Do contracts increase farmers’ incomes and food security? Evidence from the rice value chain in Senegal.

The Quiet Revolution in Asia’s domestic food supply chains (Reardon et al., 2012) seems to be on-going in Africa, with more integrated chains and new investments in food processing. In the Senegalese rice value chain, millers are implementing production and marketing contracts with small-scale producers. Numerous studies find that contracts increase incomes, but there is a need for further research, especially in the case of domestic grain chains. The purpose of this paper is to assess the impact of contracts implemented in the Senegalese rice value chain on farmer incomes and food security. We conducted a cross-sectional survey and obtained 550 valid questionnaires. We use propensity score matching and instrumental variables to correct for selection bias and to compare contracts and spot transactions. We find (1) no impact from marketing contracts on farmer incomes since there is no upgrading compared to the traditional value chain; (2) a significant negative impact from production contracts on farmer incomes due to an implicit insurance cost of credit; (3) contracted farmers engaging in spot transactions, which increase their profit; (4) marketing contracts having a positive impact on food security since they mitigate price seasonality.

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149th EAAE Seminar ‘Structural change in agri-food chains: new relations between farm sector, food industry and retail sector’, Rennes, France, October 27-28, 2016

 Record created 2017-04-01, last modified 2020-10-28

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