The (re)emergence of contract farming in Sub …...The (re)emergence of contract farming in...

The (re)emergence of contract farming in Sub-Saharan Africa:

moving from land grab to power grab?

Analysis of multilateral institutions‘ discourse from 1980 to present

Annika Lindholm

Master‘s thesis in socio-economics

Under the supervision of Dr. Isabela Nogueira de Morais

July 2014

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TABLE OF CONTENTS

LIST OF TABLES ................................................................................................................................................ 4

INTRODUCTION ................................................................................................................................................. 5

I. THEORETICAL FOUNDATIONS AND LITERATURE REVIEW ........................................................... 7

1. Theoretical foundations ................................................................................................................................ 7

1.1 Agrarian political economy ....................................................................................................................... 7

1.2. Food regime analysis.............................................................................................................................. 11

2. Contract farming: definitions, drivers, and historical and current trajectories.................................... 14

2.1 Defining contract farming ....................................................................................................................... 14

2.2 Historical trajectories and the prevalence of contracting in Sub-Saharan Africa .................................... 16

2.3 Drivers of contract farming ..................................................................................................................... 17

2.4 Land grab and new momentum for contract farming .............................................................................. 19

2.5 The New Green Revolution and the power grab of world farming ......................................................... 22

3. The potentials and risks of contract farming ............................................................................................ 24

3.1 The potentials of contract farming and their critical assessment ............................................................. 24

3.3 The risks of contract farming .................................................................................................................. 27

4. Methodology ................................................................................................................................................ 34

4.1 Discourse analysis in international development studies ........................................................................ 34

4.2 Framework for analysis ........................................................................................................................... 35

4.3 Sources for analysis................................................................................................................................. 37

II. ANALYSIS OF MULTILATERAL INSTITUTIONS' DISCOURSE ON CONTRACT FARMING ... 38

1. The first period: 1980-2006 ........................................................................................................................ 39

1.1. The World Bank ..................................................................................................................................... 39

1.1.1 Applying the first framework: underlying approaches (World Bank, 1st period) ............................ 40

1.1.2 Applying the second framework: potentials and risks of CF (World Bank, 1st period) ................... 42

1.1.3 Analysis of findings (World Bank, 1st period) ................................................................................. 44

1.2 FAO......................................................................................................................................................... 46

1.2.1 Applying the first framework: underlying approaches (FAO, 1st period) ........................................ 47

1.2.2 Applying the second framework: potentials and risks of CF (FAO, 1st period) ............................... 48

1.2.3 Analysis of findings (FAO, 1st period) ............................................................................................. 51

1.3 UNCTC and UNCTAD ........................................................................................................................... 53

1.3.1 Applying the first framework: underlying approaches (UNCTC and UNCTAD, 1st period) ........... 54

1.3.2 Applying the second framework: potentials and risks of CF (UNCTC and UNCTAD, 1st period) . 55

1.3.3 Analysis of findings (UNCTC and UNCTAD, 1st period) ............................................................... 59

1.4 AfDB ....................................................................................................................................................... 60

1.4.1 Applying the first framework: underlying approaches (AfDB, 1st period) ....................................... 61

1.4.2 Applying the second framework: Potentials and risks of CF (AfDB, 1st period) ............................. 62

1.4.3 Analysis of findings (AfDB, 1st period) ........................................................................................... 64

1.5 IFAD ....................................................................................................................................................... 65

1.5.1 Applying the first framework: underlying approaches (IFAD, 1st period) ....................................... 65

1.5.2 Applying the second framework: potentials and risks of CF (IFAD, 1st period) ............................. 66

1.5.3 Analysis of findings (IFAD, 1st period) ............................................................................................ 69

2. The second period of analysis: 2007-present ............................................................................................ 70

2.1 World Bank ............................................................................................................................................. 70

2.1.1 Applying the first framework: underlying approaches (World Bank, 2nd

period) ............................ 70

2.1.2 Applying the second framework: potentials and risks of CF (World Bank, 2nd

period) ................... 72

2.1.3 Analysis of findings (World Bank, 2nd

period)................................................................................. 77

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2.2 FAO......................................................................................................................................................... 79

2.2.1 Applying the first framework: underlying approaches (FAO, 2nd

period)........................................ 81

2.2.2 Applying the second framework: potentials and risks of CF (FAO, 2nd

period) .............................. 81

2.2.3 Analysis of findings (FAO, 2nd

period) ............................................................................................ 87

2.3 UNCTAD ................................................................................................................................................ 88

2.3.1 Applying the first framework: underlying approaches (UNCTAD, 2nd period) .............................. 88

2.3.2 Applying the second framework: potentials and risks of CF (UNCTAD, 2nd period) .................... 90

2.3.3 Analysis of findings (UNCTAD, 2nd

period).................................................................................... 96

2.4 AfDB ....................................................................................................................................................... 97

2.4.1 Applying the first framework: underlying approaches (AfDB, 2nd

period) ...................................... 97

2.4.2 Applying the second framework: potentials and risks of CF (AfDB, 2nd

period) ............................ 98

2.4.3 Analysis of findings (AfDB, 2nd

period) .......................................................................................... 99

2.5 IFAD ..................................................................................................................................................... 100

2.5.1 Applying the first framework: underlying approaches (IFAD, 2nd

period) .................................... 100

2.5.2 Applying the second framework: potentials and risks of CF (IFAD, 2nd

period) ........................... 101

2.5.3 Analysis of findings (IFAD, 2nd

period) ......................................................................................... 105

3. The framing of the institutions' narrative on contract farming from 1980 to present ........................ 106

3.1 The potentials of CF in the institutions' discourses: a summary ........................................................... 106

3.2 The risks of CF in the institutions' discourses: a summary ................................................................... 107

3.3 The evolution of the narrative on CF from 1980 to present through the lens of the two analytical

frameworks: a summary .............................................................................................................................. 108

3.4 The relations of power in the institutions' narrative on contract farming .............................................. 114

CONCLUDING REMARKS ............................................................................................................................ 116

BIBLIOGRAPHY ............................................................................................................................................. 118

ANNEX: List of multilateral institutions’ reports under analysis ................................................................ 123

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LIST OF TABLES

TABLE 1: FDI INFLOWS IN SUB-SAHARAN AFRICA, 2000-2011 ............................................................................. 20 TABLE 2A: FIRST FRAMEWORK FOR ANALYSIS ....................................................................................................... 36 TABLE 2B: SECOND FRAMEWORK FOR ANALYSIS ................................................................................................... 36 TABLE 3A: WORLD BANK'S REPORTS UNDER ANALYSIS; FIRST PERIOD .................................................................. 39 TABLE 3B: SUMMARY OF MAIN FINDINGS: WORLD BANK, 1

ST PERIOD ................................................................... 43

TABLE 4A: FAO'S REPORTS UNDER ANALYSIS; FIRST PERIOD................................................................................. 46 TABLE 4B: SUMMARY OF MAIN FINDINGS; FAO, 1

