Formal and informal contract farming in Mozambique: Socially embedded relations of agricultural intensification

Abstract

AbstractThis paper explores the role of contract farming arrangements in agricultural intensification in sub‐Saharan Africa, combining secondary literature and original case material from Mozambique. The paper extends the scope of “contract farming” beyond the formal contracts between large companies and small‐scale producers to include less formal credit agreements between farmers and traders. It argues that such informal contract arrangements are evidence of farmers' agency in “real markets.” In the studied cases, farmers use contract farming opportunities to intensify agricultural production by investing in irrigation and inputs. While informal contracts typically concern locally consumed crops, thus with more possibilities for side selling than formal contracts for export crops with company‐controlled markets, informal contract compliance reflects closely knit social ties between the contracting parties. In both formal and informal contracts, purchasers tend to seek out producers who are already irrigating, thus obtaining gains from farmers' earlier investments. This also implies contract farming as a mechanism for accelerating social differentiation arising from unequal access to irrigation. The paper argues that the significance of informal contracts in the studied cases raises the possibility that informal contract farming by local traders plays a more important role in agrarian transformation in Africa than formal contract farming by large companies.