated by the use of extra-family labor (palm, rubber, pineapple in Ivory Coast).
4.2 Exclusion or inclusion of small producers

In the case studies, the farms involved in the contractual schemes are mostly small
(pineapple in Côte d'Ivoire, palm in Indonesia, horticulture in Kenya, cotton in Burkina
Faso) or with a varied profile (palm in Ghana and Côte of ivory,
67
rubber in Côte d'Ivoire, sugar cane in South Africa). No case reports contractual schemes
that only include large farms26, for lack of such structures in the regions concerned but also
because of national policies or company strategies oriented towards small structures.
One of the key lessons drawn from the analysis of the various case studies is that it is
necessary to analyze the phenomena of selection, exclusion or inclusion of small producers
in two stages: when setting up the contractual scheme then during later stages of its
development.
A selection from the implementation phase of the contractual scheme.
On the basis of the cases studied and this, until the 1990s, the profile of farms included in
contractual schemes mainly depended on national policies for the promotion of contract
farming, clearly oriented upstream by donors, and, in to a lesser extent, agribusiness
strategies.
The role of the state is indeed decisive. The implementation of contractual schemes is the
result of a strong national policy (via the creation of state enterprises, or the prohibition to
develop large plantations) or a strong incentive (the development of a contractual scheme
as a conditionality to access credit or land for the industrial part of production, public
investment in research and technical support)27 .
Most of the time oriented and/or financed by international donors, these policies aimed to
promote agricultural development and diversification by integrating farmers without a priori
distinction. They have often been tools for the joint promotion of the development of industrial
plantations and peasant plantations. They are anchored in territories chosen for the presence
of spaces, partly already subject to local uses, but considered by the State as land reserves
(Indonesia, Côte d'Ivoire, Laos) or priority areas (Ghana). In these cases, the modalities of
access to land for the joint development of industrial and peasant plantations as well as
technical and economic factors determined the collection perimeters, and thus
26
In the literature, some authors note that companies prefer to contract with the largest farms. This
orientation makes it possible to limit the transaction costs linked to the selection of producers, the negotiation
of contracts, the monitoring of compliance with commitments, the delivery of inputs or even the collection of
products (Key and Runsten, 1999; Singh 2002). It also makes it possible to work with the producers best
able to bear the production risk (Key and Rusten, 1999) and to follow specific specifications guaranteeing a
quality supply (Glover, 1990; Glover and Kusterer, 1990; Eaton and Shepherd, 2001).
27
The development of contractual schemes around cotton was promoted in Burkina Faso from the colonial
period, that around the palm tree was established and renewed in Côte d'Ivoire in the 1960s and then in
the 1980s (Palm Plans 1 and 2). The transition from large palm plantations to a scheme combining industrial
and peasant plantations was initiated in the 1980s in Indonesia. Incentives to include small producers and
obstacles to the development of large plantations appeared in the 1990s in Kenya and South Africa.
68
spatially limited all potential contractors. These policies have thus affected a variety of
farms, including small structures, which in fact make up the vast majority of actors in the
rural sector.
The inclusion of small producers in contractual schemes thus results in the cases studied
more from a national political will for agricultural and territorial development than from an
objective specific to agro-industrial companies. Nevertheless, in a given territory, the agro-
industry policy may have resulted in preferential use of certain categories of farmers.
Selection is then undertaken to ensure compliance with contract commitments, and in
particular the repayment of credits granted (in the case of the development of oil palm in
Ghana, the GOPDC mainly contracts with medium-sized farms to avoid problems with
the repayment of credits). ). It is also implemented to secure investments. The contracts
are established in a privileged way with indigenous landowners, whose rights to the land
are less subject to dispute than those of non-indigenous landowners (case of rubber in
Côte d'Ivoire).
Since the 1990s, the role of the State has remained present but less decisive.
The initiation of contractual schemes results more from the will of companies than from
national policies, even if the latter retain a clearly incentive dimension.
This appears in particular in Kenya and South Africa. The desire to contract with
smallholders then aims to ensure a supply of labor-intensive products (case of horticultural
products in Kenya) or to guarantee a progressive image of the company and to obtain a
social label ( case of South African companies). As observed
by Reardon and his co-authors in other contexts (2009), participation in the contracting
scheme is not however effective for all small producers and may depend on the location
of the farm (proximity to a road) and the operator's participation in a cooperative.
In the case studies, the choice of the companies studied to contract with smallholders
does not appear to be linked to the desire to diversify their supply or
take advantage of the weak bargaining power of small producers (eg Glover, 1984; Birthal
et al., 2005)28. In fact, their objective may be to attract the maximum number of
producers, as is the case with cotton production in Burkina Faso. In the case of canned
pineapple in Côte d'Ivoire, contract farming involved migrants, the latter being the only
28
According to Glover (1984), contracts are made with producers who are poorly endowed with factors
when the latter are: (i) targeted by local policies recommending their inclusion, (ii) predominant in the
production zone considered; (iii) poor ability to negotiate the prices imposed by the company; (iv) able to
produce more competitively than large farms, thanks in particular to the mobilization of family labor and
easier supervision of the latter - the difference in cost between small and large farms depends the labor
intensity of the crop (Key and Rusten, 1999) and the elasticity of substitution between capital and labor
(Reardon et al., 2009). Some companies may also prefer to work with small farms to: (i) diversify their
supply and not be subject to the vagaries of results or the bargaining power of a few large farmers; (ii)
promote the responsiveness of small producers to potential changes in practices and cultures; and (iii)
benefit from their assiduity resulting from their weak capacity for negotiation or access to competing markets
(Birthal et al., 2005).
69
producers who, for lack of an alternative, wished to maintain this production, deemed
unattractive. In the case of the palm tree in Indonesia, migrants are included in contractual
schemes as part of the land use plan but also in order to ensure the development of labor
pools close to industries.
Furthermore, in the case studies, the fact that the majority of contractors are older men is
not the result of a company selection policy based on gender and age criteria. This low
involvement of women and young people is generally the result of local land rights
systems29 . Men, the main owners or managers of family land assets, are the only ones
considered capable of committing to contracts.
In Ghana, in the case of contracts signed by the GOPDC for the production of oil palm,
the involvement of women appears timidly in the 1990s. This inclusion often results from
the death of the initial contractor and the inheritance, in in addition to the rights to the plot,
the obligations linked to the plantation contract.
Still due to local socio-land structures, the contractors are mainly men over 40 (rubber,
palm in Côte d'Ivoire, palm in Ghana). Like women, young people who only have user
rights to family plots cannot enter into contracts. In addition, because of the long-term
contractual commitments made by the elders, women and young people may be
constrained in accessing the family patrimony.
Processes of exclusion or inclusion during the development phases of the

contractual scheme.
In the cases studied, the processes of exclusion or inclusion of small producers seem to
result more from movements out and in of certain operators from the contractual scheme
than from an explicit company policy. Moreover, the analysis of the effects of relations
between agro-industry and family farms benefits from being conducted beyond the prism
of contractual relations. It then makes it possible to see which producers, whether or not
they are engaged in contractual relations, invest in the production process and deliver
their harvest to the agro-industry.
When they are non-voluntary, exits from the contractual scheme seem to be linked to the
inability of the contractors to repay the credit contracted with the agro-industry (in particular,
oil palm in Indonesia) or to the lack of economic interest of this participation (abandonment
of canned pineapple cultivation by growers with land, and therefore alternatives, in Côte
d'Ivoire).
Other producers enter massively into the contractual scheme. Often urban, retired and/or
executives, these actors are attracted by the development of a profitable agricultural
activity in the long term (rubber and palm in Côte d'Ivoire). These elites can also leverage
their network of relationships to obtain a contract and advantageous conditions.
29
This applies to natives. For migrants, the low involvement of women is explained by their
fewer or their involvement in agricultural sectors other than agriculture.
70
(oil palm in Indonesia). The entry of more diversified categories of actors into the
contractual scheme or into the non-contract production process depends on the factors
set out in the previous section.
4.3 Improved producers' incomes and