ST PERIOD .................................................................................. 50

TABLE 5A: UNCTC'S AND UNCTAD'S REPORTS UNDER ANALYSIS; FIRST PERIOD................................................ 53 TABLE 5B: SUMMARY OF MAIN FINDINGS; UNCTC AND UNCTAD, 1

ST PERIOD .................................................... 57

TABLE 6A: AFDB'S REPORTS UNDER ANALYSIS; FIRST PERIOD 1980-2006 ............................................................ 60 TABLE 6B: SUMMARY OF MAIN FINDINGS; AFDB, 1

ST PERIOD ................................................................................ 63

TABLE 7A: IFAD'S REPORTS UNDER ANALYSIS, 1ST

PERIOD 1980-2006 .................................................................. 65 TABLE 7B: SUMMARY OF MAIN FINDINGS; IFAD, 1

ST PERIOD ................................................................................. 68

TABLE 8A: WORLD BANK'S REPORTS UNDER ANALYSIS; SECOND PERIOD .............................................................. 70 TABLE 8B: SUMMARY OF MAIN FINDINGS: WORLD BANK, 2

ND PERIOD ................................................................... 75

TABLE 9A: FAO'S REPORTS UNDER ANALYSIS; SECOND PERIOD ............................................................................ 80 TABLE 9B: SUMMARY OF MAIN FINDINGS: FAO, 2

ND PERIOD, TABLE 1(2) .............................................................. 83

TABLE 9C: SUMMARY OF MAIN FINDINGS: FAO, 2ND

PERIOD, TABLE 2(2) .............................................................. 85 TABLE 10A: UNCTAD'S REPORTS UNDER ANALYSIS; SECOND PERIOD .................................................................. 88 TABLE 10B: SUMMARY OF MAIN FINDINGS: UNCTAD, 2

ND PERIOD ....................................................................... 93

TABLE 11A: AFDB'S REPORT UNDER ANALYSIS; SECOND PERIOD .......................................................................... 97 TABLE 11B: SUMMARY OF MAIN FINDINGS: AFDB, 2

ND PERIOD ............................................................................. 98

TABLE 12A: IFAD'S REPORTS UNDER ANALYSIS; SECOND PERIOD ....................................................................... 100 TABLE 12B: SUMMARY OF MAIN FINDINGS: IFAD, 2

ND PERIOD ............................................................................ 103

TABLE 13: EVOLUTION OF THE POTENTIALS AND RISKS IN THE INSTITUTIONS' NARRATIVES ................................ 113 FROM 1980 TO PRESENT: A SUMMARY .................................................................................................................. 113

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INTRODUCTION

In the past decade, land in Sub-Saharan Africa (SSA) has been in growing demand by foreign

investors, mainly due to rising commodity prices and the scarcity of land marked available in other

regions. This has induced a trend of large-scale acquisitions of land, also known as ‗land grab‘, by

corporate, mostly foreign, entities. Often characterized by a lacking transparency and insufficient or

absent consultation of the local population, land grabbing has furthermore been described to put in

motion a specific kind of dynamics that transform agrarian labour regimes and social structures (White

et al. 2012). Land grabbing also became strongly criticized by the civil society and even gained

momentum in mainstream media. At the same time as the investors became increasingly involved in

African agriculture, contract farming (CF), or contracting, got increasing attention by policymakers,

particularly as a smallholder-inclusive1 business model for agricultural production. Little and Watts

define contract farming as "forms of vertical coordination between growers and buyers-processors that

directly shape production decisions through contractually specifying market obligations (...); provide

specific inputs; and exercise some control at the point of production" (Little and Watts 1994: 9).

Contract farming, in which local farmers keep (formal) ownership of their land, is often viewed as a

more equitable alternative to large-scale land acquisitions, while maintaining foreign investors' access

to local land and production. For its proponents, contracting with agribusiness would allow for the

absorption of peasants into global value chains, thus increasing their incomes and lifting them out of

poverty. Contract farming has therefore been linked to economic as well as social development, and

has consequently attracted the attention of donors. Meanwhile, some critical voices have expressed

concern over the adverse effects of contract-farming schemes. Risks of contract farming include

compromised food security and monocropping, the power imbalances originating from the monopsony

power of agribusinesses, loss of traditional cultivation methods, aggravating gender inequalities,

indebtedness resulting from credit schemes, loss of autonomy in production, social stratification,

environmental degradation, and socio-political externalities at the host-country level. Many of these

risks originate from the arguably uneven power relationship that is entailed in contract-farming

ventures between small farmers and the agribusiness. While land grabbing has resulted in the direct

dispossession of land and other resources from the local population, it has been argued that the power

imbalances in contract-farming schemes could lead to the capturing of smallholder farming into

dependency relationships with the agribusiness. Some authors have even held that contract farming

would constitute a form of control grab of smallholder production by the agro-industry (e.g. White et

al. 2012; Patel 2012). In spite of these threats, it seems that contract farming has gained renewed

1 The terms ‗smallholder‘, ‗small farmer‘ and ‗peasant‘ will be used interchangeably in this research to describe farmers with small land

holdings who mostly use household labour, and who farm primarily to cover household subsistence.

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momentum in international development policies in the past decade, and especially since the

international community has increasingly acknowledged the harmful consequences of land grab.

This thesis will investigate the narrative on contract farming as expressed by international policy-

makers for development. The research will be carried out by applying critical discourse analysis on

selected multilateral institutions‘ discourse on contract farming from 1980 to present. Several studies

have been carried out by critical development scholars on multilateral institutions', particularly the

World Bank's, discourse on agricultural development (see e.g. Amanor 2009; Oya 2009; van der Ploeg

2012; Veltmeyer 2009). The role of contract farming in this discourse, however, has to date received

less attention. Contract-farming schemes in developing countries often involve multiple actors,

including private investors, host-country governments, donor states and civil society organizations.

My research will however focus on the role of smallholders, private agribusiness and the host-country

government in contract production. The role of donors, albeit important, will not be explored in the

present study. The theoretical foundations to the argumentation consist of agrarian political economy

and food regime analysis. These theoretical postures will guide us throughout this research and justify

the focus on power relations in contract-farming schemes. Through this research, I seek to identify

patterns and disruptions in the institutions‘ narrative. The following questions rise in connection to this

study: which potentials and risks of contract farming appear as discursive elements in the institutions‘

narrative? Do these discursive elements remain static or do they evolve in the institutions‘ discourse

throughout the period of analysis? In case of the latter, which potentials and risks have been prominent

and which of them have received less attention in the institutions‘ discourses, and at what time?

Finally, how has the heightened controversy over land grabbing affected the way the potentials and the

risks of contract farming are structured in the institutions' narrative? The objective of the study is two-

fold: firstly, I will scrutinize how the potentials and risks of contract farming have been treated in the

discourse of these institutions, and secondly, I will analyse how these potentials and risks of contract

farming have evolved in the institutions' narrative from 1980 to present day. Most of the risks studied

stem from the asymmetry of economic and social power between the parties to a contract. Specific

attention will therefore be paid to the representation of power relations between the smallholders and

the entrant agro-industry in the narrative. My main research problem is structured as follows: how

have power relations been expressed in multilateral institutions' narrative on contract farming since

1980 to present?

