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Category: Economics

Published October 26, 2011

Smallholder Participation in Contract Farming: Comparative Evidence from Five Countries

That’s the title of a forthcoming article of mine (co-authored with Chris Barrett, Maren Elise Bachke, Hope Michelson, Sudha Narayanan, and Tom Walker) in World Development, in which we lay out a conceptual framework to study the participation of farm households in agricultural value chains in developing countries and survey the recent empirical evidence on the topic.

Here is the abstract:

Supermarkets, specialized wholesalers, processors, and agro-exporters are transforming the marketing channels into which smallholder farmers sell produce in low-income economies. We develop a conceptual framework with which to study contracting between smallholders and a commodity-processing firm. We then synthesize results from empirical studies of contract farming arrangements in five countries (Ghana, India, Madagascar, Mozambique, and Nicaragua). The resulting meta-narrative documents patterns of participation, the welfare gains associated with participation, reasons for nonparticipation, the significant extent of contract noncompliance, and the considerable dynamism of these value chains as farmers and firms enter and exit frequently.

Published October 25, 2011

Looking for the Next Big Research Questions in Development Economics?

A little more than a year ago, the National Science Foundation’s (NSF) Directorate for the Social, Behavioral and Economic Sciences commissioned 54 papers from leading economists on long-term research agendas. That is, on questions that are “likely to drive next generation research in the social, behavioral, and economic sciences.”

If I were a second-year Ph.D. student looking for a set of great research questions, I would be all over these. I certainly wish that the emphasis on applied theory Esther Duflo foresees in development economics had been in fashion when I hit the market in 2006!

Here is a list of the papers that should be of interest to readers of this blog:

Continue readingLooking for the Next Big Research Questions in Development Economics?
Published October 24, 2011

The Causes and Consequences of Food Price Volatility

From a longer IRIN article published last week:

Recent responses to high prices have increasingly tended to focus on reducing price volatility — sharp fluctuations in food prices.

G20 countries in their June 2011 ministerial declaration recommended measures such as building grain reserves, a global market information system and regulating financial transactions in commodities markets.

But economists like Brian Wright, professor of agricultural and resource economics at the University of California, Berkeley, and Christopher Barrett, professor of applied economics at Cornell University, believe more emphasis needs to be placed on underlying policy problems.

“Volatility is a symptom of a structural problem of low stocks,” says Wright. “When supplies get to certain low levels the prices become vulnerable to volatility.”

He makes a distinction between the impact of one-off production shortfalls and low grain stocks over a longer period: “Though [price] spikes do not indicate times of large aggregate food grain production shortfalls, it is easy to check that they do indicate times when aggregate stocks were low.”

Barrett would like to see more emphasis on boosting production and improving distribution systems to increase the supply of food and bring down prices. “Food price volatility gets addressed naturally as food supplies expand, bringing down prices and encouraging expansion of price-stabilizing inventories.”

Traditional policy responses to price volatility tend to benefit large farmers in developed countries and not the poor consumer or producer in a developing country, said Barrett.

“Every dollar spent on developing expensive reserves or marketing systems is a dollar taken away from improving yields, from developing drought-tolerant rice or setting up marketing infrastructure in a developing country,” he said.