Abstract
Investigated in this work is the impact of contract farming participation on smallholder farmers’ income and food security in rice crop production in Northern Benin using 400 randomly selected rice farmer households. Unlike previous studies, we corrected for both observed and unobserved biases by combining propensity score matching (PSM) and the local average treatment effect parameter (LATE). The results showed significant negative consequences of partaking in rice contract farming. We found evidence of significant negative effects on rice production income at a 1% level. The more the rice farmers join in contract farming, the lower the farm income became. Decreased food consumption was also a result of contract farming participation for potential participants by a score of 60.64, placing their households at the food security status level of poor food consumption because the quantity and nutritional quality of the food consumed were inadequate. Contract farming is, therefore, not a reasonable policy instrument that can help farmers increase their income and improve their food security level in the Alibori Department, Benin if farmers do not diversify their crops. The necessary resources and economic environment are not yet in place to allow contract farming to take full advantage of its potential benefits. To prevent the wasting of scarce public resources, expanding contract farming would not be appropriate in marginal areas with markets and other infrastructure. Additional measures are needed for contract farming to be profitable for contracting actors and to ensure sustainability and the large-scale participation of farmers.
Highlights
Despite the benefits of economic specialization being comprehended quite ever since The Wealth of Nations [1] was published by Adam Smith, when noting advance, some chronic loss of specialized work can be among the causes of underdeveloped economic potential in the poorest nations of the globe
Quality of the Matching Process Before addressing the causal result of involving farmers in contract farming efforts on their income and food security, quality assessment resulting from the matching test was first
These results showed that the more rice farmers participate in contract farming, the lower the farm income
Summary
Despite the benefits of economic specialization being comprehended quite ever since The Wealth of Nations [1] was published by Adam Smith, when noting advance, some chronic loss of specialized work can be among the causes of underdeveloped economic potential in the poorest nations of the globe. Such as those nations, the economies of which continue to be mainly agrarian, the structural transformation migrating to agriculture based on commerce from agriculture for subsistence has been difficult. Efforts to improve the effect of contract farming on farmers’ agricultural earnings and food security need understanding and recognition of the constraints and opportunities of farmers’ involvement in contract farming
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