investment capacities
In the case studies, improved income for contracted producers depends on the following
factors:
• contractual terms, including in particular: o the

purchase price to producers, functions of national and international prices, but
above all of company policy and the weight of the State in determining
these (pineapple from canning and oil palm in Côte d'Ivoire, cotton in Burkina
Faso). In most cases, agribusiness is
initially the only buyer in a given region and therefore enjoys a certain autonomy
in determining prices (when the latter are not set by the State). Competing buyers
can then intervene (agro-industrial companies or artisanal processors);
o the cost of credit and the level of billing for the services provided by the
company (see above);
o production standards. The cases show that small producers are capable of
respecting specific technical itineraries, but that the implementation of such
itineraries requires significant investment in support and initial training on the part
of the agro-industry. Compliance with standards relating to the sanitary quality of
the process (access to water and sanitary points) appears more difficult for small
producers without significant financial assistance from agro-industries;
• the type of crop and, in particular :
o the yield levels of the crop concerned and, upstream, the level and possibilities
of adjusting the quantities of inputs. The low use of fertilizers does not seem
to significantly affect the profitability of rubber or palm cultivation in Côte d'Ivoire
and Ghana. On the other hand, it seems to constrain the achievement of a
sufficient yield of oil palm in Indonesia or cotton in Burkina Faso and, for lack of
sufficient production, producers are no longer able to cover the costs charged by
the company and to remunerate their workforce30;
o the existence of by-products, when these can be valued on the market (sale
of alcohol from palm plantations in Côte d'Ivoire and Ghana) ;
30
The diversion of inputs to the benefit of food crops can, on the other hand, allow an increase in the
income drawn from these plots or better cover the food needs of the household (Indonesia, Burkina Faso).
71
o the amount of work to be invested and the availability and cost of labor on
the local market in the event of tasks that are too demanding, too complex
or too painful; • the area available to be contracted (see in particular the case
of oil palm in Indonesia and more generally all the cases concerning perennial crops);
The bargaining power of producers is a key factor mentioned in the literature in

determining prices. It appears weak in the different case studies, characterized or not by
monopsony situations. It is only effectively strengthened, in the case of cotton in Burkina
Faso or palm in Côte d'Ivoire, when the producers are organized into associations at the
national level, integrated into the capital of the processing companies. or associated with
interprofessions.
4.4 Land management and equitable access to land
The implementation and development of agro-industries and contractual schemes have a

direct and indirect effect on local land distribution. The key factors that modulate these
effects are:
• as mentioned previously, national policies for the promotion of investment and/or

territorial development as well as their translation into national land policies have
had a major impact on the development of large plantations (and as a result of the
expropriation of landholders existing rights) and/or contractual schemes (and the land
holding of these in relation to industrial plantations);
• the forms of production organization retained (large plantations or contractual

schemes, including joint ventures). The advantage of contractual schemes compared
to large plantations is that they do not directly challenge local land distribution. Since
the 2000s, governments have been promoting joint ventures in particular so that local
communities retain their ownership rights to land but delegate the management of
production. Within the framework of these joint ventures, decision-making power as
well as dividends are supposed to be shared. The case studies do not allow
conclusions to be drawn on the effective functioning of these structures;
• the activity of land markets, driven or stimulated indirectly by the presence of agro-
industry, and directly by the availability of land within family farms and at the local
level, and the entry of new actors (from migrants to urban executives).
As mentioned above, the indirect tenure market (or land lending, as is still practiced
in Burkina Faso) allows access to a wide variety of actors to access land without
changing the land distribution. . The development of this market, and new institutional
arrangements (“Planting-Sharing” contracts) can indeed enable landless producers,
migrants in particular, to develop a new crop.
72
Appearing or boosting buy and sell trades don't seem to go

towards a more equitable distribution of land. The development of the purchase-sale
land market results in many cases from the arrival in the micro-region of relatively well-
to-do individuals (executives, traders, civil servants, elected officials) who, attracted by
the profitability of cultivation, buy lands. Even if these plots remain limited in size (from
a few hectares to a few tens of hectares most often), the multiplication of these
transactions weighs in the distribution of land at the level of the micro-region (palm in
Indonesia, Ghana and Côte d'Ivoire). Ivoire; rubber tree in Ivory Coast).
Land saturation and emergence or reactivation of land conflicts – long-term effects
The implementation and development of agro-industries and, as a result of large plantations

and contractual schemes, play directly and indirectly on the emergence of land tensions
and conflicts.
Conflicts between peasants and agro-industry/ State
The establishment of agro-industries and large plantations did not systematically trigger
strong protests in the initial phase due to the authoritarian nature of the political regimes of
the time, the expectation of economic benefits for local communities and, in a few rare
cases, consultation of the populations. However, the situation can worsen over time. In
Indonesia as in Côte d'Ivoire, conflicts opposing local populations to agro-industries and/or
the State re-emerge a few decades later in a context of land pressure, political changes and
exacerbation the feeling of injustice of small producers in the face of private companies
occupying land that could have been their land reserves. Tensions can also be strong when
agro-industries do not fulfill the promises made in terms of building public infrastructure
(schools, dispensaries).
Tensions and conflicts within farming families/ households

The development of cultivation through a contractual scheme can contribute to weakening
or calling into question the access to land of the heirs of the head of the family. It is the
source of intra-family tensions when the part of the land patrimony ceded temporarily for
rental or sharecropping, or in a more permanent way, for the practice of cultivation stimulated
by agro-industry is done to the detriment of family dependents. , who see the areas allocated
to them diminish or their ability to manage and control income on these plots slip away
(pineapple in Côte d'Ivoire, palm tree in Ghana). Tensions are all the stronger as land
pressure is high and the crops under contract are perennial (set-aside). The attention of the
manager of family lands not to contract too large a part of the estate, such as the possibility
offered to these heirs
right to enter into contractual relations with the agro-industry or with the lessors developing
the plots, are likely to limit these tensions.
73
4.5 Competition between food crops and

new crops under contract
Farmer logics of risk management and valorization of family work throughout the year
generally leave room for food production, ie limit the risks of specializing in cultivation
under contract or purchased by the agro-industrial of the region. In addition, the time
invested in the crops under contract can be limited and allow continuous work on the
other productions of the farm. Moreover, in the case of an annual crop, the need to set up
crop rotations and the opportunity to enhance the inputs provided for cropping under
contract can have a positive effect on food crops (cotton in Burkina Faso) . In the cases
studied, the non-specialization of the production system and access to cash income
through contract farming generally limit the appearance of negative effects on household
food security.
4.6 Innovation
Four factors have favored the innovation processes:

• the work of research institutions and their support, in particular through services
in regular contact with farmers and agro-industries;
• technical support provided by agro-industry or state agricultural structures
(demonstration and ease of access to soil preparation tools, information and
training, access to inputs);
• the informal circulation of information and the dissemination of practices ensured
by employees of industrial plantations who themselves become planters, but also
between farmers;
• farmers' constraints (income and cash constraints), which have led producers to
adapt farming practices (food crops in association with contract farming) and to
reduce the initial amount necessary for the investment (plant material used ,
quantity of fertiliser) or the management of the crop.
4.7 Sector governance
The transition from a simple contractual relationship between the agro-industry and the
producers, not negotiated, to a representation of the latter within works councils and to an
active participation in contract negotiations, seems to result:
• a national political will, • a policy

of transparency in agro-industry, • the existence of
effective producer groups (created by the peasants or initially imposed on them
but which were then emancipated) , unions or federations of groups and
often, the presence of peasant leaders,
74
• and support from donors for the establishment of such arenas of

discussion.
The creation of joint ventures offers producers a greater opportunity to define and negotiate contractual
terms. This opportunity only seems to be really seized when farmers have knowledge of the sector and
experience in negotiation.
4.8 Taking long time into account