This study will consist of two parts. In the first part, I will present agrarian political economy and food

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regime analysis as the theoretical foundations to this research. I will then move on to discuss contract

farming on the basis of a review of relevant literature. In addition to defining contract farming as a

method of production, I will present its historical development in Sub-Saharan Africa, the drivers

behind it, and the relation between land grab and the process of agro-industrialization, on the other

hand, and the new momentum given to contract farming, on the other hand. I will also present and

critically assess the potentials and the risks of contract farming, which are derived from a literature

review, and will later be used as elements for the analyses. The first part will conclude by introducing

the methodology and the sources that I will use for this research. In the second part of this thesis I will

analyse the institutions‘ discourse on contract farming as expressed in selected official publications of

the institutions. The reports have been divided into two time periods: from 1980 to 2006, and from

2007 to present, respectively. I will proceed with the analyses by institution, by first applying the two

analytical frameworks that will be built up, and then discussing the main findings per institution. The

analyses will be summed up with a discussion of the framing of the institutions‘ narrative on contract

farming and its evolution, with a focus on the expression of power relations in the narrative. I will

finish my study by summarizing some general conclusions.

I. THEORETICAL FOUNDATIONS AND LITERATURE REVIEW

1. Theoretical foundations

1.1 Agrarian political economy

This thesis will examine contract farming through the lens of agrarian political economy. Bernstein

defines agrarian political economy as exploring "the social relations and dynamics of production and

reproduction, property and power in agrarian formations and their processes of change, both historical

and contemporary" (Bernstein 2010: 1). Agrarian political economy therefore places the social

conditions of production, a notion that will be further discussed below, and power relations at the

centre of analysis. Another central research objective of agrarian political economy is class

(re)formation and social stratification. Common to agrarian political economists is the recognition of

―the constant political struggles between different social classes and groups within the state and in

society that largely determine the nature, scope, pace, and direction of agrarian change‖ (Borras 2009:

19). In addition, agrarian political economy examines development from a broader, interdisciplinary

perspective than mainstream development studies. It borrows notions and analytical tools from a wide

range of social sciences, such as sociology, anthropology, and political sciences. For these reasons,

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agrarian political economy was chosen as an analytical framework for this research.

Agrarian political economy draws originally on Karl Marx's work (Marx 1995 [1887]) when it

analyses the inherent logic of the capitalist mode of production and the relationship capital maintains

with labour. Marx was followed, notably, by Karl Kautsky (1988 [1889]) and Lenin (1964 [1899]),

both of whom developed the analysis of the so-called 'agrarian question' into a field of political

economy. Kautsky and Lenin saw the emergence of agrarian capitalism in the increasing use of

manufacture in rural societies. This engendered the commodification of agricultural production and

the introduction of capitalist competition in rural societies. Agrarian political economy sees production

in a broader perspective than a simple relationship between input and output, as employed by

neoclassical economics. Farmers' production involves them in social relations with others. Therefore,

it is essential to understand the social conditions of production, which entails "all the relations between

people that shape how production is organized" (Bernstein 2010: 16). The social division of labour

refers to the specialization of actors in the production of different goods and services, and the

exchange of these products by the actors involved (Bernstein 2010). The process of production

becomes an elaborate form of interaction that is shaped by the social conditions of production. To

ensure the continuity of production, not only the means of production need to be reproduced, but also

the current and future actors involved in production, and the social relation between these actors

(Bernstein 2010). This means that, in addition to reproducing land (by retaining its fertility), seeds and

farming technology, future generations of producers need to be reproduced, as well as the social

relations they engage in. When a society goes through a transition to capitalism, smallholders lose

their ability to reproduce their means of subsistence, hence themselves, outside commodity relations

(Bernstein 2010). This can happen regardless if they are formally dispossessed of their land, since

wage labour is not the only form of labour being exploited by capitalism. In addition, there is no strict

separation between fundamentally 'free' or 'unfree' labour, and farmer categories, such as 'landless',

'smallholders' and 'tenants', are often fluid, since one can move between the categories or even occupy

them at the same time. For instance, by selling their labour power to larger farms, poor peasants might

be able to hold on to their piece of land, which can be symbolic for security or independence

(Bernstein 2010). A prominent example of how capitalism exploits labour outside of wage

employment comes from the colonization of Sub-Saharan Africa. Indeed, for the most part, colonial

settlers did not dispossess local farmers of their land, but ―encouraged‖ them to enter into economic

relations with the settlers as producers of commodities (Bernstein 2010: 51). The coercion was carried

out e.g. by means of taxation or an obligation to cultivate specific crops. While the infiltration of

capitalism into pre-colonial societies did not entail the pure proletarianization of small farmers, one

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can argue that it led to the effective reshaping of the pre-capitalist economic and social relations by the

capitalist mode of production and the formation of agrarian class societies of capitalist and peasant

farmers.

Agrarian political economists have divergent views notably on whether small farmers and peasants

would have a future in modern agriculture. The classical debate in agrarian political economy was held

between Lenin and Chayanov, and concerned the class differentiation of peasants, and the trajectory of

agrarian change. Lenin viewed that agrarian societies were differentiated into classes of farmers, the

emergent capitalist farmers or 'rich peasants', those able to reproduce themselves on the same scale of

production or 'middle peasants', and finally those struggling to reproduce themselves as capital and

labour or 'poor peasants' (Lenin 1964). He further viewed that with the development of capitalism,

rural labour markets would ultimately become dualistic, comprising of large- or middle sized capitalist

farmers, and rural wage labourers (Lenin 1964). Lenin therefore predicted a disappearance of the

peasantry. Chayanov, on the other hand, articulated a distinct theory of the peasant mode of

production, one that could co-exists with capitalist development. Seeing peasant societies as an

independent class and having a logic of their own, the Chayanovian rural society would prosper

through peasant production, and of farmers self-organizing into peasant organizations and

cooperatives (Chayanov 1966). Chayanov was not less of a modernizer than Lenin, but saw the

peasant economy as centring around family labour, giving rise to peasant 'self-exploitation' (Bernstein

2009). Self-exploitation describes how family-worked farms do not calculate costs of its own labour,

and consequently tend to farm more intensively than capitalist farmers despite their lower labour

productivity (Chayanov 1966). Chayanov's theory was later on adopted by the so-called 'agrarian

populists', a movement that aimed to counterbalance the dominant, Lenin-inspired pessimism of the

future of the peasantry. In recent years, the emergence of a global peasant movement has revitalized

the Lenin-Chayanov debate between traditional agrarian political economists and agrarian populists.

