Carlos Oya 2012

Journal of Agrarian Change, Vol. 12 No. 1, January 2012, pp. 1–33.
Contract Farming in Sub-Saharan Africa:

A Survey of Approaches, Debates and Issues
CARLOS OYA
The paper provides a selective survey of the most significant literature on the rise of contract
farming in developing countries, with a focus on sub-Saharan Africa. The review of the
literature illustrates ideological debates around the meaning and significance of contract
farming and whether it is good or bad for small-scale farmers. The paper then divides the
review of the literature into three key themes. First, it addresses the quantitative significance
of contract farming in Africa, which may not be as important as it is often portrayed. Second,
the paper highlights the substantial diversity of contract farming in Africa and problems with
excessive generalizations.Third, it discusses the various drivers fuelling the spread of contract
farming, which reflect new production conditions and existing constraints, tendencies and
counter-tendencies, and both economic and political responses to changes in production and
market conditions in the era of liberalization and globalization. The variety of drivers is
substantial and defies generalizations about the emergence of contract farming. Finally, it
briefly suggests research questions that tend to be absent in most of the literature on contract
farming, and which are important in order to understand the current dynamics of agrarian
change and transitions to capitalism in African countries.
Keywords: contract farming, smallholders, capitalism, sub-Saharan Africa
INTRODUCTION
Contract farming (CF hereafter) is today one of the most debated institutional arrangements for
production and marketing of agricultural commodities in developing countries. The World
Investment Report (WIR) 2009 by UNCTAD states that ‘contract farming activities by TNCs
[Transnational Corporations] are spread worldwide, covering over 110 developing and transition
economies, spanning a wide range of commodities and, in some cases, accounting for a high
share of output’ (p. xviii). The World Bank report on agriculture (World Bank 2007, or
WDR08) also pays significant attention to the importance and the role played by CF in the
integration of smallholders in agribusiness chains (particularly in chapter five). In fact, CF and
the creation of ‘producer organizations’ appear as two core recommendations of the World Bank
to promote commercially orientated smallholder farmers and ‘bring agriculture to the market’
(World Bank 2007, 127, 241).
The study of linkages between (private) agribusiness, especially global value chains and
agricultural producers in Africa, and particularly the related spread of CF arrangements, have
Carlos Oya, Department of Development Studies, School of Oriental and African Studies, London, Thornhaugh
Street, Russell Square, London WC1H 0XG, UK. e-mail: co2@soas.ac.uk
An earlier version of this paper was presented and discussed at the Journal of Agrarian Change workshop in 2008,
at SOAS, London. I benefited from extremely useful feedback from various participants in the workshop. I would
also like to thank the excellent research assistance provided by Helena Pérez-Niño. Comments, suggestions and
corrections by Henry Bernstein and two anonymous referees on earlier drafts were also immensely valuable, but
I am solely responsible for the analysis, and any errors, in the final paper.
© 2011 Blackwell Publishing Ltd

2 Carlos Oya
certainly received a lot of attention, especially since the 1990s (Kirsten and Sartorius 2002;
Simmons 2002; Röttger 2004; Gibbon and Ponte 2005; Bijman 2008; Minot 2009). Contract
farming is generally a form of vertical integration between agricultural producers and buyers
(exporters, agro-processing companies or retailers at the end of the value chain).1 More broadly,
it is a form of ‘non-equity mode of production and development’ – or NEM, to use UNCTAD’s
term (UNCTAD 2011).2 The definition used by Little and Watts (1994, 9) is very comprehensive:
‘forms of vertical coordination between growers and buyers-processors that directly shape
production decisions through contractually specifying market obligations (by volume, value,
quality, and, at times, advanced price determination); provide specific inputs; and exercise some
control at the point of production (i.e. a division of management functions between contractor
and contractee’. In the crafting of this definition, the authors emphasize that this excludes ‘con-
tractual marketing arrangements that presupposed no intervention in production’.3 However,
since this intervention can often be subtle and indirect, this exclusion is not always clearly
workable. Indeed, the definition used by Little and Watts (1994), which is shared by a wide range
of studies of CF, might not exclude many of the experiences of parastatal marketing boards in the
1960s and 1970s, which were precisely used as examples of failure by the World Bank in the Berg
report, where private-led CF is proposed as a solution.4 Therefore, the impression that CF may
be more important after the processes of liberalization of the 1980s and 1990s may be due to the
fact that much of the post-liberalization literature sees CF simply as a private-led arrangement.
Comprehensive literature surveys on the significance, nature and implications of the emer-
gence and spread of CF abound in general, but not specifically on Africa, although there are
already some useful, albeit dated, evaluations and comparative analysis of CF in Africa, notably
the book edited by Little and Watts (1994), one of most widely cited references in the field, the
articles by Porter and Phillips-Howard (1997) and Glover and Kusterer (1990) as well as, before
these works, the 1989 special issue in the Eastern African Economic Review, which brought
together evidence on the performance, impact and replicability of CF in various Eastern and
Southern African cases.5 There is less recent material with these characteristics, so an update
may be in order.6
1
As will be shown later on, however, there is very significant diversity in CF types, defying general definitions.
Dolan (2005, 413) more simply defines it as ‘analogous to flexible outsourcing in manufacturing, contract farming
is a form of vertical coordination between export firms and small- or large-scale growers’.
2
NEM includes contract manufacturing and services outsourcing, worth US$1.1–1.3 trillion in sales worldwide
in 2010, as well as franchising, licensing and management contracts; that is, generally ‘[various] types of contractual
relationship through which TNCs coordinate and control the activities of partner firms in host countries’
(UNCTAD 2011, 124). In this typology, CF is most similar to contract manufacturing, but is distinguished for
being ‘resource-seeking’ while contract manufacturing is ‘efficiency seeking’ (ibid., 127). Note that CF is the main
form of NEM used by transnational corporations, for which there are no reliable data for turnover (ibid., 132).
3
Baumann (2000) also uses a broad definition, encompassing three typical types of CF as (a) ‘outgrower schemes’,
usually with direct state intervention and often in joint ventures; (b) nucleus estate–outgrower schemes, with a
core estate-factory leading the scheme; and (c) multipartite arrangements, with various actors and contractual
arrangements.
4
The most obvious cases are the parastatal cotton schemes in West Africa (Mali, Burkina Faso and Côte d’Ivoire).
5
This special issue is a useful resource for early empirical studies directly focused on CF schemes in Africa, some
of which were still directly state-led at the time.The collection of case studies provides a largely policy-orientated
analysis of CF as a response to the agrarian crisis affecting Africa in the 1980s and the new context of agricultural
liberalization. In particular, the 18 schemes analyzed focused on growers’ welfare and the determinants of success
of such schemes. While the comparative analysis by Ayako (1989) and the concluding paper by Glover (1989) had
some analytical depth, the case studies were very descriptive and narrowly focused.
6
There are some recent contributions that attempt to provide brief surveys, closer to ‘guides to CF’ (particularly
work by FAO staff: e.g. Eaton and Shepherd 2001; Da Silva 2005; see also Simmons 2002; Bijman 2008), but
lacking the breadth and depth of Glover and Kusterer (1990) or Little and Watts (1994). A useful, but brief and
not Africa-focused, review is Minot (2007).

Contract Farming in Sub-Saharan Africa 3
This paper provides an updated critical survey of the literature on CF in Africa (and key
contributions for other developing regions too) and proposes an analytical linkage with political
economy questions on the patterns and prospects of agrarian/rural capitalism in sub-Saharan
Africa (henceforth SSA or ‘Africa’). Overall, therefore, the paper has two main purposes. First,
it provides an updated and extensive survey of the literature on CF in Africa, critically building
on previous surveys (e.g. Glover and Kusterer 1990; Little and Watts 1994; Porter and Phillips-
Howard 1997; Baumann 2000; Simmons 2002; Minot 2009). Therefore, the paper draws
together vast amounts of research ranging from ‘old’ themes and contributions to new emerging
issues, hence its length. However, given the sheer size of the body of literature,7 the paper is
unavoidably selective in that it primarily targets (a) literature focused on CF in Africa (although
some broader contributions in other regions are also reviewed); (b) previous surveys of the
literature, including edited collections on the topic; and (c) the most widely cited academic
material (including many case studies) directly focused on CF in Africa,8 which spans a wide
spectrum of analytical and ideological preferences and a range of sources, including academic
articles, books and ‘grey literature’.9 The paper is also partly selective in terms of paying
particular attention to issues that have not been so prominent in the literature.Thus the second
fundamental purpose is to offer a brief critical reflection on CF in Africa through an agrarian
political economy lens, where I propose some research questions that have been only partially
or tangentially tackled in the available literature, or for which the empirical evidence is still too
thin or unsystematic: for example, the actual global incidence and significance of CF (to which
the paper devotes some more detailed analysis in the third section), and the place of CF in the
‘agrarian question’, particularly a core aspect of the agrarian question of capital.10 Therefore, the
survey of the literature and the main points made about leading debates are framed within an
agrarian political economy framework, which critically looks at both mainstream economics
approaches to CF, and some critiques from the political left, including neo-populist approaches.
An important methodological consideration is that much of the reviewed literature is based
on case studies, as there is no systematic empirical evidence on the incidence and output
volume of CF production across countries over time. This has implications for the scope to
assess the impact and significance of CF worldwide and in Africa, as will be argued later.
Moreover, there is also substantial room for over-generalizations and ideology-driven recom-
mendations, particularly when research questions hover around the positive versus the negative
effects of CF. CF has certainly constituted an important site of ideological struggles and
advocacy, as it has gradually become a substantive policy question for aid agencies and states in
developing countries. This underscores the need for a deeper understanding of the politics
behind CF promotion and the sort of (agrarian and economic) doctrines underpinning these
political considerations. The following section of the paper will navigate the evolution of
thinking on CF, and will briefly present the most influential interpretations of and debates
7
A Google scholar search yields 218,000 hits for ‘CF and Africa’; and 90,000 for ‘outgrowers Africa’.
8
In the paper, I also draw to a limited extent on my own field experience in Senegal (groundnuts and
horticulture) and Mozambique (tobacco and cotton).
9
Indeed, the ‘grey’ literature – that is, consultancy reports, commissioned papers by agencies such as FAO and
so on (e.g. Eaton and Shepherd 2001; Simmons 2002; Da Silva 2005) – is very abundant and, though overlaps with
academic work are obvious, this literature tends to quantitatively dominate the material that one can find
on powerful search engines such as Google.
10
In particular, we refer to, in terms of Bernstein (2011), what constitutes a transition to capitalist agriculture and
what drives it, as well as the obstacles that explain the uneven development of capitalist agriculture, a common
feature in developing countries, especially in Africa.

4 Carlos Oya
about CF from different ideological and conceptual camps.The analytical basis of some of these
interpretations is an interesting issue per se and teaches something about the appeal of
neoclassical cum neo-populist perspectives, which have blossomed in the last decade.
The third section tackles two important issues in assessing the nature and implications of CF.
First, it critically reviews the evidence that we have (and don’t have) on the quantitative
significance and spread of CF, particularly smallholder schemes, which usually constitute the
main focus of debates. The variety of ‘logics’ and the uncertainty over the real significance of
this phenomenon reflect substantial diversity in CF schemes and underscore the need to
transcend the glorification or demonization of CF and generally ideological generalizations
about this ‘institution’. Second, the section provides an overview of key factors driving the
emergence and expansion (or decline) of CF, emphasized by the literature in different phases,
and divided into old, recurrent and emerging themes, thereby giving evidence that CF
pre-dates the liberalization period in Africa.The relative emphasis on different drivers or themes
also reflects analytical and ideological preferences. For example, new institutional economists
(NIE) will tend to focus on the idea of institutional innovations to reduce transaction costs and
manage risk, whereas critical analyses from a political economy perspective will stress the
importance of politics, the role of agribusiness globalization in finding spaces of accumulation
and the shifts in labour exploitation patterns.
Finally, the fourth section tackles the fundamental question of linkages between CF and the
development of capitalism; in other words, with the agrarian question of capital, the implica-
tions for agricultural wage employment and the struggles between capital and labour in rural
Africa.This is a subject that has received scarce direct attention by the old and new literature on
CF. Besides, the implications of the so-called ‘land-grabbing’ process, which has attracted so
much interest in recent times, could also be looked at with reference to CF debates, and
whether this process of land acquisitions may reinforce the spread of CF or, on the contrary,
reverse it and bring estate production back in, with the political consequences that this shift
could entail.
CONTRACT FARMING AS SITE OF IDEOLOGICAL AND

METHODOLOGICAL STRUGGLES
One obvious but certainly interesting finding of this review of the literature is that, unsurpris-
ingly, CF and its development implications constitute contested ground. CF is an issue that has
provided a fertile platform for contestation from a variety of analytical and ideological stand-
points, despite the fact that perhaps its quantitative significance might not warrant such a level
of attention. Ideas about CF can be placed within more general models and preferences about
agrarian development and, in particular, within a longer tradition of advocacy of ‘smallholder’
paths of development, as will be argued below.
The literature on contract farming in general, and specifically in Africa, is overwhelmingly
based on a case study approach, whether quantitative or qualitative in terms of data collection and
analysis.11 Historically, systematic and consistent reporting by transnational companies on their
plantation interests and agricultural activities in Africa was unusual (Dinham and Hines 1984).
There is indeed little systematic and longitudinal evidence about the origins, paths and incidence
of CF across Africa and the developing world from a long-term perspective (see more below).
11
For an example, though not entirely focused on CF, see the collection of case studies in Vorley et al. (2007),
and also the other classic surveys by Little and Watts (1994) and Glover and Kusterer (1990).