The success or failure, the fairness or otherwise of contract farming, must be assessed not only
synchronically, but also diachronically. The time dimension in the assessment of results is indeed
crucial. An assessment of Ivorian canned pineapple production in the early 1980s could only be critical.
However, it is this experience that has allowed the emergence of a type of pineapple crop that is much
more interesting for small producers, pineapple for fresh export, through its effects in terms of the
introduction of pineapple cultivation, training for growers, availability of plant material31. Even if this
production ended up disappearing in turn almost completely, for two decades it provided income for
small producers and boosted the regional economy. Similarly for rubber production in Côte d'Ivoire, the
long-term analysis provides a more global view of the beneficiaries of the contracts. The contractual
scheme essentially concerned, at first, indigenous households with little land, but the subsequent
dynamic then allowed a wide variety of producers to get involved in cultivation (under or without
contract).
31
See Jaffee (1994) for a similar finding in Kenya.
75
5. Avenues for sustainable and more equitable

contract farming: contributions of cases with
regard to current recommendations on inclusive
practices
Contract farming is now seen as an alternative to large land acquisitions intended for the
installation of industrial plantations, and as a possible vehicle for improving the economic
conditions of poor farmers. Contractual schemes can represent an advantage for
companies because farmers have a major comparative advantage, their ability to mobilize
labor and remain owners of their land, thus avoiding the risk of social disputes. More
broadly, contractual schemes can represent an advantage for the rural world by developing
agricultural jobs.
Nevertheless, for these schemes to be sustainable, productive for both the company and
the farmers, and vectors for improving the living conditions of rural households, several
conditions, listed below, are necessary.
5.1 The role of the state
5.1.2 Create a favorable macro-economic and institutional environment
The existence of a favorable environment is seen in the literature as a condition for the
viable development of contract farming (Little, 1994; Dorward et al., 1998; Eaton and
Shepherd, 2001; Da Silva, 2005). The existence of long-term buoyant markets for the
production envisaged as well as the higher profitability of crops under contract compared
to food and commercial crops outside the contract are conducive to the development and
sustainability of contractual schemes. These variables are partly exogenous to the action
of the State, but the government can have a major role in the constitution of a legal and
economic environment favorable to contract farming. This concerns: the legal and
regulatory framework relating to private investment and trade; an effective judicial system;
an incentive tax policy; legislation on labor and producer organizations; a foreign exchange
policy, etc. This also includes the existence of communication, water and energy supply
infrastructures.
The case studies underline that private investors set up in very varied national legal and
economic contexts and are sometimes not constrained by the legislative framework.
Nevertheless, the existence of adequate legislation is necessary so that different parties
– industrialists and especially farmers' organizations and workers' unions –
can seize these laws and encourage their respect. This is particularly the case for the
76
legislation on land and work, obligations relating to transparency on prices or even the
creation of inter-professional organizations. Moreover, an economic environment offering
access to road infrastructures, water or energy to the greatest number facilitates the
development of contractual schemes and, in particular, the integration of a diversity of
agricultural holdings.
5.1.3 Promoting contractual schemes
Beyond creating an enabling environment and as highlighted in the case studies, the state
can be a major promoter of contract farming.
Political will is indeed an important explanatory factor in the development of contractual
schemes. It translates to:
• Legislation and actions promoting the recognition, respect and securing of the land
rights of local populations and, often, as a result, limiting land appropriation. The
existence of secure land rights for farmers under contract is necessary for the agro-
industry and the producer who must have the guarantee of a return on investments.
The case studies underline that the existence of secure land rights is not limited to
securing land title alone32. The lack of formalization of the land rights of producers
(owner-operators in direct tenure or tenants) has not hindered the development of
contractual schemes and the requirement of such recognition of ownership by the
agro-industry could at the otherwise lead to the exclusion of many producers. Land
security systems can be local and based on social recognition;
• the implementation of systems avoiding unfair contracts and securing contractual

commitments;
• support for the organization of producers and the creation of arenas for negotiation and
dispute resolution;
• direct financial support: public investment in infrastructure,
agricultural research, extension and training.
The State can also promote the integration of small producers by helping to mitigate the
risks presented to them by the development of contract farming33 :
• by providing support for the organization of producers, their legal existence and the
building their negotiation skills;
• through regulation avoiding the abuse of market power;
32
In the literature dealing with contract farming, however, land tenure security is often equated with the provision
of a land title. For a recent review of the limitations of titration policies, see Colin et al. (2009).
33
See Glover, 1990; Glover and Kusterer 1990; Porter and Phillips-Howard, 1997; Dorward et al., 1998; Eaton
and Shepherd 2001; Simmons, 2002; Danson et al., 2004; Da Silva, 2005; Swinnen and Maertens, 2007; Vavra,
2009; Vermeulen and Cotula, 2010.
77
• ensuring the production and dissemination of information, in particular on the

"good contractual practices" and on prices;
• by proposing model contracts (production contracts or contracts on forms of joint venture type
enterprise) ;
• by setting up easily accessible mechanisms allowing the expression of complaints from producers
and arbitration in the event of conflict, or even by serving as mediators/facilitators between
producers and agro-industry.
5.1.3 The role of producers and organizations
The bargaining power of producers vis-à-vis agribusiness depends on their dependence on contract
farming. The more producers have specialized cropping systems and have invested in specific assets
(perennial plantations, specific equipment), the fewer opportunities they have for employment, marketing
and access to services (inputs, credit, advice ), the lower their bargaining power. Moreover, the
government and the administrations can tend to favor agro-industries to generate resources for the State
or their representatives and, in this movement, bring little support to the defense of the interests of the
producers.
The organization of small producers, in particular in the form of cooperatives, is seen as being able to
allow the establishment of relations between agribusiness and small producers:
• more equitable, by improving the negotiation skills of producers with

the company and lobbying in relation to public authorities;
• more balanced, by strengthening their capacity for negotiation and resistance to harmful business
practices35 ;
• more efficient, by greatly reducing the transaction costs of the intervention of the agro-industry in its
relation to producers under contract36 .
However, some authors in the literature and some of our case studies note the
possible difficulties of such a strategy:
• the company, precisely for fear that this organization will allow producers to negotiate better
contractual conditions, can refuse to obtain supplies from producers engaged in such a dynamic,
or even relocate its activities or vertically integrate production (Key and Runsten,
1999 ; Singh, 2002) ;

