Income Poverty Effects of Expansion and Policies in Cash Cropping Economies in Rural Mozambique: An Economy-wide Approach

Poverty is widespread in Mozambique, particularly in rural areas where the highest proportion of the population lives and work. Livelihood strategies among rural HHs in the Zambezi Valley are predominantly based on agricultural activities, but income diversification is increasingly important. Cash income from agriculture comes predominantly from tobacco and cotton production. Due to cash constraints and poor access to input and credit by farmers, and high demand from buyers to meet quality and volume requirements, contract faming is the dominant form in the organization of transactions in those cash cropping sectors. The selective nature of CF implies that not all HHs may have the chance to directly participate in these schemes; some HHs are excluded. A key question, then, is how large and widespread the indirect income effects of these schemes are, compared to the direct effects. The answer to these questions has a lot to say about the poverty reduction effects of such crops, and may generate insights about policies and programs to enhance these effects.