Methodological and scope limitations of much of the research on CF, together with the
contrasting policy implications of the different contributions, may have contributed to the
emergence of contrasting ‘schools’ or ‘views’ on CF in the course of the past 40 years or so. To
an extent, the interest in CF and the ideological and analytical battles around its interpretation
and implications mirror past debates on other forms of agrarian ‘contracts’ such as sharecrop-
ping.12 Key contestations centre around methodology, ideology (advocacy) and policy, all of
which are interrelated. Methodologically, an obvious contrast exists between mainstream econo-
mists who see CF through the lens of contract theory, economic bargaining within a framework
of methodological individualism, and political economists who look at CF more systemically
and from a historical perspective, turning the issue of ‘bargaining’ into a question of unequal
power relations and conflict. Ideologically, the most evident contrast is between those who see
CF as a ‘win–win’ efficient arrangement in light of market failure and those who see it as
another means for global agribusiness to exploit peasants and labour. The policy manifestation
of this debate lies in the drive to actively promote the expansion of CF schemes or not, and
in the preferred ‘forms’ it should take in order to benefit smallholders. This section provides
more details about these manifestations of contestation.
Glover and Kusterer (1990, 12–13), for example, provide a useful summary of these strands
of CF literature by classifying three main groups or ‘schools’: (a) evaluation studies done by
development practitioners, especially for cases where donor money was invested; (b) a
‘neo-populist’ (not their term) group of academics and practitioners (also known as the ‘Food
First’ group), which is highly critical of agribusiness along the usual lines of ‘food self-
sufficiency’ and pro-peasant discourse; and (c) a ‘business school’ group, mostly concerned with
transnational corporate behaviour and management challenges, and fairly silent on producers’
welfare, and other social and political issues. This classification mixes methodological and
ideological criteria. After the work of Glover and Kusterer (1990), a ‘political economy’ and
‘economic sociology’ group seems to emerge in works such as Little and Watts (1994)
and Daviron and Gibbon (2002), which also contrasts with the focus of policy-orientated
‘evaluative’ research (e.g. Glover 1989; Glover 1990) and the conceptual apparatus of the New
Institutional Economics (NIE) approach, interested in analysing the emergence, incentives and
efficiency implications of CF as an institutional arrangements that seeks to resolve market
failures.13
In this battle of ‘interpretations’, different authors sometimes caricature the work of others,
as Grosh (1994, 236), a NIE exponent, does for studies by scholars such as Little and Watts,
when she asserts that ‘a [case study approach] has led to a neglect of the variation in contracting
practices as a variable to be explored and explained’. Grosh (1994) in fact ignores the fact that
some of the studies she refers to actually emphasize the variety of CF experiences while
extracting some of the most salient commonalities. In reality, Grosh (1994, 237) relies on the
usual straw man to make her case for a NIE approach to CF, which is supposed to be more
illuminating because ‘it compares the advantages of alternative forms of governance (e.g. spot
markets, contracting and vertically integrated plantation agriculture in this case)’. Nowhere are
these ideological clashes on CF more evident than in one passage of the review of Little and
Watts (1994) written by Tiffen (1995, 426), a self-declared neoclassical economist:
12
For a survey of the debates on sharecropping, see Byres (1983).
13
NIE research is overwhelmingly obsessed with transaction costs and market failures as organizing principles
around which the analysis of all kinds of institutional arrangements, and especially in the form of ‘contracts’, is
developed. See, for example Grosh (1994), Hennessy (1996), Fafchamps (1996),Warning and Key (2002), Eaton and
Shepherd (2001), Kirsten and Sartorius (2002) and Otsuka et al. (1992).

6 Carlos Oya
The weakness of the book is the long first chapter by Michael Watts. Watts retains a
Marxist perspective and its accompanying turgid jargon (profit, which both farmer and
company hope to make, becomes ‘surplus extraction’ in the case of the latter). This
reviewer belongs to the neo-classical school he attacks . . . the chapter fails to address
many interesting issues related to market control, land tenure and state versus private
enterprise.Watts does not identify the two traditions which have led to different forms of
contract farming, and which would have placed the case studies in context . . .
The most important concepts used to analyze CF and other institutional arrangements in
neoclassical NIE approaches are transaction costs (from contract theory), uncertainty, risk, market
imperfections (in capital, land and labour), coordination failures (especially for the introduction
of new crops or technologies), ‘efficiency’ (a very contested concept) and monopsony rents,
which are used to explain the willingness of contractors to offer incentives to growers and the
growers’ responses to incentives and threats. From an analysis of these categories, a NIE approach
seeks to compare different situations and extract lessons, in the form of general patterns, such as
that, in the absence of monopsony power, enforceability is problematic and schemes are more
vulnerable to failure – indeed, an important insight in a context of promotion of market
liberalization. In other words, NIE concentrates on the micro-functioning of CF arrangements
following a functionalist approach that centres on the role that this institution plays for both
parties, contractors and contractees, in a rather ahistorical fashion. In the conventional NIE
analyses of CF situations, especially those undertaken at a more abstract level (Grosh 1994), there
is no due consideration of political drivers, nor is there any serious account of power and class as
organizing principles to understand CF’s origins, developments and outcomes for the different
classes of participants, considering that farmers’ differentiation is a fact of life, often connected to
the emergence of CF opportunities themselves.14 In contrast, the analysis provided by authors
such as Wilson (1986), Singh (2002),White (1997), Raynolds (2000), Ochieng (2005), Ochieng
(2010), Levin (1988), Little and Watts (1994) and the case studies contained in their volume, for
example, address many of these analytical categories, which are so central to understanding the
historical contingency, significance and diversity of CF schemes.15
After the momentum reached by the extensive reviews of field-based studies in the late
1980s and early 1990s, the current literature seems to be expanding in two main directions.
First, there is a growing body of mainstream and institutional (FAO,World Bank etc.) literature
analysing the specific arrangements in CF and the relative bargaining power of growers and
buyers mostly within a neoclassical NIE framework, as well as a growing body of policy-
orientated evaluative empirical work to assess the impact of CF schemes on the welfare of
smallholders; for example, on income and food security, and the necessary institutional changes
to improve performance (e.g. Kirk 1987; Kudadjie-Freeman et al. 2008;Warning and Key 2002;
Bolwig et al. 2009; see also Glover 1994). Indeed, donor support to CF as a solution to market
failures in the period of structural adjustment has often put it at the centre of mainstream policy
agendas (e.g. DFID 2005; World Bank 2007).16 Second, a significant literature on global value
chains has expanded and, although the focus is not on CF per se, this appears prominently in
some of the empirical studies of governance of specific GVC and the incorporation of
14
‘Differentiation’ in class terms in the sense of independent agricultural producers becoming either capital
(agrarian capitalists) or labour (proletarians or semi-proletarians). Class differentiation may also be ‘shaped
by gender relation and their dynamics’ (Bernstein 2011).
15
With the exception of essays in Little and Watts (1994) and Ochieng (2010), the other examples refer to
non-African cases.
16
The World Bank has typically discussed the emergence of (privately led) CF in a positive light, both for
ideological and analytical reasons, as shown below.

(small-scale) producers, particularly their vulnerability and powerlessness, within these chains
(see, amongst others, Daviron 2002; Daviron and Gibbon 2002; Larsen 2006).17 In addition, the
more recent literature on global ‘land grabs’ is also tangentially touching on CF in so far as this
arrangement is used in some contemporary large-scale land acquisitions or is seen as a tool to
make these deals more ‘pro-poor’ (e.g. Cotula et al. 2009; World Bank 2010).
One of the leading contentious issues, and probably the one that has attracted more debate and
‘interpretations’ in the literature, is whether companies or farmers (especially when these are poor
smallholders) benefit more from CF relations. Ochieng (2010, 136) puts it very clearly in the title
of the introduction to his paper: ‘CF: Instrument of Rural Development or Exploitation?’Thus
a focus on the relative bargaining power of the two contracting parties is pervasive in the early
and recent literature. This theme in turn connects with one of the long-standing debates in
agrarian studies: the persistence and future of small farmers. In general, research on CF, including
mainstream perspectives, tends to accept the idea that smallholders face unequal relations vis-à-vis
contractors/buyers, and that their bargaining power depends much on the availability of
alternative sources of livelihood that may provide a safety net or ‘exit’ against the monopsony
power of firms, or in case the CF relation collapses (Glover 1990; Glover and Kusterer 1990;
Grosh 1994; Little 1994). Even Reardon and Barrett (2000, 200), from a mainstream economics
tradition, articulate a point often found in radical critics when noting that ‘[CF] typically displaces
decision-making authority from the farmer to the downstream processor or distributor, turning
farmers into quasi-employees’. Sivramkrishna and Jyotishi (2008) have also provided evidence
that as a result of monopsonistic exploitation, the positive impact of CF on growers’ poverty status
is negligible.18 In other analytical terms, this situation is equivalent to a form of ‘proletarianiza-
tion’ of small farmers without dispossession, a thesis that is supported by some Marxist and other
critical interpretations of CF (e.g. Clapp 1988; Watts 1994; De Schutter 2011). However,
mainstream academics, and especially international development agencies such as the World
Bank, frequently commit to a ‘win–win’ interpretation19 of the CF relation, in contrast with the
‘win–lose’ interpretation (win for agribusiness and loss for smallholders) that is more common in
neo-populist approaches – and, in particular, in the ‘Food First’ school – or more recently in the
emerging anti-‘land grab’ literature.The ‘win–win’ approach essentially focuses on the gains that
both parties reap: companies avoid direct involvement in production and labour supervision,
while outgrowers access reliable markets, credit and technology that would be otherwise out of
their reach. The focus then is on the sorts of institutional arrangements that would smooth the
CF relation and avoid some of the problems identified (such as side-selling, exit, bargaining power
over grading and prices, loss of control over production process, access to finance, access to inputs
etc.). One typical and recurrent example is the renewed emphasis on producer organizations
(POs), strongly supported by the World Bank and other major donors.20 Another example is the
17
See also Gibbon and Ponte (2005) for a more comprehensive compendium grounded in these empirical
‘commodity studies’ and Bernstein and Campling (2006a,b) for a very detailed critical assessment of this work.
18
For a more recent review of mainstream economic studies, which raises doubts about the quality of the
evidence on the welfare impacts of CF across developing countries and the problem of causality and attribution,
see Barrett et al. (2010).
19
For a critical discussion of the Bank’s tendency to emphasize ‘win–win’ scenarios, see Oya (2011).
20
For a more nuanced review of this option, see Prowse (2007). The mainstream literature on the prospects of
smallholders in relation to agribusiness and world agricultural trade dwells on the illusion that ‘producer
organizations’ in poor developing countries can possibly exert some influence through lobbying on price-setting
mechanisms for the export crops that they produce. An example is Malian cotton farmers. This has been a typical
case of fairly successful state-led CF scheme until American cotton subsidies forced the parastatal CMDT
(Compagnie malienne pour le développement du textile) to incur huge losses to subsidize Malian producers in
turn.This has paved the way for a privatization that is unlikely to empower cotton farmers, and is resisted by them.