• the company may also prefer to work with individuals to have more visibility on the conditions of
production and the traceability of the products, for better
34
See Glover, 1990; Glover and Kusterer, 1990; Porter and Phillips-Howard, 1997; Dorward et al., 1998; eaton
and Shepherd, 2001; Simmons, 2002; Swinnen et Maertens, 2007.
35
See Da Silva, 2005.
36
Voir Glover, 1984; Glover et Kusterer, 1990; Little, 1994; Carter et al., 1995; Key et Runsten, 1999;
Danson et al., 2004; Birthal et al., 2005; NAMC/FAO, 2009; Vermeulen and Cotula, 2010.
78
adjust the support provided (level of credit, quantity of input) and, sometimes, avoid having
to deal with the problems of internal management of the groups (see also
NAMC/FAO, 2009);
• collective action, as in any organization, can face many difficulties related to the skills and
behavior of members;
• there are risks of exclusion of producers who do not fulfill the conditions
membership in cooperatives;
• Organizations can be subject to local elite takeover (Singh, 2002; Vermeulen and Cotula, 2010).
The case studies highlighted in particular the difficulty of operating producer groups set up by the
State or agro-industries – the latter not necessarily having an interest in these organizations actually
participating in negotiations on prices and terms. contractual.
Their effective activity seems to be improved by:
• setting up training;
• the provision of institutional and organizational support;
• and, inescapably, by the experience of the members and the charisma of their
representatives.
The newly established collective structures whose impact is gradually taking shape seem above all
to be associations:
• defending the interests of producers and not of organizations in charge of production and
marketing, • having both a local dimension and, thanks to a network organization, a
dimension or representation on a national scale,
Their weight in the negotiations depends on:
• the effective existence of negotiation arenas, • and,

almost systematically, support for the functioning of these arenas by the government, civil society
and foreign donors.
The institutional participation of producers in negotiations on the terms of contracts can be facilitated
within the framework of joint ventures. Effective participation again depends on the capacity of
producers and their representatives and, therefore, on the support of organizations
(private or public) specialized in training and support (support can be envisaged on an ad hoc or
continuous basis, at the request of those concerned).
79
5.3 The role of private enterprise
5.3.1. Respect the land rights of local people and foster a sense of land security
Recognition of the land rights of local populations and their respect, more or less effective
depending on the legislative framework and the practices of the State, can also be the
result of an explicit desire on the part of the company. This respect for the land property
rights of the populations limits the risks of dispute in the short and medium term and
constitutes the strong advantage of contractual schemes, including joint ventures, compared
to the development of industrial plantations. This respect for land rights benefits from being
clearly announced by the agro-industry to possibly strengthen its political and commercial
image on the national and international scene, but also to avoid suspicion at the local level.
Agribusinesses seek to work with producers with secure land rights. The important thing is
that the producers have secure rights of use for the duration of the production under
contract. This does not necessarily imply that the producers have private property rights
(land titles or other) legally recognized: the main thing is that the producers, from the local
population or migrants, have rights of use or property actually and socially recognized. If
the local security systems based on social recognition are difficult for the agro-industry to
grasp, the latter can limit the risks of intra- and inter-family land disputes by communicating
widely on the nature of the contracts entered into and by making public the names of the
contractors. The role of the private company with respect to communication and
transparency (Vermeulen and Cotula, 2010) is crucial with respect to the respect of land
rights and the duration of the contract.
5.3.2 Preferred crops
Beyond these criteria motivating the company to delegate production and the producer to
respect its delivery obligations, the crops with the best chance of being adopted in the
farming environment present:
• a higher level of profitability than other cash or food crops;

• a level of risk considered bearable by the producers and limited. In the case of high-
value export productions, Carletto et al. (2010) point out that while small producers
may be able to get involved in this type of production under favorable market
conditions, their ability to maintain it is very weak under adverse market conditions,
even with public support. or NGO. The case of pineapple-export provides an
illustration of this point (with the proviso that there is no public or NGO support in
the latter case);
• remuneration that meets household needs (short-term harvests for migrant or fragile
households; long-term harvests for those wishing to ensure
80
a retreat ; regularity and temporality of the harvests: several harvests per year or
single harvest at the time of the lean season, etc.), • an investment in labor and
land compatible with the endowments of the family farm or requiring minimal
adjustments via the labor market or land markets;
• reasonable capital investment, even if this is favored by the access to credit made
available by the agro-industry. The extent or the cost of credit should not risk
pushing the operation into a decapitalization trajectory; • the lower the level of
expertise required, the more easily the culture is adopted.
Nevertheless, the case studies underline that there are no insurmountable technical
barriers for small producers for productions without major quality requirements, as
long as they benefit from quality technical support. On the other hand, there are
significant financial barriers and in terms of expertise for small producers to meet
the increasing requirements of international markets or large distributors with regard
to the quality of production processes and the traceability of certain products
(market gardening and horticulture in particular), barriers that cannot be overcome
without the support of agro-industries.
5.3.3 Support for the production process
For the development and sustainability of the contractual system, the support of producers
by the agro-industry is fundamental in terms of access to credit, inputs, and especially
expertise and training. Established within the framework of a public-private partnership or
not, support for producers is necessary so that they can invest and train in compliance
with new production standards, particularly when these are imposed on international
markets.
5.3.4 A policy of transparency for compliance with contracts
One of the factors limiting the use of contract farming by agro-industries is the fear that
producers will not honor their obligations and in particular, their obligation to deliver. To
avoid this non-compliance with contracts and the establishment of a relationship of mistrust
between the stakeholders, a situation of monopsony may correspond to a condition of
viability of the contractual mechanism by avoiding parallel sales. Too vigorous competition
between firms is in fact likely to lead to the failure of the contractual mechanism due to an
incentive for producers to favor their short-term interests by not respecting the terms of the
contract (Swinnen and Maertens, 2007 ).
This monopsony situation can be considered detrimental for producers.
However, in order to promote compliance with contracts, the company can increase the
opportunity cost for producers of defaulting by offering a remuneration higher than
81
that of other cultures present locally, by providing quality services and by implementing credible
sanctions (exclusion from the system, seizure of property, legal action)
(Dorward et al., 1998; Da Silva, 2005).
The quality of the services and the level of remuneration are indeed in our cases elements
encouraging the producers to respect their contract. What is important above all seems to be
that the contractual scheme offers services to producers and that the methods and level of
remuneration allow producers to overcome the constraints that weigh on their operations (cash
constraint in particular) and are in line with their logic ( and not exclusively that of the company).
In addition to the company's quality services (provision of quality inputs in a timely manner,
quality of technical advice, quality of the product collection system), the viability of the contractual
system also presupposes (Glover, 1990):
• transparent management of the charges charged to farmers under contract and

methods for determining product prices;
• Proper information for producers in this regard.
The quality of the relationship between the agro-industry and the producers, based on
transparency and trust, is indeed at the heart of the success and sustainability of the contractual
system. In some of the cases studied, it even turns out to be more important than the mode of
formalization of the relationship (ie type of written contract). This quality of relationship can be
favored thanks to the existence and effective functioning of negotiation arenas whose mediation
is ensured in part by the State.
5.4 The role of development agencies and research

and support support structures (private or public
companies, non-governmental organizations)
The case studies confirmed that development agencies play a key role:
• in supporting the financing of national agricultural development policies and

territorial ;
• in the establishment of arenas for negotiation and structures for defending the interests of
farmers (interprofession, multi-actor platform for the management of supply chains,
associations representing producers);
• in the establishment of support coupled with the reciprocal commitment of beneficiaries,
private companies and producers, and more broadly in the establishment of public-
private partnerships.
The case studies also confirm, beyond the crucial role of the State, the essential functions that
can be provided by support structures such as:
82
• agronomic research institutions for the improvement of crops and agricultural