The peasant movement emerged under the auspices of La Via Campesina and other civil society

organisations, but is increasingly being absorbed in the academic debate (e.g. Altieri and Toledo 2010;

Shanin 2009; van der Ploeg 2008). These co-called 'neopopulists' emphasize the desire for autonomy

from the pressures of globalization that connects all small farmers, and advocates renewed appraisal of

the peasant mode of production through concepts such as food sovereignty. Van der Ploeg sees food

sovereignty as a notion that allows for local actors to design their food system, thus reducing

dependency on global commodity markets and enabling the pursuit of agroecological production

methods (van der Ploeg 2014). Furthermore, neopopulists question the view that productivity can only

be increased through technological development, and reject Lenin's pessimistic view of a disappearing

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peasantry. To neopopulists, not all agriculture must become capitalist, though agricultural production

is embedded in, and subordinated to he overall logic of, capitalism (van der Ploeg 2014). Instead they

view that peasants themselves can develop the 'productive forces' needed to persist and to scale up

their activities (van der Ploeg 2014). The scaling up would happen through a process of

'repeasantization', which is the peasants' struggle for autonomy and survival in a context of deprivation

and dependency (van der Ploeg 2008). Bernstein, on the other hand, takes a critical stance to the

neopopulist discourse on repeasantization. He is sceptical about peasants being able to assure their

reproduction by autonomous production, and views that once households are integrated in capitalist

commodity relations, they are subject to the dynamics of commodification, which are subsequently

internalized in their mode of production (Bernstein 2010). By contrast to neopopulists, who categorize

all small farmers as 'the people of the land', a uniform class of farmers that are exploited by capital

(Bernstein 2010), Bernstein views small farmers as a heterogeneous group, much like Lenin's typology

of different classes of farmers. He further proposes that the middle farmers are themselves created by

class differentiation through the way that they establish their commodity production at the expense of

their neighbours that are poorer farmers (Bernstein 2010). In this way, Bernstein views that the

relevance of the peasantry will diminish in the transition to agrarian capitalism.

The resuscitated debate between proponents of Lenin and of Chayanov, surprisingly, provides us with

an insight into capitalism's renewed focus on smallholder agriculture. Whereas commercial farming

emerged from of the capitalisation of agriculture, capitalism is, simultaneously, keen on maintaining

smallholder production. This is partly due to capital‘s problematic relationship with the natural process

of cultivation. In fact, agriculture is in many ways in contradiction with the logic of capitalism, since

cultivation forces capital to be tied up and unable to realize profit before harvesting (Bernstein 2010).

Another explanation lies in the difficulties that capital faces in controlling the pace of work in

agriculture, a feature that gives an advantage to family labour over wage labour in capitalist

agriculture. Through the use of family labour, smallholder farming absorbs some of the costs and risks

related to labour supervision and the mode of production in agriculture (Bernstein 2010). Mainstream

economists call this the ' inverse relationship' between farm size and productivity, a concept that will

be recurrent in this research. Kautsky noted that capitalists would tolerate the persistence of the

peasantry as long as it can produce cheap labour power (Kautsky 1988). Capitalism has therefore,

quite paradoxically, benefited from the emergence of the global peasant movement and the revival of

Chayanovian ideas under neopopulism.

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Understanding how capital is restructuring world agriculture also requires an analysis of world food

regimes. Food regime analysis also sheds light on the organization of production in value chains as an

important characteristic of the current world food system. This will be the focus of the next part of the

discussion.

1.2. Food regime analysis

Food regime analysis is a branch of agrarian political economy that looks at the world food regime

through a politico-historical lens. It seeks to explain the nature and the scope of the current food crisis,

and to situate the world food system within a broader geo-political and ecological context (McMichael

2009). Food regime analysis focuses on the role of food in social reproduction, the following

reproduction of power relations, and in the changes within these relations (McMichael 2009). The

work of Harriet Friedmann and Philip McMichael pioneered the field of food regime analysis,

followed by researchers from diverse fields, such as sociology, geography and anthropology. Common

features of the study of food regimes is the emphasis on the role of food in the global political

economy and the conceptualization of contradictions in food regimes (McMichael 2009). These

contradictions are of particular interest of food regime analysts, as they tend to bring about crises, and

subsequent transitions, in the world food system (Friedmann 2005). The current state of the food

regime, characterized by the agro-industry and global value chains, can therefore be seen as merely the

newest phase in a continuum of crisis and transitions that have taken place throughout the

development of the world food system.

Food regime analysts have divided the trajectory of the world food system in three more or less

distinct periods. The First International Food Regime (1870-1914) emerged under the auspices of

colonialism and the British hegemony. The technological advances made during the second industrial

revolution (1870's) paved the way of transforming agriculture into a separate sector of economic

activity. The rise of international food markets and extensive monocultivation of export crops from

colonies was coupled with a creation of national agricultural sectors in emerging settler states, notably

the USA (Bernstein 2010; McMichael 2009). According to McMichael, the emergence of farming as a

separate economic sector "modeled twentieth-century 'development' as an articulated dynamic

between national agricultural and industrial sectors" (McMichael 2009: 141). Hence, the ideological

foundations for modern agribusiness were laid. The inter-war period (1914-1940's) was characterized

by industrial states' protectionism and, as a result, can be considered as an interruption in the process

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of liberalization of world trade. In the meantime, however, colonial powers intensified their rent

extraction from Africa and Asia through e.g. the establishment of marketing boards. The

transformation of farming was accelerated during the Second International Food Regime (1940-

1970's), when chemicalization and mechanization were institutionalized by national Green

Revolutions, and drove the development of an agro-industry. During this period, the culture of mass

production, characteristic to capitalism, led to a dramatic shift in the notion of effective demand in

agriculture, to reflect the purchasing power of consumers instead of the physical need for food

(Bernstein 2010). Thus, the advancement of capitalism in agriculture meant that people became

increasingly dependent on markets for their subsistence. Also, localized farming was challenged by

the proliferation of transnational agrifood companies and the emergence of global commodity chains.

Interestingly, the Second Food Regime was characterized by two parallel, if not complementing,

development trends in agriculture: one of the development paradigm, which called for the 'national

developmental state' to introduce systematic plans for agriculture intensification, and another trend in

privatization of agricultural production through transnational corporations that governed commodity

value chains. The active role of the state would, however, be dropped from mainstream policy

discourse at the dawn of the neoliberal era in the 1980's. Private sector hegemony became, thus, one of

the defining elements of the newest International Food Regime.

Whether a Third International Food Regime is emerging, or if we are still in a continuum of the

second regime, remains a debated question between food regime analysts. Pechlaner and Otero see the

emergence of a third, neoliberal food regime as one having a central focus on "biotechnology and ‗life

science‘ transnational corporations as key economic actors operating in a neoregulated international

context" (Pechlaner and Otero 2008: 366), only dependent on the state for setting up intellectual

property rights regimes that serve corporate interests. Burch and Lawrence, on the other hand,

consider the new role of international financial institutions in agriculture as the manifestation of a

financialized food regime, in which financial institutions can reorganise stages of the agrifood supply

chain and govern the conditions under which other actors can operate in the chain (Burch and

Lawrence 2009). Common two these views is the power of private capital, which is demonstrated by

the centrality of value-chain production in the current food regime. Value-chain agriculture

appropriates value in activities at the final stage of the chain, namely in processing, retailing and

financial operations. At the same time, global value chains strengthen the international division of

labour, by carrying out the value-adding activities in the North, and leaving the South to cultivate for

export. In this way, value-chain agriculture becomes synonymous to a power relationship in which

value is redistributed from farmers to corporate actors (McMichael 2013). Whether the current food