8 Carlos Oya
alleged positive role that CF can play to solve the credit market failures that have become so
evident in the wake of structural adjustment in agriculture (World Bank 2007, 13, Bellemare
2010).
The institutional support from international donors to CF schemes, especially during the
1980s and 1990s, is an interesting phenomenon that reflects some of the prevalent ideological
contours of mainstream development policy debates. Aid agencies have been typically favour-
able to CF production, but now there is renewed emphasis, especially after the disaster of many
market liberalization experiences in the era of structural adjustment. The Bank, for example,
frequently argues that ‘institutional innovations such as CF can reduce the transaction costs and
risks of smallholders’ (World Bank 2007, 237). It is striking, however, that these organizations
label CF arrangements as ‘innovative’ mechanisms to link smallholders with global agribusiness
and facilitate much-needed technology transfer, despite the fact that CF is already an ‘old’
institution, far from being particularly ‘innovative’. The historical memory of the Bank, as so
often, seems lacking, as the Bank has been one of the core donors supporting state-led
outgrower schemes since the 1960s (in Kenya, Cameroon and Ghana, amongst other countries).
The latest flagship report on agriculture (World Bank 2007, 238) states that ‘scale economies in
processing and marketing exist with fragmenting and shrinking farm size, so institutional
innovations such as CF can reduce the transaction costs and risks of smallholders. Linking
smallholders to processors and retailers can also create access to more financial capital through
banks – and provide technology, extension, and buy-back arrangements, while monitoring food
safety.’ All these tasks were performed by many of the state agencies liquidated under World
Bank and donor pressure during the 1980s and 1990s, despite having received previous support
from the very same World Bank.
In fact, the Bank’s current stance is revealing for the contradictions and incoherence that its
support to CF presents (see also Oya 2011). Before the structural adjustment era of donor-
driven economic reforms, the World Bank (and other agencies, such as the CDC – Common-
wealth Development Corporation) had supported a number of CF projects with strong state
intervention where parastatals were created in a similar way to the state marketing boards that
dominated the African landscape before the onset of reforms in the 1980s (Glover 1994).
Despite this support, the Bank was quick to severely criticize the ineffectiveness and failure of
state-sponsored agricultural modernization programmes and especially the marketing boards,
which were often engaged in ‘CF-like’ vertical integration with a mass of farmers of different
classes.21 At the same time, the World Bank suggested that private CF schemes would be a
solution to government failures and would supposedly improve the bargaining power of farmers
hitherto exposed to the over-taxation of agricultural price policies. While CF was again
supported, the main tenet of SAPs was the liberalization of agricultural markets. A clear
contradiction emerged in so far as the rationale for private CF schemes was the underdevel-
opment of markets and the need for coordination between the private sector and growers
through forms of vertical integration. The marketing boards had attempted precisely this.
Moreover, most literature on CF, including the most pro-agribusiness (Goldsmith 1985;
Williams and Karen 1985), had by then acknowledged that CF was sustainable as long as either
(a) contract enforcement was effective thanks to a good regulatory and judicial system (unusual
in the African context), or (b) CF companies enjoyed monopsony power over contract growers
with scarce alternatives for marketing and income generation (Williams and Karen 1985; Glover
and Kusterer 1990).This is striking, as it implies that CF schemes are sustainable with less or no
21
See World Bank (1981) for the paradigmatic exposition of Bank’s views in this respect, and Bates (1981) for
their intellectual inspiration.

market competition and that private agribusiness dislike free markets, particularly because of the
risk they face in losing the advances given to thousands of hard-to-monitor outgrowers, who
may be tempted to engage in ‘corner-cutting’ and break contractual arrangements. The Bank
thus faces tension in its double commitment to CF as institutional ‘innovation’ and to free
markets as desirable for the welfare of small farmers. It does seem, however, that the enthusiasm
for CF, and, by extension, for the prospects of smallholder farmers, has somewhat waned in
recent times as a result of these contradicting claims.
As noted before, the discussion of the role of CF in development and in transitions to
capitalism cannot be dissociated from the debate on the role of smallholders in development. In
fact, generally much of the literature that celebrates the potential of ‘smallholders’ tends to make
reference to their successful integration in agribusiness chains. A pro-smallholder bias is obvious
in much of the so-called neoclassical neo-populist approach, criticized in this Journal by many
authors, and especially in the special issue dedicated to land reform (Byres 2004). It is a bias that
is also evident in Food First approaches to agribusiness in Africa, such as Dinham and Hines
(1984) who basically conflate agribusiness penetration with cash crop specialization at the
expense of food security. The pro-smallholder approach contends that smallholders (generally
seen as an undifferentiated mass of poor rural agricultural producers) – if they are given the same
conditions and facilities enjoyed by large-scale farmers, such as access to inputs, credit and so on
– can outperform the latter with greater production efficiency, on the grounds of diseconomies
of scale at production level (the famous ‘inverse relationship’ between size and productivity).22
Taken further, CF is thus seen as one of the preferred institutional devices to make the
smallholder path to development (and capitalism?) viable in contemporary developing countries
in the context of globalization. This contrasts with opposing views that the ‘the best way for
them [smallholders] to play this role [in economic growth] is to “disappear”, either by leaving
agriculture, or by becoming large farmers. But, for this disappearance to be worthwhile, it
should be the result of an enrichment process’ (Boussard 1992). In other words, the role of
smallholders in development is to give way to large-scale capitalist farming.This view is actually
quite out of fashion, and even people who might be favourable to large-scale capitalist farming
in developing countries (including many at the World Bank) will prefer the politically correct
option of finding a role for smallholders (an ‘incorporation’) without questioning the global
agri-food system. In fact, most international and national policy documents today seem to
favour a smallholder path, as a cursory reading of poverty reduction strategies, and various
agricultural policy documents, seems to suggest.23 There is definitely no bias in favour of
large-scale farming in policy discourses. At most, and more in practice than in rhetoric, some
governments aim to propose a ‘dual’ strategy (Leavy and Poulton 2007, 25), based on (a) a
strong component of promotion of commercial smallholder production and their integration in
global value chains through CF and other similar mechanisms, and (b) some measures to
promote agricultural investments by large-scale investors (foreign or national) in an attempt to
build up agricultural competitiveness in highly demanding markets.24
22
See Wiggins et al. (2010) and articles in the special issue of World Development on the future of small farms. See
also the Journal of Agrarian Change debate on land reform in 2004 (volume 4, issue 1&2) for critiques of the ‘inverse
relationship’ and associated neoclassical neo-populism especially Byres (2004).
23
For example, the most recent Mozambican Strategic Agriculture Plan 2011–2020 (PEDSA) approved by the
Council of Ministers on 3 May 2011. In this remarkable strategy, where previous World Bank recommendations
for more liberalization have been reversed in favour of a more interventionist stance on input distribution,
agro-processing and technology packages, CF is also specifically prioritized in a move to ‘incorporate’ small and
medium farmers more effectively in profitable value chains.
24
Agricultural strategies in countries such as Senegal, Mozambique, Zambia and Ethiopia contain strong
elements of this ‘dual’ strategy.

10 Carlos Oya
Overall, one is tempted to think that the significance of CF, as reflected in academic debates
and mainstream policy discourses, arises in relation to broader debates on the viability and
desirability of smallholder farming in contemporary capitalism. Agribusiness, in turn, may act in
response to these ideological fads in order to secure good concessions and long-term access
to land and markets. Although, from an economic point of view, it would make more sense to
contract fairly efficient and technologically sophisticated large-scale outgrowers, for many
agribusiness companies the CF solution is a public relations exercise designed to build alliances
in the areas where they produce and source their throughput, and to access subsidized credit
from agencies buying into the ‘smallholder path’ to development (see more below). In fact,
access to subsidized credit seems a significant factor driving agribusiness to engage smallholders
(Little and Watts 1994; Konings 1998). States and donor agencies may thus maintain their
support to CF as long as this institution is seen as an acceptable compromise between the
requirements of agricultural modernization and capitalist development and the political clout of
(organized) smallholder farmers in developing countries, particularly at a time when advocacy
against ‘land grabbing’ has gained substantial momentum.
THE EMERGENCE AND SPREAD OF CONTRACT FARMING IN AFRICA: KEY

THEMES AROUND INCIDENCE, ORIGINS AND DRIVERS
Theme 1 – How (Quantitatively) Significant Is Contract Farming, Particularly Smallholder Schemes,

in Africa? Do we Know?
An important question in this survey is to what extent the ample literature on the subject
sheds light on the (quantitative) economic significance of CF as a form of organization of
agricultural production over time worldwide, and specifically in SSA. This is important to
address the question posed later in the article, as to whether CF provides a dominant ‘path’
towards agrarian capitalism in Africa. Rehber (2000, 1–2) asserts that CF may account for 15
per cent of agricultural output in developed countries and is ‘rapidly expanding in developing
countries’. Therefore, even in areas where this institution is supposed to be more developed,
it only accounts for a relatively small proportion of output.25 Moreover, this evidence does
not say anything about who is contracted and therefore about the proportion of this output
that actually comes from smallholders under CF arrangements. Thus, if this evidence is correct,
plausibly the proportion of agricultural production under CF in developing countries may
not exceed 15 per cent, but this remains a hypothesis. On the other hand, following a
mainstream institutional analysis, Setboonsarng (2008) presents a stylized evolution of CF
from greater significance in earlier stages of market development (a move from subsistence
to commercial agriculture and the development of agro-industry), in which most SSA coun-
tries find themselves, to declining significance as spot markets become more developed and
information constraints less binding. Ultimately, however, the incidence may slightly pick up
again when product differentiation and traceability rule global value chains. This, however,
only tells us something about a theoretical evolution without giving us precise evidence of
real significance.
25
Rehber (2000) interestingly notes that CF is traditionally considered a feature of an advanced capitalist
agricultural structure and probably where it all started. In fact, a significant proportion of the literature on CF
published in mainstream agricultural economics journals (e.g. Journal of Agricultural Economics, Agricultural Economics
and the American Journal of Agricultural Economics) focuses on advanced capitalist countries, especially the
USA.