practices adapted to the constraints of households and their environment, •
organizations capable of providing training and strengthening the skills of producers
in the technical and organizational field, as well as than in institutional coordination.
These functions can be carried out by public structures or non-governmental
organisations, but the challenge is to ensure the long-term nature of this support
(support from NGOs is often limited to the initial phase of the contractual scheme).
These organizations can in particular play to the benefit of certain groups of actors
who have more difficult access to resources (migrants, women, young people).
They can also play a role in the arbitration of disputes and conflicts, which are
more often settled informally than by recourse to the courts. They play a concrete
role in strengthening the skills of producer organizations in defending their interests.
5.5 Challenges
In almost all the cases studied, the establishment of contractual schemes was the result
of national incentive policies and technical and financial support reinforced by donors or
foundations. Agro-industrialists may indeed be reluctant to initiate a contractual
organization of production with small producers requiring a substantial set-up time and
involving many transaction costs (note that the implementation of large-scale plantations
is also source of many transaction costs, often underestimated by investors). A first
challenge is therefore to give sufficient keys to private entrepreneurs to seize the
advantages of contract farming (knowing that the question of the profitability of contract
farming compared to large-scale farming is poorly documented, because in particular a
difficulty in monetarily evaluating transaction costs). A second challenge is to support,
technically and institutionally, more than financially, private companies towards the
development of contractual schemes.
83
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86
Annexes
The following annexes present the case studies in the form of a summary sheet.
Appendix 1: Ivory Coast – Pineapple
Study title : From canned pineapple to export pineapple. Small-scale pineapple production in
Côte d'Ivoire in relation to agro-industry and the international market.
Author : Jean-Philippe Colin (economist, IRD)
Type of study : personal empirical research + bibliographic
Country: Ivory Coast
Sectors : Pineapple for canning & pineapple for fresh export
Period studied: 1954-2010 in two phases: canned pineapple (1954-1985) and pineapple for
fresh export (1980-2010)
Scale : East-Comoé region (Lower Ivory Coast)
Main parties involved:
Canned pineapples
SalciI-Sodefel system:
• a private company, then a mixed economy (Salci) with the unit of

processing and its own plantation (about 350 ha)
• small producers under contract (about 4,000), without land control, organized into
cooperative groups (GVC) on mechanized cultivation blocks (the land being rented to
landowners by the GVC and sublet to growers), cultivating from one to a few hectares
• a development company (Sodefel) overseeing the GVCs
Siaca-Socabo system:
• a production cooperative (Socabo) bringing together around 500 cooperators, generally

owning land but grouped together, for pineapple production, on blocks of mechanized
cultivation (the land being rented to landowners by the
GVC and subleased to planters), cultivating one to a few hectares (in addition to other
crops)
• a private factory (Siaca), in which the cooperative is a shareholder, who does not have his
own plantations and obtains his supplies exclusively from the cooperative
87
Pineapple-export:
• about ten export cooperatives selling on consignment (the grower-cooperator remains the owner of
the fruits until they are acquired on the European market)
• small planters, cooperators (about a thousand, cultivating around 3 ha on average) or non-cooperators

(no data on their number; cultivating smaller areas)
• buyer-exporters (cooperative growers, large growers, traders), who buy the production of non-
cooperative growers or cooperators who do not wish to export through their cooperative.
Role of the State:
Canned pineapple: acquisition of a stake in the agro-industrial company (Salci), supervision of some of the
planters through a development company (Sodefel); contribution of the results of agronomic research;
fixing the price to the producer.
Pineapple-export: liberalized sector.
Type of production: perennial plant, perishable product; important quality for production exported fresh
Type of market (planter-downstream relationship):
Canned pineapple: strict monopsony of processors (Salci-GVC, Siaca-Socabo)
Pineapple-export: plurality of cooperatives (even if the rule would be that a planter adheres to only one
cooperative), competition between buyers.
Contracts binding the company and the producers:
Canned pineapple: production contract with quasi-integration of the pseudo-employee type.
Pineapple-export: (i) export via a cooperative: sale on consignment; (ii) sale to a buyer: marketing contract
establishing the harvest calendar and the farm gate price, or "assisted production" contract (the buyer
provides aid in kind and sometimes non-directive technical assistance).
88
Key steps
Type of enterprise and mode of organization of

Period Key elements of the context
production
Private company (Salci: cannery + own plantation) develops

Development of contract production of
production under contract with small unorganized planters,
The 50's canned pineapple under
owning land or not (leased)
the impetus of private initiative
Salci becomes a semi-public company; planters (80% of

State involvement in the sector processed production) organized into GVCs and cultivation
(Salci) blocks supervised by a development company.
Land rented by the GVCs and sublet to planters. Mainly
Role of German cooperation
Burkinabè migrant planters.
(Siaca)
years
Significant migratory flow from
60-70 Siaca private factory (without own plantation)
Upper Volta / Burkina Faso: maneuvers
transforming the production of a cooperative
farmers, some then becoming small
(shareholder), Socabo. The cooperative rents land and
pineapple growers under contract
organizes production on cultivation blocks. Indigenous
planters owning land or
burkinabe migrants
Canned pineapple crisis (Asian competition on

the international market, difficulties in managing Disappearance of canneries and therefore of the sector
millers, dysfunction of GVCs, emerging Canned pineapple in East-Comoé
competition from pineapple
1980-85 export)
Emergence of pineapple for fresh Reconversion of part of the small growers (mainly from
export: end of the ban on fresh Burkina Faso) into cultivation for fresh export (sale to
fruit production in East-Comoé, strong buyers with export quotas)
demand on the European market
Creation of export cooperatives
Very strong dynamics of small export pineapple production,

1985 –
Golden age of pineapple-export mainly provided by Burkinabè growers
end of
Strong demand in the European market
90s
Direct sale on the European market (sale on consignment
through cooperatives) or farm gate, to buyer-exporters
End of Decline in Côte d'Ivoire's share of this market,

90s- due to a quality problem attributed to the share
start taken by small growers in the volume of exports Strong momentum continues
years
2000
89
Major regression on the part of the

Côte d'Ivoire on the European market,
unable to withstand competition from Virtual disappearance of small export pineapple
2005-2010
multinational firms established in Costa production
Rica (new variety of Del
Mountain)
Outstanding effects
• The case shows two cycles, that of canned pineapple, over almost 40 years, which ends
with the bankruptcy of the processors, and that of pineapple for fresh export, over almost
30 years, which ends with the quasi-disappearance of the culture in village environment
of the inability of the production of the small growers to resist competition (in terms of
variety and quality) on the European market.
• The organizational dynamic is marked by the transition from contract farming built on a
"centralized" mechanism for the cultivation of canned pineapple, to multiplex production
for export, organized through a bundle of contractual relations putting the producers in
contact with landowners, laborers, buyers, cooperatives, providers of mechanized
services, and giving rise to innovations not only technical, but also institutional.
• The “canned pineapple” phase mainly concerned the poorest: migrants who did not have
land locally and whose alternative was to work as agricultural labourers. Producers with
alternatives (landowners) who initially engaged in this crop abandoned it when its low
economic appeal became apparent. The subsequent development of export cultivation
can be seen as particularly inclusive, with many of the smallholders being former
agricultural laborers – a “deterritorialized” inclusion since the beneficiaries are essentially
Burkinabe migrants.
Main lessons
• The success or failure, the fairness or otherwise of contract farming, must be assessed
not only synchronically, but also diachronically. The production of canned pineapple
under contract, very unattractive for producers, paved the way for the subsequent
emergence of production for fresh export, much more interesting for small producers,
through its effects in terms of of planters learning about a new crop and the availability
of plant material. Even if this production ended up disappearing in turn almost completely,
for two decades it provided income for small producers and boosted the regional economy.
90
• The time perspective reveals path dependence phenomena (without a negative meaning
of this concept), with the ability of canned pineapple producers to seize the opportunity
to develop production for export.
• Due both to the capacity of migrants to overcome, better than village nationals, the
constraints of pineapple production (capacity to mobilize labour), and to a strategy of
the latter favoring tree crops or the perception of he land rent, the entire dynamic
described was essentially based on a significant migratory flow. The latter played a
decisive role in the contribution as a labor force (which is relatively traditional), but
also in the emergence of small farms working land taken from FVI (which is less so).
• The fact that a crop as intensive as pineapple and relatively difficult to control (including
under small production conditions) was adopted outside the "centralized" contractual
system by producers under severe constraints refers to various factors: the cultivation
of the pineapple, which is not perennial, can easily be considered as an indirect tenant;
under local conditions, all costs can be considered variable; certain monetary
disbursements can be avoided by resorting to own factors, mutual assistance,
sharecropping contracts, credit in kind possibly provided by the buyer; the
apprenticeship of the producers came initially from their experience as producers of
canned pineapple, then, for the producers later involved in the crop, from their activity
as family helpers with a close pineapple planter, annual laborer or 'Abougnon-worker;
the production system is less intensive than what the standards of quality and regularity
of production would require – which remains “manageable” as long as the market is
not very selective, but then becomes prohibitive.
• The recent quasi-disappearance of the small export pineapple production, due to the
evolution of the European market, goes in the direction of pessimistic prognoses
regarding the future of contract farming and non-traditional export production in a
development perspective. The cooperatives of fresh pineapple growers – in fact,
service providers – have indeed played a decisive role in access to the European
market for small growers for two decades. However, they were not able to stimulate
varietal conversion and compliance with international market standards, when these
became stricter. The essential, pessimistic lesson that emerges from this case is that
small producers who do not benefit from a capacity for collective action and a
effective support from the State or NGOs are unable to sustainably integrate into the
international market oriented by increasingly strict standards, for a high added value,
heavy and perishable crop such as fresh pineapple .
91
Annex 2: Indonesia – Oil palm
Title of the case study: Relations between agro-industries and the dynamics of evolution of
family farms and the rural environment. Indonesia – palm oil sector.
Author: Johanna Clerc
Short description
The bibliographic summary covers the evolution of the Oil Palm sector in Indonesia from the
1950s to the 2000s. the establishment and development of agro-industries on rural households
and the rural environment. The main parties involved are public and private companies, which
have a processing unit, manage an industrial plantation and establish contracts with the
farmers.
In 1981, barely 1,000 ha were owned by small producers, a hundred thousand

