Contract farming, animal epidemic disease outbreaks, and inclusive growth in rural China

Abstract

ABSTRACT Contract farming (CF) is promoted as part of agricultural development policies in many countries. Few literature on CF has considered the animal epidemic risk, which significantly affects the total revenue and the re-distribution between the contract farmers and the enterprise. Using the ten-year nationwide household-level panel data, we investigate the Chinese poultry sector to analyse the inclusiveness of CF. We evaluate the impact of participating in CF on farmers’ income and asset endowments when animal epidemic diseases occur. The results confirm the insurance and discover the special re-distribution function of CF through adjusting product price. CF negatively affects large farmers’ poultry farming income while it could be mitigated during the animal epidemic disease outbreak. Meanwhile, participating in CF has a significant positive effect on small farmers’ assets when diseases occur. However, CF fails to be ‘inclusive’ in the presence of risks. The above positive effect is limited due to overall fewer participation opportunities available to small farmers. Policy implications and suggestions are derived to improve the inclusiveness of CF to small household farmers.