Contract Farming, Rural Livelihoods and Development in Sub-Saharan Africa

Abstract: The majority of poor people live in rural areas and depend on agriculture for their livelihood. Agriculture is one important tool for rural development in Sub-Saharan Africa. Contract farming has been widely used in agribusiness and has potential to contribute to the development process in rural areas. This paper examines the main features of contract farming in SSA and analyse the consequences of it for rural livelihoods and development. By using a number of case studies from countries in SSA, the main characteristics of contract farming are outlined. Many common features are found, but there are also many variations among different contract schemes. The analysis shows that contract farming contributes to an increased access and accumulation of capital assets. There are major gains to be made in social, human, physical and financial capital which can increase farmers’ opportunities to pursue their desirable rural livelihood strategies. But there are also several risks faced by small-scale farmers involved in contract schemes which limit the positive impact of contract farming. Contracting farming per se can contribute to the building of rural livelihoods and rural development; however it is not a universal solution for poor smallholders in Sub-Saharan Africa. But with a strong legal framework protecting both farmers and firms and the implementation of policies facilitating for all parties, contract farming has the potential to contribute to rural development while mitigating the risks for farmers.