Sources more directly concerned with agricultural production in developing countries

emphasize the significance of CF by citing the numbers of outgrowers contracted by large
agribusiness TNCs such as Nestlé or Olam, which annually engage hundreds of thousands of
suppliers across the world, or by giving examples of intensive involvement in specific coun-
tries for specific crops – as in the case of Mozambique, where 100 per cent of cotton is
supplied through CF schemes (UNCTAD 2009, 119–20). UNCTAD (2011, 140), for
instance, lists five countries, three in Africa, where CF is very significant for particular crops,
namely: (a) Brazil, where around 75 per cent of poultry and 35 per cent of soya bean
production are sourced through CF; (a) Kenya, 60 per cent of tea and sugar, and nearly all
of cut flower exports (though the latter mostly from large farmers); (c) Viet Nam, where
some 90 per cent of cotton and fresh milk, 50 per cent of tea and 40 per cent of rice are
CF-sourced; (d) Zambia, 100 per cent of cotton and paprika; and (d) Mozambique, where
most cotton production and much of tobacco is on CF, and where 400,000 smallholders are
involved in some form of CF – in other words, equivalent to a little more than 10 per cent
of all listed smallholder farmers in the country.26
However, the crop and commodity-specificity of much of the available data, and the
resulting lack of systematic empirical information across countries and crops, make it impos-
sible to assess the precise quantitative importance of production and exports in CF schemes
across the full range of contracted crops, and especially over time. For example, we would
need nation- and region-wide empirical estimates for some of the following indicators: (a)
share of CF production in total agricultural exports; (b) percentage of CF production in total
cash- or export-crop production (not just numbers of outgrowers); and (c) proportion of
total crop production originating in CF schemes (not the proportion of producers who are
outgrowers, especially in contexts of significant production concentration – e.g. horticultural
production). Despite the unavailability of such aggregate indicators, the collection of case
studies analyzed in various sources cited in this paper and the quantitative information
contained therein would seem to suggest that CF production does not account for a major
share of agricultural production or even exports SSA-wide.27 It is clearly more important in
some countries (e.g. Kenya, Zambia, Mali and Mozambique) than others. Indeed, most of the
available literature seems fixated with the Kenyan case studies, which reflects two things.
First, CF may be a relatively dominant institution for smallholders especially in Kenya,
because of the long-standing tripartite relationship between the state, agribusiness and small-
holders, which has been extensively discussed since the ‘Kenya debate’28 (see the section
below; see also Currie and Ray 1987; Ochieng 2005). Second, only Kenya provides sufficient
systematic evidence of successful experiences on which the pro-CF literature may draw, both
because of the quantity and quality of the Kenyan literature on this topic (Ayako 1989;
Glover 1994).
26
According to my own calculations from the latest agricultural census in Mozambique, held in 2010, only 2.4
per cent of total area farmed in the country is devoted to cotton and tobacco, the two chief CF crops. See
http://www.ine.gov.mz/censos_dir/agro-pecuaria/CAP_Apresentacao18052011_final.pdf.
27
Probably the most notable exception is cotton farming, not a particularly dynamic sector, for which small-
holder CF schemes represent the bulk of African exports, especially in countries such as Mali, Côte d’Ivoire,
Burkina Faso, Mozambique and, to a lesser extent, Zimbabwe.
28
See the original ‘Kenya debate’, centred on the idea of dependency applied to Kenya, and the subsequent
‘Nairobi discussion’, centred on agrarian questions and the prospects for and constraints on capitalist development,
published in the Review of African Political Economy, issues 17 and 20, respectively. See also Leys (1996, 143–63) for
a lucid rejoinder of the debate, Kitching (1985) for an excellent critical reassessment, and Orvis (1993 and 1997)
for very useful summaries and reappraisal.

12 Carlos Oya
Ascertaining the actual significance and evolution of CF is also affected by selection biases
in published research, and the predominance of analysis of success stories as opposed to failures
(Glover and Kusterer 1990, 132). So it is hard to know how many schemes have been
discontinued in Africa and how such failures would affect the interpretation of tendencies. One
example of failure is Bud Senegal, a scheme that was short-lived in the 1970s and which
received significant attention from the agribusiness and Food First literatures. Bud represented
the ‘enclave’ character that some CF schemes have had in the past and the extent to which these
‘experiments’ were unsustainable and caused long-term damage to their external environment
without bringing lasting benefits in terms of welfare and/or accumulation (Mackintosh 1989).29
Other examples illustrate the limited significance of CF production in some countries. In
countries with more developed capitalist agriculture and for plantation crops, where economies
of scale exist, the introduction of CF schemes does not really alter the dominance of non-CF
large-scale production – as in the case of the Transvaal sugar company in South Africa, where the
smallholding group, which includes 1,000 growers with an average holding size of 6.8 hectares
(thus not particularly ‘small’), only supplies about 10–20 per cent of the company’s output
(Röttger 2004).30 Other examples in West Africa (palm oil in Cameroon and Côte d’Ivoire;
rubber in Liberia) in the 1960s and 1970s also suggest that outgrower schemes, sometimes
dominated by large-scale growers, represented less than 5 per cent of total national output – in
the case of palm oil (Daddieh 1994; Little and Watts 1994, 6, Konings 1998).
This takes us to Kenya, perhaps the toughest test for the significance of CF in Africa and
particularly smallholder schemes, since this country has been distinguished for the prominent
role played by smallholders in commercial agriculture and development policies (Ochieng
2010). It is here that CF has blossomed and attained output shares well above other countries.
After its consolidation, 33,000 sugarcane outgrowers (mostly smallholders) provided 90 per cent
of Mumias throughput (Glover and Kusterer 1990, 95), but this output was not a very large
share of national production. More significant is the Kenya Tea Development Agency (KTDA)
tea outgrowing scheme, one of the largest schemes in Africa, focused on smallholders and
coordinated by a parastatal agency (until its privatization in 2000), which dramatically increased
the share of national tea supply from outgrowers from 6 per cent in 1965 to 33 per cent in
1980. Since then, Kenyan tea production on both large-scale plantations and outgrowing
schemes such as that of the KTDA, has increased continuously, to nearly 400,000 tons in 2010.
The latest figures for 2010, according to KTDA sources, show a further significant increase from
around 350,000 small-scale outgrowers in 2002 to 598,000 farming on 109,000 hectares
(around a half-acre farm per grower) but declining yields relative to estate farms.31 Therefore,
29
Mackintosh (1989) specifically argues that the promotion of high-productivity, irrigated ‘islands’ amidst
low-productivity rainfed agriculture, when it fails, leaves long-term detrimental legacies for the social organization
of production and the simple reproduction capacities of rural households. In the end, the land appropriated by Bud
for its farms and outgrower scheme was eventually distributed among some large-scale vegetable exporters with
significant access to non-farm capital. The neighbouring population and increasingly migrant labour from inland
Senegal continue to provide labour power to the new vegetable exporters.
30
In South Africa, 70 per cent of sugarcane production is accounted for by 3 per cent of sugar farmers (all
large-scale growers) (Röttger 2004). See also Jackson and Cheater (1994) for similar evidence in the case of sugar
and tea schemes in Zimbabwe, where either estates (in sugar) or large-scale capitalist farmers (tea) accounted
for the main bulk of output. Even in cotton, which tends to be the realm of smallholder production, in
1986 smallholders only supplied 50 per cent of CF production, while the rest was supplied by large-scale
farmers (Jackson and Cheater 1994).
31
Data extracted from a presentation by the KTDA’s managing director, Lerionka Tiampati, at http://tea-
convention.eatta.com /2011% 20convention%20presentations/Small%20Scale%20Tea%20Sub%20Sector%20in%20
Kenya%20_%20KTDA%20Story%20by%20L_%20Tiampati.pdf and compared with data from Ochieng (2010,
141).

in 2010 the tea smallholder CF sector accounted for 50 per cent of Kenya’s total tea output,
down from 65 per cent in 2002.32 These numbers are significant and attest to an extent the
‘exceptionalism’ of the Kenyan case.33 This, in fact, contrasts with the poor performance of the
smallholder subsector in tea production in neighbouring Tanzania, where its share in the early
2000s was only 10 per cent of national output, despite cultivating almost half of tea areas, after
dropping from 29 per cent in 1985 (Baffes 2004, 14).
However, the importance of CF with smallholders in Kenya is not as impressive in other,
even more dynamic, agricultural sectors, notably horticulture, which has been often hailed as an
example of successful agribusiness–small farming linkages (Jaffee 2003). The evidence suggests
otherwise. Take the example of floriculture, for which exports doubled in volume between
1995 and 2003 (data from the Horticultural Crops Development Authority, HCDA; http://
www.hcda.or.ke/tech/) and have consistently accounted for over 50 per cent of the value of all
horticultural exports from Kenya in recent years (Whitaker and Kolavalli 2004). This chain is
mostly based on large-scale estate production, specifically three large farms employing thou-
sands of workers, many of whom are permanent, and 75 per cent of cut flower exports being
supplied by 40 medium- and large-scale estate farms (Hughes 2004; Hale and Opondo 2005).
Therefore, in one of the most dynamic agricultural export sectors in Kenya, the largest impact
on poverty is through employment rather than income for smallholders (Jaffee 2003).34
Moreover, in the case of fresh fruits, mainly pineapple (which represent around 5–10 per cent
of total horticultural exports), large-scale estate farming also dominates, while smallholders have
lost much space.35 To be sure, smallholder CF schemes have had a significant presence in some
horticultural products (especially French beans and Asian vegetables).36Around 15,000 small-
holders (from only several hundred in the 1970s) were involved in horticultural production in
the mid- to late 1990s, and by then smallholders were producing large shares of these fresh
vegetables, in the order of 40–60 per cent (Minot and Ngigi 2004, 22) and declining since then
(see below). Perhaps more importantly, on a continental scale, the dynamic exports of fresh
fruits and vegetables today remain dominated by South Africa, where smallholder CF schemes
are only marginal.37
Another significant development is an emerging private-led move away from smallholder CF
in several places and for certain crops. Several authors have pointed out that CF, even in
32
I assume a standard conversion rate of 4.25 kg of green leaf to 1 kg of made tea. This is a reasonable estimate,
between the usual standard of 4.5 : 1 and what is reported in Kenyan media of ‘around 4 : 1’; see http://
www.ipsnews.net/Africa/nota.asp?idnews=49074.
33
On the idea of ‘exceptionalism’ of the Kenyan model of agricultural development, see Bates (2005) for a new
institutionalist political economy perspective, or Ochieng (2005, 2010), for how the significance of smallholder
outgrowers in the political economy of Kenya lends support to the idea of ‘stakeholder-capitalism’ specific to
Kenya.
34
It is estimated that the sector employs 40,000–50,000 employees, many of them young women who harvest
and pack flowers for export (Jaffee 2003; Dolan 2004; Hale and Opondo 2005). See also Maertens and Swinnen
(2009) for the case of Senegal and the poverty reduction implications of horticultural estate production.
35
The decline of smallholders in Kenya was particularly evident in the production of pineapple for exports, as
Del Monte decided back in 1974 to rely entirely on their own estate production for reasons of quality and supply
reliability (Minot and Ngigi 2004).
36
This pattern is also similar in Senegal, where smallholder CF schemes are mainly concentrated on French beans
(Maertens and Swinnen 2009).
37
In most of the cases analyzed by a recent FAO study in South Africa and Kenya, the vast majority of supplies
came from agribusiness’ own estates or from large-scale contract growers. Only a marginal share is sourced from
small-scale outgrowers. This would suggest that small-scale schemes are indeed part of the public relations
operations of these companies, and are driven by government policy to lure agribusiness into relations with
smallholders in exchange for some lucrative incentives for the companies. (Röttger 2004, 14). See also Collinson
(2001).

14 Carlos Oya
countries like Kenya, increasingly relies less on large numbers of smallholders (especially poor
smallholders) and more on fewer dynamic smallholders and/or, more importantly, on middle-
and large-scale commercial (capitalist) growers (Coulter et al. 1999; Dolan and Humphrey 2004;
Minot and Ngigi 2004; Gibbon and Ponte 2005, 143; Bernstein and Campling 2006b). In some
cases, this tendency is taken further and second-tier suppliers opt for a return to own-estate
production at the expense of smallholder schemes (Daviron 2002; Daviron and Ponte 2005).38
In this vein, the most recent and significant example is horticulture in Senegal (Maertens and
Swinnen 2009). This reported decline of smallholder CF is largely due to the growing
importance of contracts with large retailers/supermarkets, associated food safety and ‘traceabil-
ity’ requirements, and generally new stringent conditions for quality standards (especially
EurepGap), which make reliance on smallholders riskier (in terms of timely supply and quality)
and more costly, as a result of the waste of product that fails to meet EU quality requirements
(Dolan et al. 1999; Minot and Ngigi 2004, 22; Gibbon and Ponte 2005).39 Dolan (2004, 105),
with a study based on four leading exporters in Kenya, estimates that the share of fruit and
vegetable exports produced by smallholders for these exporters declined from about 75 per cent
in 1992 to between 10 and 20 per cent by the late 1990s, with a tendency to decrease even
further.40
It is also interesting that in some recent cases of smallholder export crop ‘success’, CF has
played some role in some countries but not in others. Tobacco production from the 1990s is
one example. In Malawi, second exporter in Africa after Zimbabwe, the accelerated entry of
smallholders into the sector, especially since 1990, led to a boom in burley tobacco production
(Peters and Herrera 1994), but smallholders were not organized in CF schemes, as they are in
other countries such as Mozambique, Mexico and India. Malawi followed the same marketing
arrangements as Zimbabwe, even if the type of tobacco was very different (burley as opposed
to flue-cured); that is, the entire crop was sold through auctions that smallholders access through
burley clubs (not open to all growers though) (Jaffee 2003). In Mozambique, tobacco produc-
tion increased remarkably, partly as a by-product of the land reform in Zimbabwe and the move
of large-scale growers and tobacco companies to the other side of the border. The lack of
auctions and the preference of the Mozambican government for CF schemes (as in the case of
cotton production) are two reasons why the main private buyers (Dimon and Universal Leaf)
have opted for a CF arrangement for tobacco procurement, with the condition of obtaining
territorial concessions (hence monopsony power) to cope with side-selling.
Finally, one more reason to doubt the supposed quantitative importance of CF in aggregate
agricultural production is its relative insignificance in food markets for domestic consumption,
which, despite their generally poor articulation and inefficiencies, account for a large share of
marketed agricultural output in much of SSA (Wiggins 2000). Despite the vacuum that market
liberalization left in many countries and the high transaction costs that characterize food
markets (which make spot markets particularly inefficient), CF schemes for locally consumed
38
In contrast, Herath and Weersink (2009) report of a counter-tendency in the tea sector in Sri Lanka, where
companies are gradually moving from plantations towards CF, to a large extent as a result of government
interventions that have reduced the ‘transaction costs’ to set up smallholder schemes.
39
There is also a possibility that exporters ‘cheat’ by not reporting or under-reporting the origin of supplies from
smallholders in order to avoid suspicion about meeting food safety standards. This would mean that under certain
conditions, the extent of smallholder participation in horticultural chains may be underestimated in order to
circumvent stringent private standards that are nonetheless weakly enforced (see Baglioni, 2009). It is, however,
very hard to establish how pervasive ‘cheating’ is.
40
Dolan et al. (1999) calculated that Zimbabwean exporters to UK supermarkets only sourced 6 per cent of their
exports from smallholders. See other similar examples in case studies cited by Gibbon and Ponte (2005, 143–51).