ha by private companies and twice that by public companies. In 2001, 1.1 million ha were
planted by small producers, 1.9 million ha belonged to private companies and 534,000 ha
were managed by companies.
Type of study : bibliographical synthesis

Country : Indonesia
Sector : Palm oil

Period studied : 1950's - 2000's
Scale : national study
- public and then private companies which have a processing unit, which manage a
plantation and which establish contracts with farmers (in 2001, about 1.9 million ha
were private company plantations, 534,000 ha were managed by public companies
according to the General Directorate of Indonesian plantations),
- mostly small producers grouped together in the framework of a cooperative organization
(while they represented 1000 ha in 1981, in 2001 1.143 million ha correspond to
plantations of small producers).
Role of the State : direct player in production then, once the sector has been privatized, the
State is involved in hybrid public-private systems and at the origin of strong incentive policies
in the organization of production and of the sector. It also allows access to land for companies.
Type of production: perennial plant, perishable harvest products
92
Type of market : strict monopsony (a single buyer of regimes for a large number of sellers)
Production contract "turnkey planting", the company carries out the plantation before transferring
it to the producers, with a subsequent reimbursement by the latter of the costs of creation, and not
returning to the former landowners, in the form of planted area, part of the land that had been
taken from their land holdings. It provides assistance to the producer in the form of inputs, credit,
technical assistance, and provides an outlet for production.
Key steps
Period Key elements of the context Type of production and fashion

organization enterprise
Colonization Colonial agricultural development policy Large private plantations
Growth market for palm oil
1950's Nationalization of colonial enterprises large state plantations
1960's and 1970's State direct investment policy
Important role of the World Bank
Promising market
1980's Incentive policy for the development PIR/NES scheme

of family plantations
between state enterprises and planters
1988-1995 Private business development support Pir/Trans scheme, KKPA between private
policy (access to land, credit, infrastructure) companies and growers
in return for the implementation of the Pir/
Trans or KKPA scheme
Organization of migration and

settlement of migrants (diagram
Pir / trans)
1995-1998 Under the injunction of international diagram between private companies and
institutions, State policy limited to institutional cooperatives
support (credit, land)
93
Transfer of technical support from public

services to private companies
1997-1998 Economic crisis KKPA scheme and development
no more obligation of the plan including the

non-contract plantations
peasants but this one continues
2000-2005 Decentralized governments facilitate access return of large private plantations

to land for private companies and impose
differential rules regarding the imposition or
not of a scheme including peasants
national policy to promote forms of joint venture trial

private-farmer-State partnerships
Significant effects:
Most of the plantations have developed to the detriment of the customary land heritage of
the local populations, and the economic results have often not lived up to the promises
made by the companies, generating conflicting situations. However, there is generally an
increase in income, job creation and improvement in the economic situation of the majority
of small producers. Plantations have, however, tended to accentuate socio-economic
differentiations between the most vulnerable individuals and local elites.
Main lessons
There is a threshold effect, ie an area from which individual plots can ensure the economic
reproduction of the plantation. Moreover, in many cases, the plots of small producers are
not very productive due to insufficient or inappropriate use of inputs (in particular the use of
quality plants and sufficient quantities of fertilizers). Faced with insufficient technical support
from companies and government agencies, it is often the individuals with the best economic
and social resources, as well as those who enjoy a certain proximity to the companies, who
manage to achieve good levels of productivity. Finally, the general lack of information of
small producers, a certain opacity on the calculation of prices, debt, and poor registration of
land rights are all factors that easily lead to abuse by companies.
94
Annex 3: Burkina – Cotton
Title of the case study: The role of cotton companies in the dynamics of family farms and rural
areas in Burkina Faso.
Author: Guy Faure (economics, CIRAD, UMR Innovation), Gaspard Vognan (agro-economist,
INERA)
Short description:
The study traces the evolution of cotton companies, farmers' organizations and cotton-producing
farms at the national level of Burkina Faso in the period 1960-2010. It analyzes changes within
cotton-producing farms linked to cotton companies by a production contract, including a
purchase guarantee and access to inputs and technical advice via farmers' groups.
Type of study: Personal empirical research + bibliographic research
Country : Burkina Faso
Die: Cotton
Period studied : 1960 – 2010
Scale : All the cotton-growing areas of Burkina Faso, corresponding to several regions of the
country.
- Initially, a public company which was then privatized to give birth to three private
companies. These companies have processing units (ginning and oil mill) but no
plantations and establish contracts with
peasants,
- producers, mostly small, organized in groups from the 70s. in the late 90s. In 2005-
2006 the record figure of 713,145 t is reached. the number of producers concerned,
equal to 70,000 in the 1980s, varies between 280,000 and 550,000 depending on the
year from 2000.
Role of the State: Direct actor before the privatization of the sector, policies of strong incentives
after privatization, role of arbiter within the Interprofessional Association of Cotton in
Burkina Faso
Type of production : non-perennial plant, non-perishable product.
Type of market : national monopsony before privatization, regional monopsony since 2004.
95
Assisted production contract (c): the company provides (in addition to the outlet for production)
assistance to the producer, in the form of inputs, credit to acquire them, and non-directive technical
assistance. It does not exercise direct control over production.
The contract offers a guaranteed purchase of seed cotton to farmers, at a price announced in
advance. It organizes, via the group of producers, access to inputs on credit, the provision of
technical advice, and the purchase of seed cotton.
Key steps
Period Key elements of the context Type of production and mode
organization enterprise
from 1924 colonial policies Development of a production

peasant
1951 creation CFDT private company
1979 creation of SOFITEX = State + CFDT strong increase in production

peasant
1980 national agricultural credit fund organization in Village Groups
1995 First strong economic crisis and state support organization into village groups that have no place
in negotiation and decision-making in the sector.
Attempt to create a federation – update

the leader's deviation
Change of GVs into cotton producer groups
1998 creation of the UNPCB and entry into the capital of

producers in SOFITEX
2002 Liberalization of the sector under pressure from the progressive structuring of producers with a policy of
World Bank with the creation of three companies alliance with companies the policy of the cotton
(sofitex, dagris, Socoma) with entry of producers into company (see GMO defense)
the capital thanks to the retrocession of the State of
its shares to producers
96
2006 Creation from the Association Participation of producers in strategic decisions