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regime is a 'corporate food regime' (McMichael 2009) or a 'corporate-environmental food regime'

(Friedmann 2005), it is, quite distinctly, ―already contested by the very movements it draws on"

(Friedmann 2005: 257). The contradiction in the current food regime is better understood when

analysing the two opposing paradigms of globalization and localism that the world food system puts

forward. On the one hand, the food regime is governed by an intentional, political globalization-

process that privileges corporate power in the food system, all in the name of "feeding the world"

(McMichael 2009: 153). The liberalization of trade has favoured the emergence of global value chains,

which in their turn are controlled by a few multinational corporations. Furthermore, supermarkets have

emerged as major actors in value chains by prescribing new products and standards, in order to cater to

a growing, affluent consumer base. Together with the increased investment by financial institutions in

all levels of agricultural production, the world food regime is, more than ever, governed by the private

sector. In addition, the development of biotechnology and the increased usage of genetically modified

materia in agriculture has further eroded the link between nature and the food, causing a 'metabolic

rift' that distances production from its biological base (McMichael 2009; Bernstein 2010). In a similar

manner, using food crops in biofuel production has partly drifted agriculture away from its original use

and caused tension between the two, antagonistic purposes of food cropping. On the other hand, the

current food regime is contested by a wealthy consumer base that demand for various forms of

localism in food production, a tendency that is partly attributable to the internationalization of the

peasant movement. In the process of geographical and social distancing of consumers from food

production, wealthier consumers increasingly demand for organic food and fair trade practices, as well

as respect for health, environmental and social standards in production. Friedmann calls this tendency

'green capitalism' as ―one that reshapes accumulation of capital through altering production practices

so as to reduce harmful environmental effects and satisfy cultural shifts in demand for 'green'

commodities‖ (Friedmann 2005: 230).

It is through the competing tendencies of globalization and localism that we should understand the re-

emergence of contract farming in the developing world. The proliferation of exports from the South

through value-chain agriculture has made agribusiness activity increasingly lucrative. At the same

time, the growing public attention to the environmental and social sustainability of agribusiness

activities has prompted the industry to integrate small farmers into contractual relationships in the

name of local development and win-win scenarios. In this way, contract farming serves as an

instrument by which the two opposing tendencies of globalization and localism are accommodated in

the current world food regime. This study will now move on to discuss contract farming as it has been

debated by relevant literature, thus providing the necessary analytical tools to carry out the research in

14

the second part of this study.

2. Contract farming: definitions, drivers, and historical and current trajectories

2.1 Defining contract farming

Contract farming is a form of vertical coordination that a company can engage in with local,

independent farmers. It can take diverse forms and involve a multitude of actors. In a general manner,

contracting takes place when a central processing unit or export firm purchases produce from farmers

and the terms of the purchase is stipulated by a contract (Baumann 2000; Vermeulen and Cotula

2010). The contractor also frequently provides technical assistance and credit to farmers as a part of

the agreement (Da Silva 2005). The legal, though very much eurocentric, definition of a contract

centres on the entry of unequal parties into an agreement as legal and political equals (Watts 1992;

1994). In rural societies of developing countries contractual relations frequently, however, take the

form of complex social relations shaped by the local custom and culture. As Watts states it, in the

context of contract farming in Sub-Saharan Africa, it would be mistaken to reduce the contract to a

simple technical term, when it in fact ―represents quite distinctive, if locally varied, social relations of

production‖ (Watts 1994: 28) in which producers are subordinated through a distinctive labour

process. With regards to contract farming, this subordination can take the form of adoption of new

farm technologies and a specific labour process, or through the introduction of new crops for the

region.

The definition of contract farming employed by Little and Watts (1994), as stated in the introduction

to this thesis, emphasizes the dynamics of control that the contract generates over the process and the

social relations of production. This definition contrasts the dominant theoretical approach to contract

farming, which emphasizes the technical characteristics of commodities as determinants of a contract

mode of production. The mainstream approach tends to make crop-specific classifications and

associate crops to specific production and labour processes. As a result, labour-intensive crops are

deemed suitable for production under contract (Vermeulen and Cotula 2010). Labour-intensive crops

can be tree crops or traditional cash crops, as well as horticultural products. By contrast, according to

this approach, crops that require significant economies of scale, such as food staples, would be less

suitable for contract farming (Vermeulen and Cotula 2010). Other authors have, however, underlined

the significant diversity of crops produced under contract, making contracting profitable in principle

15

for any crop (Buch-Hansen and Marcussen 1982; Eaton and Shepherd 2001). Watts further argues that

explaining the emergence of contract farming solely by technical factors ignores the heterogeneity of

crops produced under contract (Watts 1992). More significant for the emergence of contract farming

is the growing demand of production grades and quality standards in agricultural commodities (Watts

1992; Da Silva 2005; Kirsten and Sartorius 2010). It has been held that the outcome of the schemes is

dependent on the historical, politico-economic and social contexts in which contract farming is

practised (Little and Watts 1994). The results and the durability of contracting schemes can depend on,

for instance, the patterns of relations and conflict between the actors involved (Daddieh 1994).

Contract farming can take such diverse forms and involve so many actors that Little and Watts view

that any attempts to make a general theory of contracting ―would be foolhardy and ultimately

unproductive‖ (Little and Watts 1994: 5). A classification of contract farming schemes has nonetheless

been elaborated by Eaton and Shepherd (2001). They classified contract-farming schemes in five

different categories according to their design:

1. The centralized model

2. The nucleus estate scheme

3. The multipartite model

4. The informal model

5. The intermediary model

The centralized model, also called the outgrower scheme, is prevalent on the African continent. The

labour process and the quality of the produce are strongly controlled by the sponsor (often the agro-

food company or the state). The centralized model is associated with tobacco, cotton, sugarcane, and

tree crops, but it has also been applied to horticulture (Eaton and Shepherd 2001). Typically, the

sponsor provides inputs and services to farmers under contract. The nucleus estate scheme is a

variation of the centralized model in which the sponsoring unit also operates a plantation estate in the

proximity of the processing unit. In this way the sponsor complements its own production by

contracting out supply to farmers, thus securing a certain level of produce and relying less on the

contracted farmer's supply. The larger nucleus estate commonly serves as a trial and demonstration

farm. The aim is to transfer production technologies and methods to participating farmers after a

concluded pilot stage at the nucleus estate. Cultivated crops are often tree crops that require significant

16

initial investment (Baumann 2000), but nucleus estate schemes are also widely practised on traditional

commercial crops, particularly in the African context. The multipartite model involves both state and

private actors in the conception and management of contract schemes. These joint ventures between

state agencies and private companies were common in the 1970's and in the beginning of the 1980's in

the African context (Kirsten and Sartorius 2010). The state's participation can take various forms,

ranging from the provision of credit and extension services to managing the entire contract scheme.

The prevalence of multipartite models has diminished since the neoliberal turn of the 1980's and the

subsequent weakening of the role of the state in mainstream development policies. The informal model

applies to smaller companies or individual entrepreneurs who contract production to local farmers on a

simple and informal, often seasonal, basis. The crops under contract usually require minimal

processing, and this model is therefore most commonly practised on horticulture. Finally, the

intermediary model entails the use of middlemen, who function as intermediaries between the farmers

and the buyer. Usually the agrifood company buys the produce from an intermediary organisation,

such as farmer committees, who in their turn have a separate agreement for buying supply from the

farmers.