food production have been almost inexistent (Kherallah et al. 2002, 114).41 This may partly be
because neither governments nor donors have taken an interest in developing these schemes
and because the private sector, when it has taken the lead, has normally focused on a narrow
range of export commodities and high-value added products. At the same time, fast urbaniza-
tion rates across SSA and the development of peri-urban agricultural belts have deepened the
development of urban food markets (Little 1999;Wiggins 2005), which are dominated by local
traders and transporters who accumulated during the process of market liberalization of the
1980s and 1990s.
Theme 2 – Contract Farming Diversity in Africa

The difficulty of establishing, with available evidence, how important CF really is in terms of
dominant production relations in agriculture, is compounded by the sheer diversity of CF
experiences across countries and crops, from their original inception to most recent develop-
ments. The variety of origins and drivers, as described in the previous and following sections,
owes much to the very diversity of CF schemes and their specific contractual arrangements,
which imply diverse outcomes (in terms of welfare, accumulation and sustainability), varying
degrees of bargaining power, and a variety of distributional effects that cannot be anticipated a
priori. This is partly due to how broad and encompassing the definitions used in the literature
are.42 Moreover, diversity is also an outcome of the long history of CF and its fluidity over time.
Therefore, pinning down what CF really is and what it means for agrarian change over time
is even more complicated, since its significance, implications and role are highly contextual. As
shown by Jaffee (1994, 135) in the case of Kenyan horticulture, CF schemes ‘have undergone
repeated changes in size, location and administration’ and have sometimes become not more
than short-term episodes in the evolution of a particular chain or subsector, in response to
changes in the political economy of production and distribution of horticultural commodities.43
While much of the literature since the 1990s tends to associate CF with agribusiness
investments in developing countries,44 in reality, the diversity of schemes, especially if one
considers both ‘old’ and ‘new’ forms of CF, is remarkable. Sometimes CF schemes are classified
according to land ownership and management, and the presence or not of a nucleus estate, into
(a) ‘outgrower’ (often smallholder), (b) nucleus plus outgrower and (c) tenants on state schemes
(Tiffen and Mortimore 1990). However, CF schemes can also be classified along several other
criteria, summarized briefly below.45
First, there is the type of crop – whether it is particularly perishable and requires high quality
(fresh fruit and vegetables, tea, sugar), whether it requires immediate processing (palm oil, dairy
products, tea, tobacco) or whether it is more labour intensive (e.g. highly labour-intensive
41
Some exceptions are reviewed by Sautier et al. (2006) and Weatherspoon and Reardon (2003), but they tend
to be concentrated in a few countries where the agricultural commercial sector in food is well developed and
where urban food markets are much more articulated (South Africa and Kenya). See also Poole et al. (2003) on
vegetable marketing in urban and peri-urban areas of Ghana for incipient CF arrangements between some
(larger-scale) producers and local traders.
42
See Baumann (2000) and the broad definition by Little and Watts (1994, 9) cited in the Introduction to this
paper, which may encompass both parastatal, private or joint schemes.
43
On the significant shifts in the long history of CF in tea production under the KTDA, see also Ochieng
(2010).
44
See the FAO studies in Eaton and Shepherd (2001), Da Silva (2005) and Röttger (2004).
45
For clear tabulated details on a large sample of case studies, see Watts (1994, 44). Watts presents data from
secondary sources on 67 schemes for 16 crops. A selection of these case studies has been considered for the
purposes of the survey in this paper. See also criteria used by Glover (1989, 1990) to analyze the variety of schemes
and the determinants of their success, as discussed in the special issue of the Eastern African Economic Review.

16 Carlos Oya
French beans) or less labour intensive (e.g. palm oil). Contrary to generalizations in earlier
‘technical’ mainstream analyses of CF (e.g. Binswanger and Rosenzweig 1986), the spread of CF
across such a wide range of crops belies the relative importance of the type of crop to explain
whether or not CF is suitable.46
Second, ownership structures are diverse, ranging from fully controlled state schemes, to
multipartite arrangements (KTDA in Kenya), to full private agribusiness control, with the
former dominating the CF landscape before the 1980s.
Third, contractual arrangements vary considerably, on a continuum from a simple buying deal
with some seasonal credit and little intervention by the buyer in the production process
(markets-specification and resource contracts, depending on the degree of involvement in input
distribution), to a quasi-plantation system where outgrowers labour as quasi-wage workers
(under extreme production contracts), a situation quite common in sugarcane, tea and some
horticultural schemes (Roy 1972; Little and Watts 1994).
Fourth, most CF is devoted to agricultural exports (both traditional and ‘non-traditional’ –
e.g. fresh fruits and vegetables), but some schemes are also organized to serve local markets; for
example, vegetables and dairy milk, particularly in Kenya, Uganda and Ghana (Poole et al. 2003;
Vorley et al. 2007).
Fifth, some CF schemes are simply ‘annexes’ and marginal complements to large-scale estate
production (palm oil in Cameroon and sugarcane in Zimbabwe),47 acting both as a form of
border protection and labour attraction – in other words, an incentive to mobilize more
permanent and seasonal labour around plantations – while other schemes cover the entire
output procured by the buyer (cotton and some vegetable exports in Kenya and Zambia).
Sixth, the scale varies a lot, with some schemes coordinating thousands of fairly similar
smallholders who devote fractions of their land, often less than one hectare (cotton in West
Africa and tea in KTDA Kenya), whereas other schemes include a more limited number but
wider range of outgrowers from large-scale producers to smallholders, depending to different
degrees on the scheme for their livelihoods (pineapples in Côte d’Ivoire, palm oil in Côte
d’Ivoire and Cameroon, horticulture in Kenya and Zambia).
Seventh, different CF producers are positioned in different ways in the value chain in terms
of distance from final distributors. Some sell to local companies that then distribute to exporters
or export directly, whereas more recently some CF schemes include arrangements between
retailers at final destination (such as Tesco and Sainsbury) and producers themselves, with
perhaps only one intermediary level.
An interesting case serves to illustrate the importance of diversity, from an agrarian political
economy standpoint. It is still possible to find remarkably diverse outcomes and situations even
when crops under contract are the same and the contract forms very similar, as Daddieh (1994)
shows in his fascinating comparative exploration of two outgrowing schemes in oil palm
production in Ghana and Côte d’Ivoire. According to this author, the situations and outcomes
depended largely on the contingent patterns of relations and conflict between the three main
agents: the state, international capital and agricultural producers. Indeed, part of the story had to
do with the very different attitudes of newly independent governments towards large-scale capital
(foreign or national), the Ivoirian case being one of a rush to nurture domestic capitalism and the
Ghanaian reflecting the anti-capitalist rhetoric of the regime. But ideology and policies were not
the only drivers. Material conditions also mattered, and while in Ghana land expropriation was
46
See also Sautier et al. (2006) for a taxonomy combining type of commodity (food, export crop, traditional
versus non-traditional export) and market (local, national, international).
47
See Konings (1998) and Jackson and Cheater (1994).

necessary for the scheme, and its most contentious issue, in Côte d’Ivoire most conflicts
concerned how much financial and material support the government was prepared to offer to
smallholder outgrowers, and its aim to accelerate production in order to extract surplus for other
developmental purposes.
In sum, and to use the words of Little and Watts, ‘the heterogeneity of contract production
– a diversity embracing crops, actors, production relations, and institutional links – strongly
suggests that any effort to outline a general “theory” of contracting would be foolhardy and
ultimately unproductive’ (Little and Watts 1994, 5).
Theme 3 – What Drives the Emergence of CF and Its Significance for Africa?
Much of the literature on CF attempts to make sense of the complex sets of ‘motivations’ leading
large agribusiness to promote CF ‘spaces’ (Bijman 2008; Minot 2009). Some early studies,
especially from conventional economics, focused on technological and agro-ecological drivers
associated with different crops (perishability, economies of scale in processing and distribution,
high value per volume and so on), as if CF was a rational institutional response to specific
technical conditions of production (Grosh 1994; Williams and Karen 1985). Others, such as
Wilson (1986), rooted in a political economy perspective, emphasized the importance of market
structures and the nature and distribution of actors involved in different commodity chains
(producers, processors, traders and so on).Wilson (1986) dismissed the usually cited reasons for the
emergence of CF (nature of product,‘market failure’, crop specialization and so on) and advanced
an interpretation based on the centrality of the social relations of production in the determination
of the production system and its aspects of product differentiation and monopolistic tendencies.
Today, in more general terms, global restructuring in the agro-food system, and the rise of private
regulation and ‘buyer-driven’ chains competing for product differentiation and branding, have
given renewed impetus to the spread of CF in Africa (Watts 1994; Röttger 2004; Gibbon and
Ponte 2005). However, many other drivers must be considered in a more nuanced historical
overview of CF schemes.
CF is not simply a new phenomenon connected to globalization trends in agro-food systems
(see below), although its spread seems more rapid now. In fact, experiences of CF can be traced
back several decades, especially as CF encompasses a wide range of approaches and mechanisms
where both state and private sectors play varying roles.The incipient experiments with CF took
place during the colonial period, but on a very small scale, and started to gain momentum in the
early post-colonial decades, especially with new restrictions on plantation systems (Dinham and
Hines 1984; Watts 1994; Baumann 2000; Ochieng 2010).
This subsection will now offer a critical overview of some of the key issues and themes in the
CF literature about the engines of the apparent expansion of these schemes, classified in three
categories: (a) old; (b) recurrent; and (c) emerging issues. The variety of drivers emphasized by
different strands of the literature reveals the fluid character of CF as an agrarian institution, its
historical contingency (from rise to fall to rise again), and the difficulty of making a single general
and consistent story to explain its emergence and expansion.The variety of drivers also in itself
reflects, first, the diversity of CF manifestations in the past and at present, as shown above, and,
second, the different analytical ideological interpretations that CF has provoked.
Old Issues
Political and economic drivers of agribusiness drive towards CF. The CF reviews of the 1990s (Glover
and Kusterer 1990; Little and Watts 1994) aptly focused on the variety of motivations and

