Supply chain upgrading in domestic and staple food chains in developing countries is important for a more efficient supply to growing urban markets. Little research is done on institutional innovations, such as contract-farming, in these chains. Research on the impact of smallholder contract-farming largely focuses on export-oriented high-value commodities. In this paper, we assess the welfare implications of smallholder contract-farming in the rice sector in Benin, using farm-household survey data and applying propensity score matching and difference-in-difference estimation. We find that contract-farming is associated with higher rice incomes, higher yields, higher input use, increased commercialization and higher farm-gate prices.