These five models of contract farming involve various actors to different degrees, but common to

these models is the exercise of control by the contractor over the producer. By consequence, the

contractor, being the party who retains the effective control over the production, has the capacity to

alter or deviate from contractual practices to the detriment of the farmer. Possibilities for manipulation

by the contractor seem to exist in contract farming, irrespective of the contract-farming model

employed. The power imbalances of contract farming constitute a central focus of this research, and

will be discussed in depth at a later stage. But first the discussion will move on to briefly present the

historical development and the quantitative importance of contract farming in Sub-Saharan Africa.

2.2 Historical trajectories and the prevalence of contracting in Sub-Saharan Africa

Despite the recent accrued attention to contract farming in agricultural development strategies, it has

been used as a mode of agricultural production for several decades, especially in the industrialized

world. The origins of contract farming lie in North-American farming industry, which was

transformed at the dawn of the Second International Food Regime by Fordist production methods and

a society of mass consumption (Watts 1992). Yet it was not until the 1960's onwards that contract

farming spread more vigorously to the developing world. The emergence of contract farming in the

17

African continent was partly due to the contemporary trend of nationalisation of developing country

agriculture, which led foreign companies to search for alternatives to direct ownership of plantations

(Watts 1992; Vermeulen and Cotula 2010). By contracting out production to smallholders, agrifood

companies could avoid heavy state regulation of foreign ownership, while simultaneously maintaining

effective control over agricultural production. The use of contract farming intensified in Africa under

the auspices of neoliberal policies and structural adjustment programmes in the 1980's. Contract

farming was conceived as a means to revitalize the stagnant private sector in Africa and to lift farmers

out of poverty. The dual use of contracting in developing countries both as business model and as a

tool for development has thus its origins in the neoliberal era. Private-sector involvement in rural

development projects was ideologically legitimized by rhetoric such as the conclusion of a ―dynamic

partnership‖ for the ―targeting the rural poor‖ (Watts 1992: 75), while the greater role given to private

capital served the neoliberal thesis of rolling back the state. The focus on export promotion in order to

improve macroeconomic indicators, as well as the increasing demand for high-value commodities and

biofuels, further contributed to the growth of contract farming schemes in Sub-Saharan Africa.

The quantitative importance of contract farming has received less attention than case-study

approaches, and the lack of systematic data across crops and regions over time is certainly one reason

behind it. By consequence, whether contracting represents the dominant path to agrarian capitalism in

Sub-Saharan Africa remains unanswered by academic literature (Oya 2012). While contract farming

can be highly prevalent in some specific crops and regions, such as cotton production in Mozambique

(100 per cent) or tea production in Kenya (60 per cent), it can be much less common in other contexts,

such as in the Transvaal sugar scheme in South Africa, an area in which smallholder production has

not replaced large plantations (Oya 2012; Vermeulen and Cotula 2010). Nevertheless, though the

quantitative importance of contract farming might not be clear, its significance in policy debates,

particularly during recent years, cannot be contested. In the next part we will discuss the drivers of

contract farming and how they relate to the state of the world food system.

2.3 Drivers of contract farming

Drivers of the renewed interest in contract farming are both economic and political, both of which are

related to the state of the current world food regime and its opposing trends of globalization and

localism, as discussed earlier in this thesis. Firstly, the emergence of contract farming can be linked to

the new lifestyles of consumers in wealthy countries that increasingly pay attention to diet and health

18

(Kirsten and Sartorius 2010). This compels agriculture ―to shift from a philosophy from 'here's what

we produce' to a situation where farmers take note of what the consumers want‖ (Kirsten and Sartorius

2010: 506). The capacity ―to engineer food from farm to table‖ (Kirsten and Sartorius 2010: 506) has

led to a fundamental shift from agricultural commodities to products, and has given more weight to

processing activities relative to the production phase of the value chain. The demand for a greater

range of high-quality, differentiated products has further favoured vertical coordination instead of

trading in open markets. The participation in value chains requires investment in technologies,

research and extension, to which small farmers often lack access. The proponents of contract farming

hold that the private sector, instead of a capacity-weak state, can provide small farmers in developing

countries with access to the technologies and inputs needed to integrate markets. A second motivation

is related to the capitalist imperatives of increasing efficiency and minimizing transaction costs and

risks in an increasingly volatile and competitive global market. Transaction costs can be reduced by

contract farming, since family labour internalizes the majority of labour costs (Da Silva 2005), such as

wages, supervision, and social security costs, and risks related to production. This is the rationale for

the conventional economic concept of the 'inverse relationship' between farm size and productivity, or

the 'diseconomies of scale'. The gains made by reducing labour costs can, in their turn, compensate for

the slightly higher transaction costs associated with contracting to a large number of smallholders

(Kirsten and Sartorius 2010). Quite strikingly, conventional economics has adopted the Chayanovian

notion of peasant self-exploitation and applied it to serve the interests of capitalized agriculture under

the ideologically more neutral term of 'inverse relationship' in productivity and farm size. The final

driver of a renewed interest in contract farming relates to recent changes in the politics of development

discourse, and will be a central focus of this research. In effect, it seems that contract farming has

gained renewed momentum partly because of a desire to consolidate agribusiness interest with a pro-

smallholder development discourse. In this respect, Oya provocatively states that the pro-smallholder

bias may not constitute more than a ―public relations exercise‖ for rent-seeking agribusiness (Oya

2012: 10). Though contract farming has been advocated as a tool for development long before the

recent 'boom' in foreign investment to the African continent (e.g. Watts 1992; 1994), it seems that the

popularity of contract farming as a 'smallholder-inclusive business model' has exponentially increased

in connection to the investor rush to land in Sub-Saharan Africa. The role of the investor rush and the

subsequent land grabbing claims in the re-entry of contract farming in the development discourse will

be the subject of the next chapter.