18 Carlos Oya
drivers according to various key parameters, of which crop characteristics, labour market
conditions, quality demands and political incentives loom large. In trying to understand why
many, especially agribusiness-led, CF schemes did include smallholders (as opposed to expec-
tations that these can hardly be accommodated in GVC), Glover and Kusterer (1990) high-
lighted the combination of: (a) political reasons, such as avoiding inherent risks in land ownership,
labour conflicts, the relative lack of collective action power of scattered smallholders and, in
many cases, the need for ‘public relations’ exercises (CF being one important example) to
maintain profitable traditional operations; and (b) elements of ‘economic rationality’ – in other
words, the fact that smaller-scale farmers, once tied into CF schemes, find few ‘exit’ alternatives
and are thus more vulnerable to exploitation through various forms of cost reduction mecha-
nisms (not least the manipulation of grades and standards). CF does not necessarily mean a
declining interest of agribusiness in direct production, since ‘the only way to be in the market
52 weeks a year is to control your production’ (Dinham and Hines 1984, 27).What agribusiness
gradually discovered (or was forced to discover by changing circumstances) is that control over
production did not necessarily require a plantation system in all cases.48 Moreover, with
agribusiness globalization, the lion’s share of the value increasingly lies in the processing,
packing, trading, transport, branding and distributing nodes of commodity chains, making
investments in direct production possibly less attractive (Gibbon and Ponte 2005).
The pervasive role of the state and CF as ‘political creations’. One well-established fact is that both
before and after agricultural liberalization processes, the role of the state has been central in the
emergence and spread of many cases of CF across Africa. According to the sample reviewed by
Watts (1994), 70 per cent of the 67 schemes analyzed had full or joint state ownership, and in
many cases the schemes (such as the Mumias sugar scheme in Kenya) were essentially ‘political
creations’, designed to build up legitimacy among the peasantry and to stabilize large popula-
tions in areas otherwise liable to be politically problematic and prone to produce masses of
migrants to saturated urban areas (Glover 1990).49 The modalities varied from schemes orga-
nized around a state (processing/marketing) company to joint ventures initiated by the state
with support from donor agencies such as the World Bank and CDC (e.g. tea in Kenya, and
palm oil in Nigeria, Côte d’Ivoire and Cameroon). The alliance between states, foreign donors
and foreign capital aimed to promote shifts from estate to smallholder production while
maintaining private-sector interests and investments, albeit with new roles, as the case of KTDA
in Kenya attests (Ochieng 2010).50 The story of KTDA is particularly interesting, because it
shows how these schemes, once they grow to a significant size, become sites of economic and
political struggles between factions of capital and the state. As Ochieng (2010) shows, KTDA
moved ‘from a top-down autocratic organization dominated by the interests of foreign capi-
tal . . . in the early 1960s into a private company [after privatization in the 2000s] owned
wholly and exclusively by smallholders in 2000’.51
48
Some early cases of CF, however, showed that agribusiness corporations were still interested in maintaining a
plantation system and only wanted a complement from marginal adjacent smallholder outgrower schemes, mainly
designed to help attract and retain sufficient labour and reduce labour costs, through supplementing wage income
with on-farm food and livestock production (Dinham and Hines 1985, 27, quoting one of the conditions given
by an Unilever subsidiary involved in palm oil production for accepting a government plan to revive the industry
in Zaire in 1976).
49
See also Baumann (2000) and Cowen (1981). A larger agenda of ‘Africanization’ of commodity production in
agriculture also underpinned these initiatives, as discussed in contributions to the ‘Kenya debate’ (see above).
50
See also Currie and Ray (1987) on Kenya and Boesen and Mohele (1979) on the move from large-scale settler
estates to smallholder farming in tobacco production in Tanzania in the 1950s and 1960s.
51
Ochieng (2010) also aptly notes that the KTDA story is unusual by comparison with other CF schemes, which
are more tightly controlled by TNCs.

A significant engine for these ‘political creations’ was the growing resistance to plantation
systems in several African countries after independence as part of the political drive of
nationalist projects aiming at a rapid Africanization of capital, land and labour (Cowen 1981;
Sender and Johnston 2004, 143). This led to a growing threat of expropriation against foreign
business interests in property, especially land, and therefore the perceived weakening of property
rights. In addition, other state policies, in the form of specific macro- or micro-economic
measures such as import bans, land tenure reforms and so on, also created the conditions that
made CF a rational option for agribusiness.52
Recurrent Issues
Managing risk. From the corporate point of view, and especially in agribusiness discourse, risk
management remains an overriding driver of CF (Felgenhauer and Wolter 2008; Herath and
Weersink 2009; Minot 2009). There are three main types of risk that export companies usually
attempt to minimize through CF: production risk in terms of harvest failure, lower yields or lower
quality; asset (mainly land) expropriation risk; and labour risks – that is, the possibility of conflicts
with a large unionized plantation labour force.Watts (1994) suggests that the first risk dominates
agribusiness considerations in favour of CF, especially in a post-Fordist context of multi-local
flexible production outsourcing. In most CF schemes there seems to be no doubt that the risk
of output rejection and associated income loss falls mostly on the smallholder (Raynolds 2000;
Singh 2002).53 Reporting on the operations of a major vegetable exporter in Kenya, Blackmore
(2007) argues that the export and contractor company, Homegrown, only ‘owns’ the produce of
the CF scheme once it is harvested and meets its standards.This means that all the risks between
sowing and harvest are borne by the smallholder.54 Overall, the discourse from agribusiness
favourable to contracting out emphasizes the significance of lower costs associated with risk
spreading and without direct ownership of assets as the primary driver.
Contracting out to small-scale farmers, however, entails some additional costs and risks for
the buyer, such as the need to set up complex structures of planning and monitoring thousands
of scattered smallholders (Jackson and Cheater 1994; Watts 1994; Baumann 2000; Eaton and
Shepherd 2001; Jaffee 2003). Using farmers’ groups to pool additional risks and costs may be
an option (Glover 1990; Porter and Phillips-Howard 1997; Konings 1998), but, as Gibbon and
Ponte (2005, 160) suggest, the experiences of farmers’ associations that help consolidate
successful CF schemes are not so frequent.55 Moreover, risks of poor quality, lack of enforce-
ability of standards and unreliable supplies now loom large in agribusiness strategies and
particularly affect their linkages with smallholders (Dolan 2004; Gibbon and Ponte 2005; Minot
2009; Maertens et al. 2011).
CF as a more effective mechanism of labour exploitation. The labour ‘nexus’ is probably critical in
any account of CF development. Porter and Phillips-Howard (1997) and some chapters in Little
52
See Porter and Phillips-Howard (1997) for some examples, particularly CF for Nigerian breweries, which
contracted outgrowers who happened to be former company employees.
53
There are some notable exceptions, as reported by Benziger (1996) in Thailand, where contractors protect
growers from possible crop failures.
54
However, the fact that the company provides inputs and services means that any inability of smallholders to
meet standards will also be costly for the exporter, as these costs may not be recoverable.
55
See also Prowse (2007) and Konings (1998). Kenya’s successful stories in this respect are most unusual, as an
effect of private-sector coordination facilitated by significant market concentration and some forms of state support
( Jaffee 2003; Dolan 2004; Minot and Ngigi 2004).

20 Carlos Oya
and Watts (1994) put emphasis on the importance of labour and its mobilization (and exploi-
tation) in studies of CF and the extent to which labour issues have been neglected in the
literature on CF (see also Little 1994).56 Particularly in the political economy literature, several
labour-related issues are raised: (a) attempts by agribusiness to reduce supervision costs by
engaging outgrowers (Herath and Weersink 2009); (b) moving from direct exploitation through
wage labour to indirect exploitation of household labour, and implications for intra-household
relations (Mackintosh 1989; Carney 1988; Carney 1994); (c) avoiding labour union conflicts
and circumventing labour laws; and (d) poorer working conditions for labourers in smallholder
farms than on estates, since small-scale outgrowers do frequently hire casual labour and tend to
pay a fraction of estate wages (Sachikonye 1989; Glover and Kusterer 1990; De Schutter 2011).
The critical literature in this regard has usually emphasized household labour self-
exploitation rather than casual wage labour hired by outgrowers, partly as a result of the
conventional assumption that smallholders mainly use family labour.57 The mainstream litera-
ture, particularly contributions from the ‘business school’ and neoclassical agricultural econom-
ics, eschews the issue of ‘self-exploitation’ and instead celebrates the idea that, under normal
conditions, smallholder production may be more efficient, especially for French beans, for
which labour intensity is critical (Strohm and Hoeffler 2006). This reflects the conventional
view that an ‘inverse relationship’ between farm size and productivity exists in agriculture, a
proposition that is subject to intense criticism in the agrarian political economy literature and
that is raised in contradictory fashion in World Bank reports (Oya 2011).58 In reality, the relative
ease with which (usually male) household heads allegedly manage to exploit the labour of their
relatives, especially women, children and young men, and associated notions of harmonious
relations among household workers and the idea of greater family labour efficiency, tend to be
assumptions rather than being supported by evidence (Johnston and Le Roux 2008).
While the argument that CF facilitates access to cheap (household) labour in a context of
flexible sourcing remains persuasive, through a political economy lens, the fact is that CF is only
one of several options historically chosen by agribusiness in different places and times to deal
with labour problems: for example, increasing the recruitment of migrant labour; relying
increasingly on seasonal and casual labour (e.g. saving on housing); changing the composition
of the workforce by hiring workers who are more ‘docile’ and cheaper, especially women and
children; introducing labour-saving technologies, especially mechanization (common in sugar
plantations); or increasing efficiency (lowering unit costs of labour) by technological and
managerial innovations (Tiffen and Mortimore 1990).The documented move from CF to estate
production in some instances, such as horticulture in Senegal, also suggests that in the current
context CF may not be a better strategy of labour mobilization from the point of view of
agribusiness exporters (Maertens et al. 2011).
Moreover, from the point of view of wage workers, a switch back to plantation production
may be progressive in so far as wages and working conditions (and even employment per
cultivated area) tend to be better in large corporate estate farming than among smallholder
employers who can hardly afford to offer minimally decent working conditions (Cramer et al.
56
Singh (2002), writing on India, makes a similar point – that the available literature seldom focuses on labour
conditions under CF arrangements, especially labour conditions on smallholder farms employing wage labour. See
also Dolan (2004).
57
‘Harmonious’ self-exploitation cannot be taken for granted, however, as research by Mackintosh (1989) and
Carney (1988) has shown. Intra-household conflict and struggles for resources and rewards seem to be exacerbated
by the participation in CF schemes. See also Singh (2002) and von Bulow and Sorensen (1993).
58
There is an extensive literature on the inverse relationship thesis. See contributions in the special issue on land
reform in the Journal of Agrarian Change volume 4 (issue 1&2).

2008 for Mozambique, Maertens et al. 2011 for Senegal; Sender and Johnston 2004, 159, citing
Dorwood 1999, for the case of burley tobacco).
Market liberalization and structural adjustment. This is a common theme in the more recent
literature (surveys and case studies), especially in the 2000s, when CF is interpreted as a response
to the post-liberalization and privatization context. Market liberalization has either led to an
effective privatization of previously state-run schemes or to the emergence of new private-led
CF schemes to address market failures; hence the significant interest in this theme among NIEs
within neo-classical economics (e.g. Grosh 1994; Weatherspoon and Reardon 2003). In one of
the most influential reviews of the agricultural liberalization experience in Africa, CF is seen as
the solution to ‘recreate aspects of the ongoing relationship that smallholders had with export
cropping parastatals’ (Kherallah et al. 2002, 149).59 The survival of many of these state-led
schemes until the 2000s, particularly in cotton in West Africa, groundnuts in Senegal and cocoa
in Ghana, attest to the relative lack of interest (or resources) from the private sector to take over
the functions of state-led CF schemes in some instances.Agricultural liberalization and the fiscal
squeeze led by structural adjustment also affected export performance by reducing the extent
of product quality control that was performed by state marketing boards and public agencies,
especially for traditional commodities such as coffee, cocoa and cotton (Gibbon and Ponte
2005, 181).60
The liberalization process has in many ways exposed smallholder farmers to increasing risks
and new challenges. It is in this light that CF has appeared, in many cases, as their only viable
alternative to engage in export crop production for increasingly demanding and volatile
agricultural markets. Private-led CF thus becomes attractive for outgrowers (small, middle and
large farmers) in so far as it may offer one or all of the following: (a) a reliable market outlet
compared to spot markets and with no need for farmers to pay for transport of crops; (b) a
more reliable source of financed inputs (Masakure and Henson 2005); (c) technological
spillovers from contact with agribusiness61; and (d) guaranteed (thus more predictable) prices
before harvest as agreed in contracts (Bellemare 2010; Warning and Key 2002; Masakure and
Henson 2005). In sum, the consequences of market liberalization set the scene for a renewal of
private-led CF, which was in the interest of those farmers who aimed to attenuate the loss of
direct support from gradually disappearing parastatal institutions and, more importantly, who
had the means to participate in such private schemes.
Emerging Issues
Agri-food globalization and private standards. There is substantial literature to show that rapid
changes in agri-food systems, particularly the move towards private regulation (of which new CF
59
Another telling example of the ‘privatization’ of CF is the Ghana Oil Palm Development Corporation, created
by the state and the World Bank at the time of state-led donor-funded outgrower schemes, and which entailed the
expropriation of 9,000 hectares of land belonging to 7,000 farmers. The privatized outgrower scheme eventually
met significant resistance from youth and local farmers, as it spurred differentiation and fuelled the emergence of
an underclass (Amanor 2005, 61). See also Melamed (2002) on the long history of cotton farming in Mozambique
and the emergence of private CF schemes on old ‘forced cotton cultivation’ lands and former state farms; and
Ochieng (2010) on the transformation of the KTDA scheme after its privatization.
60
Historically, as shown by Chang (2009) for today’s advanced capitalist countries, the task of export crop quality
of control has been successfully fulfilled by the state.
61
For example, in the case of sugar schemes in Kenya (Glover and Kusterer 1990), Zimbabwe (Jackson and
Cheater 1994) and South Africa (Porter and Phillips-Howard 1997), some operations in outgrowing farms were
mechanized, using the equipment of the processing company, and costs were sometimes not passed on to
producers.