Cotton Interprofessional in Burkina concerning the sector.
(AICB)
high cotton production
State support via Association
Cotton Interprofessional in Burkina

Faso
2007 Record seed cotton production justifies investment Regular tensions between producers and
in new ginning units which will be underutilized in companies over the purchase price of seed cotton
the following years and the transfer price of inputs
Outstanding effects
The cotton sector has significant effects on the agricultural economy of the regions concerned:
Generation of stable income over the years;
Promotion of innovation in production systems (seeds, inputs, animal traction, motorization);
Development of efficient agricultural services or support for private service providers (inputs,
credit, blacksmith, advice, training, etc.);
Strengthening of producer organizations from the base up to the federation level;
Revitalization of the industrial fabric and employment outside agriculture (ginning, oil mill, soap
factory, transport) even if spinning remains underdeveloped.
Main lessons
The study of the cotton sector in Burkina shows that different endogenous conditions conducive
to the development of positive synergies between agro-industry and producers are:
• Relatively loose production standards compared to other crops that do not exclude
producers with fewer resources;
• Vertical integration with clear rules of the game, stabilized over time, allowing manufacturers
to secure their investments and producers to engage in cotton production;
• A political will on the part of the cotton companies and a strong alliance with the producers
making it possible to forge links of trust and mobilize the producers;
97
• The establishment of an innovative institutional system with an interprofessional

(AICB) allowing the actors (producers and industrialists) to negotiate between themselves
the evolution of the rules;
• A State that shows a political will to support the sector, guarantees the correct application of
the rules but also intervenes regularly, sometimes with the support of “loyal” donors;
• Long-term support from donors, which is decisive because they support the sector with the
State, but also finance innovative projects and investment projects.
98
Annex 4: South Africa – Citrus and Sugar Cane
Case study title: Agro-industries and agricultural producers in South Africa: The case of the citrus
and sugar cane value chains.
Author: Sandrine Fréguin-Gresh (agro-economist, CIRAD ART-DEV/UCA-Nitlapan) and

Ward Anseeuw (Political economist, CIRAD-ART-DEV/UPretoria)
Short description: The study focuses on the analysis of relations between agro-industrial
companies and agricultural producers in the sugar cane and citrus sectors in South Africa. Based
on case studies, it analyzes the methods according to which three agro-industries engage in
contractual relations with small producers and adopts a diachronic perspective (since the 1990s).
Type of study : empirical research results of the authors and bibliographical synthesis
Country: South Africa
Sector: Sugar cane and citrus fruits
Period studied : early 1990s – current period (latest data in 2011)
Scale: small agricultural region in Kwazulu-Natal Province, small agricultural region in North West
Province (Winterveld), small agricultural region in Limpopo Province (Tzaneen).
Main parties involved
Sugar cane (TSB company)
- private company, which has a sugar cane processing unit, its own plantations and which
supplements its supplies from producers under contract;
- small producers from the same community associated within the framework of joint ventures
(contracts with the community);
- medium to large producers (individual contracts).
Citrus (Magalies company)
- private company, which has a processing unit but which does not have its own production.
It gets its supplies under contract with citrus growers in the Magaliesberg region around
which the company is located. The producers are shareholders of the company.
- small producers in the Winterveld region (individual contracts)

- medium to large producers in the Magaliesberg region (contracts
individual)
99
Citrus (Lona company)
private company, exporter (directly engaged in primary production in other regions);
small to large producers (individual contracts with medium to large producers or contracts with “cooperatives”
of land reform beneficiaries)
Role of the State
Sugar and citrus sector - Public support policies, in particular to promote the participation of black farmers
in the supply of agro-industrial companies.
Type of production : non-perennial, perishable products (citrus fruits) or having the obligation to be
transformed (sugar cane).
Type of market
Sugar cane: strict monospone.
Citrus: existence of outlets other than the contracting company (presence of other processing companies,
supermarkets, informal local markets).
Contracts binding the company and the producers
In the case of the citrus sector and Lona, the contracts linking the company to producers organized in
cooperatives are marketing contracts stipulating strict specifications for production (types of variety, types
of inputs, crop calendar, etc. .) which is mandatory for citrus certification. The company does not provide
support (possibly other than technical advice) nor does it carry out strict control of production conditions.
In the case of the citrus sector and Magalies/WUFA. The contract specifies the inputs to be applied
(dosages, application schedules). Magalies does not provide any resources other than technical assistance.
Planters undertake to deliver a certain quantity of fruit, of a specific quality (ripe fruit, of the Valencia
variety), at a fixed price at the beginning of each season.
In the case of the sugar cane sector and TSB, three types of contracts exist:
1/individual marketing contracts with medium to large producers; 2/assisted production contract with: the
company provides (in addition to outlets) assistance to the producer, in the form of inputs, the means to
acquire them, or non-directive technical assistance. It does not exercise direct control over production;
3/contracts within the framework of joint ventures with communities: planters must follow a specific technical
itinerary and the company provides technical assistance and campaign loans, with profits from sales being
equally divided.
100
Key points agricultural sector
Marketing controlled by the State until 1994, then fully liberalized

with the exception of certain sectors, including sugar cane
Main actors: wholesale markets for fresh produce (Fresh Produce Markets) managed by the
municipalities of the main cities of the country, "cooperatives" of small producers, agro-industrial
processing companies with or without an export activity, supermarkets supplying the domestic
market
95% production carried out by entrepreneurial farms or large managerial plantations
Entrepreneurial farms benefited during apartheid from significant public support for production
and marketing; Since the end of apartheid, the state has implemented positive discrimination
policies that provide support to black farmers in various forms.
The policies of positive discrimination (Agri-BEE) allow an enhancement of the “socio-political”