19

2.4 Land grab and new momentum for contract farming

Since 2007 there has been an unforeseen surge in land acquisitions in Sub-Saharan Africa. The wave

of land deals in Sub-Saharan Africa has been considered partly as a consequence of the peaking global

commodity prices between 2007-2008, and partly due to scarcity and increasing prices of land in other

parts of the world (e.g. Edelman et al. 2013), as well as being related to the weak governance of land

in many African countries (Huggins 2014). As a result, investments in land in Sub-Saharan Africa

have become more attractive both to export agribusiness and to food-insecure countries that seek to

assure their food supply by acquiring land overseas (Edelman et al. 2013). White et al. defines land

grabbing as ―the large-scale acquisition of land or land-related rights and resources by corporate

(business, non-profit or public) entities‖ (White et. al. 2012: 619). Land deals can thus involve various,

both public and private actors, and does not have to lead to the displacement of the local population

(Edelman et al. 2013). Yet media and civil society attention has mostly concentrated on land grab

practised by private foreign entities, leading to forced resettlement of the local population. Land

grabbing is by no means a new phenomenon in Africa, as settlers commonly practised it during the

colonial period (White et al. 2012). Nevertheless, in the post-colonial era, many African governments

ventured land reforms in order to re-establish patterns of customary land ownership and redistribute

land to small farmers (e.g. Cousins 2007; Hall 2004; Sachikonye 2003). Quite strikingly, the trend has

reversed during the past decade. The liberalization of trade and the growing global demand and prices

of food, fuels and commodities have contributed to the exponential inflow of Foreign Direct

Investment (FDI) in Africa. According to data collected by UNCTAD, the investment inflows to

Africa have grown fast since 2004, and reached their peak in 2008, with FDI inflows amounting to 88

billion USD, of which 73 per cent went to Sub-Saharan Africa (UNCTAD 2009). Though the financial

crisis slowed the pace of growing investment inflows, FDI to Sub-Saharan Africa has been steadily on

the increase since 2010 (UNCTAD 2013). A majority of the incoming FDI constitutes of transnational

companies' downstream activities, such as processing and retailing (UNCTAD 2009).

20

Table 1: FDI inflows in Sub-Saharan Africa, 2000-2011

It is difficult to assess how much of the FDI to Sub-Saharan Africa is directed to land acquisitions, not

the least because of the lack of information and transparency surrounding these deals (White et al.

2012). The World Bank used data gathered by GRAIN when it estimated that from 2008 to 2009, 464

land deals were concluded (World Bank 2011). The size of land acquired was recorded in less than

half of the projects: the area acquired in these 203 land deals amounted to 56.6 million hectare

worldwide (World Bank 2011). Two thirds of this area, and 48 per cent of all projects, involve Sub-

Saharan Africa (World Bank 2011). Finally, a fourth of all projects include a surface of more than 200

000 hectare (World Bank 2011). Notwithstanding the fact that information on land acquisitions is

incomplete, the estimations presented indicate that land acquisitions make up for a significant part of

inward FDI in the developing world.

In agrarian political economy, land has similar dynamics as capital: the social relations and struggles

surrounding land give rise to, and become a consequence of, the distribution of property and power

(Akram-Lodhi et al. 2009). Land grabbing is therefore not simply a transfer of land rights from one

party to another, but a catalyst for a ―specific kinds of property dynamics‖ (White et al. 2012: 620)

that amount to a control grab of agricultural production, including the dispossession of land and other

natural resources, their concentration into private hands, and the following restructuring of agrarian

0

5

10

15

20

25

30

35

0

50

100

150

200

250

300

350

400

450

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Per cent Volume

Year

Stocks (millions)

Flows as % of grossfixed capital formation

Measure: US dollars at

current prices and

current exchange rates

Data source: UNCTAD 2013

21

societies (Borras et al. 2012). The already materialized consequences of the investor rush to land

include tenure insecurity, the displacement of local populations, and compromised sustainability of the

environment and natural resources (Da Via 2011). In addition, White et al. aim to put forth three

aspects to consider when attempting to unveil the long-term dynamics of land grabbing (White et al.

2012). Firstly, land grabbing can lead to the reshaping of the existing patterns of social differentiation

by the changes in land use and property relations in rural societies. Secondly, it can also lead to the

reorganization of the social relations of production and exchange, as agricultural production is

incorporated into global value chains. Thirdly, the role of politics is essential in the dynamics of land

grabbing. Both the mobilization of resistance to land grabbing, and the political narrative employed by

states and multilateral organisations to either justify or discourage land acquisitions, are key to

understanding the surges and declines in land acquisitions (White et al. 2012). In a conventional

economics perspective, putting areas of so-called idle land into intensive cultivation would increase

aggregate productivity and exports, hence expanding world food stocks and leading to economic

development in the host country. In this way, the dual objective of business and development has

brought together a multitude of actors, including donors, recipient countries, private sector agents, and

multilateral institutions, into the politics of large-scale land deals. Critics view, however, that by

defending large-scale land deals international development banks, multilateral institutions and host

governments have become accomplices in a process that aimed to push corporate agendas forward (Da

Via 2011; White et al. 2012). The discourse revolving around land deals, either enthusiastic or

discouraging in tone, reflects the larger tendencies and developments in world agriculture. Land

grabbing has in recent years prompted civil society mobilization in an unforeseen scale. The resistance

on the grass-root level has led international non-governmental organizations, such as GRAIN and the

International Land Coalition, to take up a vigorous anti-land grab advocacy. Civil society resistance to

land grab can indeed be seen in conjunction with the broader peasant movement, as discussed earlier,

with its struggle for issues such as food sovereignty and security, environmental sustainability, and

human rights. Civil society mobilization, together with the subsequent media attention to land

grabbing, compelled multilateral institutions and development agencies to restate their position on

land acquisitions. In 2010, the World Bank, FAO, IFAD and UNCTAD came together to elaborate the

―Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and

Resources‖, a set of voluntary guidelines for best practices to follow when conducting land investment

(FAO, IFAD, UNCTAD and World Bank 2010). These guidelines were envisaged as a form of code

of conduct that would be followed by self-regulating private companies when conducting large-scale

land deals. The inherent appropriateness of the infiltration of the private sector into developing

countries was, however, not questioned, which prompted a group of civil society organizations to

condemn these guidelines as a way for the private sector to normalize land grabs and add ―another

22

feather in their CSR2 cap‖ (GRAIN et al. 2011).

It is in this context that we should understand how the heightened awareness of the negative impacts

of land grabbing articulates with a renewed focus on smallholder-inclusive business models, such as

contract farming, in international policy discourse. It could even be argued that the desires of the

global peasant movement are, quite strikingly, being instrumentalized by the mainstream

development-policy discourse in order to sustain and justify private-sector involvement in developing-

country agriculture. The next part will further discuss the power dynamics involved in the current food

regime with its New Green Revolution. It will also clarify how the notion of power grab relates to the

shift from land grab to contract farming in the current food regime.

2.5 The New Green Revolution and the power grab of world farming

As discussed above, conventional economists see the (re-) entrance of contract farming into the

development discourse as a result of value-chain agriculture, the increasing demand for grades and

standards in agricultural production, and the inverse relationship in farm size and productivity. Patel

gives, however, a more nuanced analysis of the resurgence of contract farming as one manifestation of

a broader process of financialisation and privatisation of agriculture, which he renames 'The Long

Green Revolution' (Patel 2013). The original Green Revolution, a state-led process of agricultural

intensification between the 1940's and the 1970's, was to Patel ―a moment in struggles around the

creation of value, altering the balance of class forces, reconfiguring relations to the means of

production, and setting the processes of production and reproduction on a new trajectory‖ (Patel 2013:

3). Patel further argues that a Green Revolution is still going on as a process that reconfigures the state

and society, but has changed from a state-led to a private sector-led venture (Patel 2013). This New

Green Revolution is a process of agricultural restructuring that is effectively controlled by private

capital. A striking feature of the New Green Revolution is that the privatization of world agriculture is

done in the name of smallholders and pro-poor development. For instance, the farming inputs and

technologies provided in Green Revolution technologies are presented as being scale-neutral, thus

increasing the productivity and incomes of poor farmers and contributing to their material and physical

well-being (Patel 2013). The justification for carrying out a New Green Revolution became its pro-

smallholder focus, which has allowed international financial institutions and donor agencies to give

their blessing to the private sector for acting as the engine for development (Patel 2013; World Bank

2007).