22 Carlos Oya
schemes are just one manifestation), have been a central aspect of the global restructuring
of capital in the era of globalization (Watts 1994; Friedmann 2004; Vorley et al. 2007). As we
have seen before, however, the diversity of situations and contexts in which CF emerges
suggests that CF is neither a particular outcome of the process of agri-food globalization nor
the only form of business–farmers’ linkages characterizing agri-food corporate investments
in developing countries. Much of the literature on CF, nonetheless, emphasizes that growing
market risks (in the form of price volatility), and the shift from spot markets to implicit contracts,
have made full vertical integration and preferred supplier lists central to contemporary global
agribusiness and to global supermarkets, which have risen as important players in many
developing countries, including Africa (Reardon and Barrett 2000;Weatherspoon and Reardon
2003; Gibbon and Ponte 2005; Vorley et al. 2007).62 The spread of important technological
innovations affecting the nature and organization of the global agribusiness sector and its logistics
has also been a major factor facilitating these new forms of integration of supply chains.The most
significant are improvements in distribution logistics, transport and storage technologies (e.g.
refrigeration, chemical products to prevent fungus formation and so on) and the availability of
faster and larger ships, as well as more space for air freight (Reardon and Barrett 2000;Vorley et al.
2007). These technological advances permit cost reductions that in turn facilitate the spread of
corporate arrangements of multi-local flexible sourcing (Gibbon and Ponte 2005).This does not
necessarily mean a preferred incorporation of smallholders, in so far as supply and quality
reliability are central concerns for agribusiness and supermarkets.There is substantial evidence in
the literature that suggests that the rise of agri-food grades and standards (G&S), and the fact that
often only medium-large-sized more capital-intensive farmers manage to meet the standards,63
have raised the barriers to entry for smallholder outgrowers. In particular, as the share of large
supermarkets in total retail increases, the proportion of output coming from small-scale suppliers
diminishes rapidly (Vorley et al. 2007, 200).
Branding and image: the importance of ‘public relations’ and new ‘niche’ markets. A counter-tendency,
which may strengthen the incidence of CF and the incorporation of smallholders through such
schemes, is brought about by ethical trading, and the creation of new market niches such as
Fair Trade and other ethical labels, where smallholders are favoured. Thus, in the current era of
branding and image, large agribusiness corporations, and particularly retailers, pay increasing
attention to the good publicity that pro-smallholder CF schemes can provide (remember also
the ‘political drivers’ for agribusiness mentioned above). In the context of ethical trading,
apparent – even token – support to smallholders can be capitalized easily by global corporations
otherwise under attack from NGOs and various global lobbies.64 However, the scale of these
operations remains small in comparison with the ‘business as usual’ of exporting traditional
plantation crops on the basis of economies of scale, cost reduction and quality, therefore
62
In Africa, the rise of local supermarkets linking directly with producers is a relatively new phenomenon, which
is only emerging in few countries where the degree of urbanization and the rise of a middle class make it viable;
for example, South Africa, Kenya and, to a lesser extent, Zambia (Weatherspoon and Reardon 2003).
63
Particularly in Latin America and in those African countries where such a class of farmers is more established;
for example, South Africa and Kenya (Key and Runsten 1999; Reardon and Barrett 2000), but also in countries
such as Senegal, Ghana, Côte d’Ivoire and Kenya, where private CF initially spread fast, only to be partly reversed
by a shift towards large-scale contractees or even estate farming directly controlled by transnational agribusiness
(Minot and Ngigi 2004; Danielou and Ravry 2005; Dolan and Humphrey 2004; Maertens and Swinnen 2007;
Maertens et al. 2011). For more evidence on this issue, see also Eaton and Shepherd (2001).
64
Blackmore (2007, 53), in her study of Homegrown, concludes that both government support and political
pressure (notably from NGOs and donors) ‘has ensured that contracting has remained a preferable arrangement for
HG’. Many other studies reviewed by Glover and Little and Watts do emphasize the role of public relations
exercises as a ‘political reason’ driving agribusiness firms into CF.

questioning the actual quantitative impact of this tendency.65 The addition of new CF schemes,
even at relatively small scale compared to other operations, therefore helps transnational
agribusiness achieve added value through product differentiation by creating ‘certified spaces’,
where selectivity is crucial and only farmers (who may well be large or middle-scale local
farmers) who succeed in matching the strict requirements of land quality and availability,
personal qualifications, reputation and so on, are included (Fold 2008, 113).
Land ‘grabbing’. This is certainly the most recent of the issues related to the expansion or decline
of CF in Africa (and elsewhere), and one for which evidence is still very patchy and anecdotal.66
The evidence so far suggests that most processes of land acquisition deals (‘land grabs’ in the
popular critical literature) reveal a return to old forms of land appropriation and use (through land
purchases and long leases), to a renewal of plantation agriculture in countries where large-scale
farming seemed hitherto unlikely (Cotula et al. 2009; World Bank 2010; Li 2011). In countries
characterized by agrarian structures largely dominated by small-scale farmers, such as Ethiopia,
the granting of large tracts of land to agribusiness in remote regions (the single largest deal
concerning 150,000 ha) appears like a very significant shift in agricultural policy, and a deliberate
policy to maximize foreign exchange and job creation in remote areas. In other countries, the
expansion of biofuel production (e.g. Mauritius, Malawi, Mali, Zambia, South Africa and Senegal,
amongst others) is led by a drive towards finding alternative sources of energy or to become
biofuel exporters and generate more foreign exchange (Molony and Smith 2010). Another
important aspect is that, although the attention is frequently directed to foreign direct acquisitions
(by private agribusiness or foreign state agencies), there are ‘widespread land acquisitions by
national elites and urban middle classes in several African countries’ (Cotula et al. 2009, 50). But
what are the implications for CF in Africa? While the emphasis in the land grab literature so far
has been mostly on the displacement and creation (or not) of direct jobs by the new production
units, about which the evidence is still largely insufficient, the still fashionable policy emphasis on
the promotion of smallholders among African policy-makers and donor agencies may lead to an
increase in the significance of CF in the current and future large-scale land deals. The World
Bank, not surprisingly, favours such strategy in both contexts of little and abundant suitable land
with large yield gaps.67 Whether this is the case or not will depend much on the particular
bargaining and struggles between African governments, domestic capitalists, foreign capital and
pro-smallholder/peasant organizations.
‘CONTRACT FARMING’ FROM AN AGRARIAN POLITICAL ECONOMY LENS:

UNDERDEVELOPED QUESTIONS AND DEBATES
Most of the literature cited so far (especially within mainstream economics or neo-populist
approaches such as Food First) addresses many different types of questions as shown above, but,
arguably, not many of central interest to classical agrarian political economy. In fact, the
connections between CF and the development of capitalism, especially the emergence of domestic
agrarian capital in developing countries, are somewhat tenuous if not absent in most of the
65
See also Fold (2008) on palm oil in Ghana, where helping small farmers with small flagship schemes is
becoming a new strategy for agribusiness corporations willing to make inroads in the ‘ethical consumer’ market.
However, the small scale of these schemes in terms of overall output level casts doubts on its potential impact in
significantly shaping social relations of production for those commodities.
66
Much of the emerging ‘land grab’ literature focuses on issues of ‘form’ rather than substance, CF being one of
the options of the ‘form’ a land deal can take (Borras and Franco 2012).
67
There is some emerging evidence that some of these deals entail the creation of CF schemes in order to
incorporate small-scale and/or local farmers, as in the case of the Varun deal in Madagascar (Cotula et al. 2009).

24 Carlos Oya
literature. Of course, as it has been noted, there are some exceptions, which analyze the
emergence of CF, its attributes and drivers from a political economy approach.68 However, much
of the political economy analysis found in Little and Watts (1994), for example, mostly tries to link
the rise of CF (taking for granted its growing significance with globalization) to the expansion
of a new international food regime (cf. Friedmann 2004) seeing CF as an instrument of global
capital ‘to gain access to cheap Southern smallholder labour supply’, in an over-deterministic
fashion (Gibbon and Ponte 2005, 149–50).This section attempts to propose a brief reflection to
encourage a research agenda that could add depth to the study of CF in Africa and its relation
with agrarian transitions.69 Thus there are different kinds of research questions that could be
explored in greater depth from an agrarian political economy perspective:
1. Is there a distinct CF road, or agrarian transition, to rural capitalism? Or, in other words:
Does CF spur capitalist development in African rural areas? Or is it simply a fairly new (or
renewed), but mostly contingent, institutional mechanism that is instrumental to the con-
tinuation of ongoing and uneven processes of transition to agrarian capitalism? Will sig-
nificant numbers of African agrarian capitalists emerge from the ranks of outgrowers? Or
will the emergence of domestic capitalists become redundant once transnational agrarian
capital can extract surplus value from smallholders without need for changes in agrarian
structures?70
2. What are the implications of CF for the spread of wage employment and the conditions of
wage labour relations in agriculture? Does labour exploitation increase and the conditions
of labour worsen through more reliance on household labour self-exploitation and the
growing incidence of casual labour for smallholders?
3. How does the politics of land, particularly land conflict, and associated transnational agrarian
movements affect the dynamics of CF and its impact on property and production relations?
4. To what extent and in what ways is CF contingent on global forces and internal dynamics
of social differentiation? Are events such as the global food crisis and the apparent return of
large-scale land deals likely to spur or limit the spread of CF in developing countries?
The agrarian political economy literature has mostly focused and provided evidence on the
second and third questions. The first question is one where empirical evidence seems scarce,
especially in contemporary contributions to the agrarian political economy of Africa. This is a
question that received much more attention in the 1970s and early 1980s, although at the time
there was no explicit focus on CF. The last question is one that is likely to receive more
attention now as part of the emerging ‘land grabbing’ literature, but so far the empirical detail
and depth of available studies is unimpressive (Borras and Franco, 2012).
Coming to the first question, more specifically, the relationship between CF and capitalist
development in agriculture is not one that has received direct attention in much of the literature
on the political economy of agrarian change in Africa. To be sure, the ‘Kenya debate’ indirectly
referred to the extent to which the linkages between agribusiness, the state and peasants had
created scope for a capitalist development ‘from below’ in parallel to the settler farm economy.
68
In particular, Wilson (1986), White (1997), for Indonesia, and many of the essays in Little and Watts (1994).
There is, however, scant recent literature that has taken these contributions and broader literatures on capitalist
development in Africa as a point of departure for concrete empirical stories (with exceptions such as Ochieng
2005, 2010).
69
There is no space to engage in an extended review of the contributions to the literature on capitalist
development and agrarian change in Africa, but some directions are proposed here.
70
White (1997) considers this possibility in the case of Indonesia. Bernstein (2011) articulates this position in
terms of the possible obsolescence of the ‘agrarian question of capital’ in contemporary (global) capitalism.

