For many smallholder farmers, accessing larger, more lucrative markets can seem like an impossible proposition. While contract farming (a set agreement between a farmer and a buyer) can help establish set prices and more reliable links to domestic and international markets, contracts are typically signed with more educated, medium-sized farmers rather than smallholders. Impediments such as high quality standards, high monitoring costs, and health or weather shocks often keep smallholders from engaging in contract farming, thus preventing them from taking advantage of an important tool to link them to more profitable markets.
A new article on the Global Forum on Agricultural Research (GFAR) examines IFPRI's research into how improvements in the design of farmer-buyer contracts can encourage more smallholder participation. The Contracting Out of Poverty project hypothesizes that small adjustments in the design and implementation of farming contracts can benefit both contracting companies and contracted farmers, leading to increased trust between the two parties, strengthened contracts, and greater smallholder participation.