image of companies under contract with black farmers.
Citrus sectors
60,000 ha, 1,400 producer-entrepreneurs, 2,200 small black producers
Half of the production is exported
100,000 jobs in the sector
Magalies
1959-2005: parastatal “cooperative” for packaging and then processing (from 1965) citrus fruits
produced exclusively by white farmers
Since 2005: privatization and registration as a public company with 90 producer shareholders
(50,000 tons of citrus per year)
Medium-sized black "emerging" farms located in a region of the former Bantustan whose situation
is unique because the land has been owned by black farmers (with titles) since the 1950s.
Black producers are grouped together in an association (WUFA) chaired by a charismatic leader
(technical assistance and packaging)
Du Roi
Main activity of the company: production and marketing of certified plant material (especially
citrus fruits) (a prerequisite for export)
101
Between 2001 and 2010, the Limpopo Department of Agriculture asked Du Roi, under its supervision
and with financial incentives, to provide assistance to two cooperatives of land reform beneficiaries as
part of its affirmative action policy aimed at to promote the participation of small black farmers. The
company engages in:
Production support (which turns into full production management) for land reform beneficiaries
The provision of services: Du Roi is committed as a guarantor to allow small producers to access
credits + the promotion of improved technologies
Negotiation with exporters (including Lona) to allow the export of citrus fruits produced in this way
which are certified (GlobalGAP, Tesco Nature's Choice and fair trade_
Sugar sector
Sector being liberalized. Marketing is still controlled by a public institution, the South African Sugar
Association, which also participates in "economic development projects" aimed at increasing the
participation of black producers in cane production, with public support.
35,000 cane growers
77,000 direct jobs in the sector; 350,000 indirect jobs
6 processing companies and 14 sugar factories
TSB Sugar
2 sugar factories – about 20% of national production
2,400 employees
Other upstream + downstream subsidiaries for the distribution of sugar
3 ways of supplying processing plants
Own plantations (estates) : 7,800 ha (18% of cane processed)
Joint ventures with 2 rural communities that have recovered after redistribution of approximately
6,000 ha of private land from company plantations or other large entrepreneurial farms – 50/50
sharing of profits (production counted with that of his estates)
1,400 producers under individual contract:
82% of supply; 47,000 hectares
140 large-scale producers-entrepreneurs: cane areas of more than 50 ha, on average 190 ha per
farm, who cultivate a total of 27,000 ha of cane and supply
102
approximately 2.5 million tonnes per year – i.e. 3 times the volumes supplied by plantations of
TSB
Several dozen “emerging” black producers: 900 ha of cane on average per farm
1,300 small black producers: 10,000 ha of tribal land – on average an area of 7.8 ha per family, or
between 3.7 and 30 ha of cane per farm. Nearly a third of these small producers are women.
Outstanding effects
The analysis of agro-industry-farmer relations gives mixed results. On the one hand, some of these
results are encouraging: building production capacities, improving access to support services, training,
resources (inputs, credits, information), as well as in terms of possibilities offered to small producers
to participate in markets – even in agricultural production – when they were excluded from them), to
be competitive and competitive – including in market segments subject to strict regulations (standards
for exports fresh fruit, for example) which are extremely difficult to penetrate. On the other hand, other
results show that relationships with agro-industries can marginalize small producers, since: (i) the total
number of small producers involved remains low; (ii) the transfer of production management to
companies shows the need to fully question the expectations, interests and motivations of the actors,
and question the economic, social and political sustainability of these relations; (iii) the increased
weight of norms and standards in the governance of “modern” supply chains and marketing circuits
encourages vertical integration –
or even the internalization of production by companies and to the exclusion of small producers.
Main lessons
The case studies demonstrate that it is possible to create a virtuous circle in South Africa combining
public action and private investment. Indeed, the diachronic analysis since the establishment phase
of these contracts shows that the accompaniment and support from which the small producers involved
in these relations have benefited come from both the government and the private sector (companies,
foundations, donors international organizations, including local communities). Accompaniment and
support must therefore be approached in a reasoned and intelligent way (“ smart supports ”) and not
only mean unidirectional public transfers, without compromise on the part of other partners (including
the communities benefiting from this support). Consequently, an in-depth reflection must be carried
out, including all the actors including the State, the NGOs, the private sector, the associations of
producers, the interprofessions.
103
Annex 5: Laos
Study title: Laos transition to commercial agriculture: modalities and impacts of agro-
investments in Laos.
Author : Isabelle Vagneron, Economist (CIRAD)
Short description : A small landlocked country heavily dependent on subsistence agriculture,

Laos has opened up to the regional market and trade since the 1990s.
Type of study: Literature review (scientific articles, reports, gray literature, websites, etc.).
Country :
Laos
Sector : rubber, maize, sugar cane, rice, cassava, vegetables, etc.
Period studied: 2000’s
Ladder : Whole country.
Main parties Lao and foreign investors (China, Vietnam, Thailand) – Provincial/District
involved: Ministry of Agriculture officials –
Producers and producer groups.
Role of the State: Strong State incentives in favor of foreign direct investment, slash and burn
eradication policy, infrastructure development, etc.
Type of production: perennials and annuals, perishable crops.
Type of market: regional market (Thailand, China, Vietnam).
binding contracts Different types of contracts (2+3, 1+4, concessions) according to the
companies and respective contribution of the different parties (land, labor, technology, market).
producers:
Sector Highlights Agriculture still essentially subsistence. agriculture is a new phenomenon
agricultural: that allows farmers to open up to new crops, new farming practices.
Significant effects: Contract farming is a means of initiating producers to the functioning of

markets and access to a certain number of services that do not exist in
rural areas. However, due to their lack of knowledge of the market and the
absence of a legal framework, farmers have very little bargaining power
and are very vulnerable. Many contractual arrangements are not honored.
104

Major Agricultural Investments and Inclusion of Small Producers: Lessons From Experiences in 7 Southern Countries

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Major Agricultural Investments and Inclusion of Small Producers: Lessons From Experiences in 7 Southern Countries

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Land Tenure Working Paper 23

MAJOR AGRICULTURAL INVESTMENTS

LESSONS FROM EXPERIENCES IN 7 SOUTHERN COUNTRIES

MAJOR AGRICULTURAL INVESTMENTS

LESSONS FROM EXPERIENCES IN 7 SOUTHERN COUNTRIES

Coordinated study and summary written by Perrine Burnod (CIRAD)

Case study authors:

Ward Anseeuw (CIRAD)

Large agricultural investments and inclusion of small producers

To quote the document:

Large agricultural investments and inclusion of small producers

CIRAD: International Cooperation Center for Agricultural Research and Development

CFA: African Financial Community

FAO: Food and Agriculture Organization of the United Nations

INERA: Institute of Environment and Agricultural Research (Burkina Faso)

WRITE : Research Institute for Development

GOPDC : Ghana Oil Palm Development

GMOs: Genetically modified organism

BEE : non-governmental organization

SALCI : Ivory Coast Pineapple Society

SAPH : African Rubber Plantation Company

SODEFEL : Society for the Development of Fruits and Vegetables

WUFA : Winterveld United Farmers Association

Large agricultural investments and inclusion of small producers

Large agricultural investments and inclusion of small producers

Thanks ................................................. .................................................. .....................II

Acronyms................................................. .................................................. ............................III

Executive summary................................................ .................................................. ...................... 1

Executive summary ................................................................................................................ 13

1.1. Objectives of the study ................................................ .................................................. ........ 23

1.3. Cases studied................................................ .................................................. .................. 24

1.4. Limitations of the study .............................................. .................................................. ........... 25

2. Characterization of the cases ...................................... .................................................. ....... 27

2.1. Brief description of the studies ................................................ ............................................... 27

2.2. Characterization of organizational configurations .................................................. ... 31

2.3. Characterization of contractual configurations ................................................ .......... 35

2.4. Characterization of contractual relationships ...................................................... ....................... 39

2.5. The logic behind the use of contract farming by companies............................... 42

3. The effects of contractual schemes ........................................... .................................. 45

3.2. Effects on production systems ........................................................... ............................ 54

3.3. Governance of the sector .................................................. .................................................. 61

4. The main lessons ....................................................... .............................................. 65

4.2. Exclusion or inclusion of small-scale producers ............................................. .................. 67

4.3. Improving producers' incomes and investment capacities .............. 71

Large agricultural investments and inclusion of small producers

4.4. Land management and equitable access to land ................................................. ..................... 72

4.7. Governance of the sector .................................................. ................................................ 74

4.8. Consideration of the long term .................................................. ..................................... 75

5.1. The role of the state ............................................ .................................................. .............. 76

5.5. Challenges................................................ .................................................. ........................ 83

Bibliographical references ................................................ ................................................. 84

Annex 1 ................................................ .................................................. ........................... 87

Annex 2 Indonesia – Oil palm ...................................................... ................................... 92

Annex 3 Burkina-Cotton ............................................ .................................................. 95

Appendix 5: Laos ............................................... .................................................. ................ 104

Large agricultural investments and inclusion of small producers

(Vermeulen et Cotula, 2010).

The study aims to:

• qualify the effects of certain contractual schemes,

Large agricultural investments and inclusion of small producers

Why do companies choose to set up contractual schemes?

Large agricultural investments and inclusion of small producers