However, reference used to be broadly made to the phenomenon of commercialization or

commodification of peasant farming, CF being one of the institutional mechanisms but not the
only one, perhaps dominant in some crops but not present in other commodities.71 Mainstream
approaches to agriculture in Africa, especially by the World Bank, would implicitly support the
idea that CF may be instrumental to agricultural modernization, and hence capitalist develop-
ment in agriculture, in their ‘win–win’ scenarios, but again, the Bank seems ambiguous about
the relative durability of CF (e.g. World Bank 2007, 237–42).
Within classical agrarian political economy, and following the taxonomy of agrarian transi-
tions to capitalist development proposed by Byres (1996), many of the cases cited in the
Africanist literature mostly conform to the classic ‘accumulation from below’, posited by Lenin
for the case of the northern USA, or to East Asian paths, where small-scale farming largely
survives subject to substantial taxation from developmental states (Bernstein 2011). In Africa, the
literature that has directly engaged with the nature and determinants of capitalist development
in Africa and related agrarian questions (e.g. Iliffe 1983; Sender and Smith 1986; Hill 1970;
essays in Berman and Leys 1994; contributors to the ‘Kenya debate’ as shown above) has not
explicitly considered CF as a dominant path fuelling accumulation from below.
Beyond Africa, however, the question has been asked more directly. For example, Byres
(2003) cites de Janvry (1981) as having suggested the existence of a ‘contract farming road’,
distinct from the others, for Latin America. De Janvry (1981, 109) notes that ‘production along
this road is therefore highly modernized and takes place on medium- and large-scale units’, and
that ‘. . . contract farming is one of the increasingly important means by which international
capital penetrates Latin American agriculture, particularly in countries where landownership by
foreign nationals is prohibited – for example, Mexico’ (ibid.).This road, as de Janvry shows, may
coexist with other paths, such as the classical ‘Junker’ and ‘American’ paths, as well as a
‘merchant’ path. However, the evidence available to support this hypothesis is very patchy.72
White (1997) is one of the few studies that directly tackles the question as to whether an
agrarian transition centred on smallholders vertically integrated with larger agribusiness capital
is possible instead of the emergence of large-scale farming.73 According to White (1997),
however, evidence in Indonesia suggests that CF schemes do not always work as expected and
result in unintended outcomes, as the main beneficiaries are not really smallholders, whose
livelihoods continue to depend on access to off-farm wage employment, but rather opportu-
nistic ‘armchair’ capitalist farmers, who use their power to turn CF institutions in their favour.
An underlying question in this debate is the extent to which CF is a dominant driver of
processes of differentiation among smallholders by contributing to the emergence of an upper
stratum of ‘progressive’ small farmers, who accumulate and employ wage labour. Some of the
contributions to the ‘Kenya debate’ and the ‘Nairobi discussion’ (Steeves 1978; Cowen 1981;
Njonjo 1981; Currie and Ray 1987; Orvis 1993), Ochieng (2005, 2010) and Sachikonye (1989)
71
See Orvis (1993), and contributions to the Kenya debate referred to before. Buch-Hansen and Marcussen
(1982), and more recently Ochieng (2010), in follow-ups of the Kenya debates, explicitly refer to CF and suggest
a positive linkage between non-dependent capitalist development, growing differentiation among smallholders
and CF.
72
Byres (2003) raises doubts as to the analytical and empirical significance of a ‘contract farming’ road to
capitalism, but does not provide evidence. Zhang and Donaldson (2010, 38) also conclude that in China today
‘contract farming as a form of agrarian capitalism is unstable and likely to be transient’, and they document
significant drops in the incidence of CF arrangements between companies and farmers, led by the ‘middleman pro-
blem’ and corner-cutting in contracting relationships.
73
This could be another form of East Asian agrarian transition, as in post-1950s South Korea, where smallholders
generated some of the surplus necessary to finance capitalist industrialization through crushing taxation by a
strongly interventionist state, which in turn invested in agricultural modernization in order to reproduce the
generation of agricultural surplus (Bernstein 2011, 30).

26 Carlos Oya
for Zimbabwe have provided some evidence that differentiation and ‘accumulation from below’
happened as new export crop market opportunities were opened up, sometimes in the form
of CF, sometimes not. In the case of Malawi, the government not only created a system of
incentives to consolidate the foreign-owned estate sector, but also engaged in significant
investments to promote a class of ‘progressive farmers’ (known as Achikumbe) from the ranks of
smallholders through CF-like schemes that ensured access to cheap finance, inputs and technical
advice (Ghai and Radwan 1983). However, many other contributions to these debates did not
take CF as a central aspect of the process of capitalist accumulation, and most often did not
even mention it, while they centred their attention to the balance between off- and on-farm
income sources, the impact of the commercialization of agriculture and land property relations.
Of course, the literature on the development of capitalism in Africa places due emphasis on the
significance of the spread of commercial agriculture and cash crops (Sender and Smith 1986),
but there is no sufficient evidence that CF, by itself, has been the main catalyst of agricultural
commercialization across Africa and across food and export crops.74
Orvis (1993), for example, provides compelling longitudinal evidence, for a relevant case
study in Central Kenya,75 that the processes of differentiation and the emergence of proto-
capitalist farmers, who he calls ‘straddlers’, were driven by access to off-farm income, notably
wage employment in better-paid jobs. This facilitated the possibility of investing in new crops
when coffee and tea became available to Kenyan smallholders and middle peasants. Accumu-
lation in the farm was highly dependent on off-farm sources of income, and CF through the
KTDA in itself was not a dominant catalyst of the differentiation process, although it may have
contributed to the consolidation of some of these ‘straddlers’ as capitalist farmers and ‘sharpened
the class division between owners and labourers’ (Steeves 1978, 132). Similarly, Sachikonye
(1989) shows how a ‘rural salariat’ (similar to Cowen’s and Orvis’ ‘straddlers’) emerges as the
upper stratum of outgrowers in tea CF schemes in Zimbabwe. A determinant factor in
accumulation from below is both access to hired labour (to tackle peak labour bottlenecks) and
to wage employment opportunities (for the outgrower), in many of the case studies that provide
evidence on differentiation (Njonjo 1981; Sachikonye 1989; Orvis 1993; Melamed 2002).Thus,
hiring labour requires a regular inflow of cash, which is usually more common among rural
people with access to non-agricultural wage work or to remittances from relatives in towns. In
other words, the dynamic relationship between off-farm employment opportunities and emerg-
ing commodity production opportunities (whether through CF or not) seems at the centre of
many stories of differentiation and ‘accumulation from below’.
In sum, the working hypothesis emerging from the evidence surveyed in this paper (especially
with regard to the quantitative significance and the historical diversity of CF in African
agriculture) is that there is not a distinct and dominant ‘contract farming path’ of agrarian
transition towards capitalism in Africa.Agrarian transitions towards capitalism have happened and
are under way with or without CF, in variety of forms and circumstances, where only a tendency
towards ‘accumulation from below’, driven by market imperatives, off-farm employment oppor-
tunities among other factors, can be discerned from the accumulated historical evidence.
Of course, this is not to deny the growing importance of CF, especially in the era of
liberalization, and the fact that some of the features observed in Latin America by de Janvry and
74
Although Kenya may be one example where CF played a significant role, especially in the early post-
colonial period.
75
He also rightly questioned some of the contributions around the ‘Kenya debate’ for extrapolating much from
cross-sectional evidence of dubious quality, which might not be enough for claims about social differentiation and
rural class formation.

other authors (Glover and Kusterer 1990) are also manifested in some parts of Africa, particu-
larly countries where a commercial capitalist agriculture has developed further (South Africa,
Kenya, Zimbabwe, Côte d’Ivoire). Moreover, CF today reflects how global agribusiness is
making renewed inroads into African agriculture. Hence it must be taken seriously in terms of
its effects on African rural social formations and changes in agricultural production practices.
However, these inroads are not inevitably in the form of CF, as the recent move towards direct
large-scale land acquisition in many African countries would suggest. The evidence on current
processes of large-scale land acquisition (usually known as ‘land grabbing’) suggests that CF is
not necessarily the preferred method of land use, and that a return to large-scale estate
production may be preferred by investors (see the section above). However, in cases where
governments fear the political consequences of these large-scale concessions CF may be often
used as a ‘carrot’ to make investments more palatable. In sum, it is not clear whether the
phenomenon of ‘land grabbing’, if it acquires the proportions expected by much of the critical
literature, will provide an additional boost to the expansion of CF or, a return to plantation-
type capitalism and incorporation of poor rural people as direct wage workers, with implica-
tions for the welfare of the rural poor that cannot be simply assumed (negative or positive) and
should therefore be empirically tested.
CONCLUDING REMARKS
This survey article has attempted to provide a critical overview of the debates, issues and
evidence around CF in Africa, from an agrarian political economy standpoint. It has been
shown that CF, as a marketing arrangement, an institution and a site of struggles, is a significant
phenomenon, which has received substantial attention in agrarian studies from various analyti-
cal and ideological camps. From mainstream agricultural economics to anti-agribusiness neo-
populist approaches through a variety of political economy analyses, CF has constituted a fertile
field for several battles of ideas. For example, when it comes to ‘winners’ and ‘losers’, the debate
on CF is certainly polarized, where explicit and implicit ideological preferences lie behind basic
methodological differences. An analysis of these debates and of the evolution of contributions
on CF suggests that the significance of CF arises particularly in relation to broader debates on
the viability and desirability of smallholder farming in contemporary capitalism, and how to
achieve a ‘virtuous’ incorporation for smallholder farmers.
At the same time, despite the abundance of literature, especially after liberalization processes
in the 1980s and 1990s, the survey shows that CF is not a new phenomenon, but one that has
seen states, capital and agricultural producers being involved in various forms and historical
circumstances. The drivers of this process are extremely varied and depend on contingent
combinations of factors that defy easy generalization, although the role of the state seems a
recurrent factor even after market liberalization. Indeed, this survey of the literature points to
the sheer diversity of CF arrangements and the difficulty in drawing general lessons – even less,
theories about CF in contemporary agriculture. The paper has attempted to extract concrete
evidence from the abundant literature on the quantitative significance of CF as a form of
production and marketing arrangement across Africa. However, given the proliferation of
unsystematic case-study analysis and the lack of consistent statistics on CF’s incidence in African
agriculture, there is still no substantiation that CF is a dominant form of production, despite the
increase in the number of studies and reports, and the fact that market liberalization and
globalization seem to have spurred outsourcing in the form of privately led CF. CF may still be
important in some countries, for some crops, especially in places where agricultural commer-
cialization and capitalist development has proceeded more rapidly since colonialism.

28 Carlos Oya
Finally, and in relation to the previous point, the paper has briefly argued that the overall
economic significance of CF in processes of agrarian change is central to old agrarian questions
of capital. In particular, the paper refers to the question of whether CF can be considered a
dominant catalyst of the development of agrarian capitalism and, in so doing, can accelerate
processes of social differentiation and agrarian transformation in contemporary Africa. This
issue, relatively neglected even in the agrarian political economy literature, raises some funda-
mental questions that require rigorous empirical analysis and suggest a fertile agenda for
research for agrarian political economists. There are some isolated precedents in previous
debates on agrarian change in rural Africa but far from providing enough substantive evidence.
The extensive literature reviewed in this paper suggests that CF may be contributing to
processes of social differentiation and capitalist development already under way, in conjunction
with several other forces, specific to time and place.
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Journal of Agrarian Change, Vol. 12 No. 1, January 2012, pp. 1–33.

Contract Farming in Sub-Saharan Africa:

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CONTRACT FARMING AS SITE OF IDEOLOGICAL AND

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THE EMERGENCE AND SPREAD OF CONTRACT FARMING IN AFRICA: KEY

Theme 1 – How (Quantitatively) Significant Is Contract Farming, Particularly Smallholder Schemes,

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Sources more directly concerned with agricultural production in developing countries

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Theme 2 – Contract Farming Diversity in Africa

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‘CONTRACT FARMING’ FROM AN AGRARIAN POLITICAL ECONOMY LENS:

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However, reference used to be broadly made to the phenomenon of commercialization or

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