2 Corporate Social Responsibility

23

Critics of the New Green Revolution, however, see it as a way to capture smallholder farming into the

corporate agenda for agriculture (Da Via 2011; McMichael 2013; Patel 2013). The provision of

specific farming inputs and technologies dictates cultivation methods and patterns, and subsequently

strengthens agribusiness' control over what, when and how crops are grown. Furthermore, the project

for intensification of smallholder agriculture is often complemented with smallholders entering into a

debt relationship with a corporate actor, a factor that further deepens the financial capture of peasant

production by the private sector (McMichael 2013). Finally, the technology bias of the New Green

Revolution alters the means of production and reproduction of peasant farming. As I have discussed

earlier in this research, changes in the methods and the pace of production transform social relations in

production. The original Green Revolution was supposed to be scale-neutral, but ended up benefiting

the richer farmers, since the technologies needed were dependent on a certain level of existing

resources, such as an appropriate farm size (Bernstein 2010; Patel 2013). The New Green Revolution,

just as its predecessor, is based on input-intensive farming, thus also risk only benefitting better-off

farmers, thus contributing to a further differentiation of the rural society. In sum, Patel eloquently

describes the New Green Revolution as essentially a plan to strip small farmers down of their power to

the benefit of the private sector (Patel 2013).

This research argues in line with the reasoning in White et al. (2012) and Patel (2013) that contract

farming also amounts to a control grab of smallholder production by the private sector. The control

grab does not include the actual acquisition of land (White et al. 2012), but results in some degree of

dispossession of the farmer's autonomy by the contractor. The choices available and the degree of

autonomy that a farmer possesses are strongly linked to the socio-economic context that the farmer is

embedded in. A farmer in a country with a middle or higher level of development can maintain a

possibility to negotiate or exit a contractual relationship, because the power imbalances are less

pronounced than in developing countries. By contrast, poor peasants engaging in contract farming in

Sub-Saharan Africa are at a much higher risk of dependency because of the stronger power

asymmetries involved. In this way, the small farmer in Sub-Saharan Africa is institutionally captured

through contract farming into the agribusiness-led New Green Revolution agenda for agriculture (Da

Via 2011), all in the name of pro-poor development. Contract farming becomes thus a way to

instrumentalize smallholder production for the pursuit of corporate interests in developing-country

agriculture.

24

3. The potentials and risks of contract farming

This part will introduce and critically assess the elements that are presented as 'potentials' and 'risks' of

contract farming operations. The elements presented can be found both in academic and international,

as well as non-governmental, organisations' discussions, and derive from both macro-level as well as

case studies on contract farming. The diversity of views on these potentials and risks, which

sometimes even contradict each other, shed a light on the inconclusiveness of the discussion on

contract farming. This thesis will nevertheless attempt to bring together the elements to be found in the

literature, while maintaining a critical posture to contract farming as a tool for development. The

potentials and risks discussed will moreover serve as elements for conducting the analyses in the

second part of this thesis.

3.1 The potentials of contract farming and their critical assessment

(Input-intensive) technology transfer (TT). Contract farming is promoted as a way of providing inputs

and extension services to small-scale farmers in order to increase their productivity and enable them to

produce according to the quality standards that contracts prescribe. The technological assistance

provided through contract farming can take the form of seeds, fertilizers, pesticides, farm equipment,

and skill transfer, among others. Moreover, provision of inputs to the cultivation of the contractual

crop is envisaged to produce spillover effects to other crops, or to farmers who do not participate in

contract farming schemes. The proponents of contracting therefore see the transfer of technology as

central to intensify smallholder productivity also outside the scope of the contract (Eaton and

Shepherd 2001; Da Silva 2005). If the technologies or inputs are specific to a certain crops, the

spillover effects can, however, be minimal (Eaton and Shepherd 2001). In addition, scholars have

argued that technology is not socially neutral (Bernstein 2010; Patel 2013). The use of the new

technologies and inputs often depend on already existing resources, such as size of land holdings and

facility of access to credit and extension services (Patel 2013). As a result, agricultural companies are

often inclined to work with farmers who already have a certain amount of resources at their disposal.

In addition, the provision of specific technologies can create smallholder dependency on agribusiness

for the continued supply of inputs. By this mechanism, contract farming can give rise to smallholder

production that is unable to reproduce itself outside its relationship with the agro-industry (McMichael

2013). The risk of dependency will be further discussed together with the risks of contract farming.

25

Market access. Contract farming is also advocated as a tool for enabling small farmers to access world

markets through their participation in value chains. By assuring a market outlet for crops, farmers

should be encouraged to diversify their production and better respond to market opportunities. In

addition, if the contract fixes the price to be paid to producers, it protects the participating farmers

from volatile market prices (Eaton and Shepherd 2001). The incorporation of small farmers into value

chains would also enable them to participate in a market that they would otherwise be excluded from.

The logic of value-chain agriculture, as we have discussed earlier, appropriate value from production

to the final stages of the chain. Critics of contract farming therefore argue that by participating in

value-chain agriculture, the smallholder will not, by default, receive the full added value of the

produce he puts his labour power into, but rather a fraction of it.

Increased productivity and income. A result from enabling smallholders to access inputs and markets

should be an increased productivity, which would result in higher incomes for participating farmers. A

number of studies have found that participating in contract farming schemes raises household incomes

(e.g. Maertens and Swinnen 2009; Glover 2002; Singh 2002). Eventually, the increase in income

depends, however, on the pricing mechanism of the contract and on the degree to which the

agribusiness honours it. A case study of horticulture in Kenya shows that agribusiness can abuse their

power by, for instance, delaying payments to farmers (Jaffee 1994). In a similar manner, if the

participation in contract farming is conditional to entering a debt relationship with the buyer of the

produce, the real increases in farmers' income might be less than advertised. Finally, while the income

might increase on a household level, the extra revenue does not necessarily benefit equally all

members of the household. Case studies on the gender implications of contract farming show that the

income from contract crops might be used by the male head of the household for private consumption

purposes, instead for raising the standard of living of the entire family (Carney 1994; Bulow and

Sorensen 1993). The benefits of income increases for farmers under contract might therefore be rather

ambiguous.

Access to credit. Contract farming is also promoted as a means for small farmers to gain access to

credit, which they would otherwise be excluded from. The buyer of the produce, often a supermarket

chain or an agro-food company, usually grants the loan. Sometimes contracted farmers can obtain a

loan from a commercial bank by using the contract as collateral (Da Silva 2005). The provision of

credit is often necessary for farmers to be able to make the initial investments needed for the

cultivation under contract. Yet obtaining the credit is rarely unconditional, as the farmers are supposed

26

to use the credit they obtained for cultivation of the contractual crop, for instance to buy the inputs

prescribed by the contract (McMichael 2013). In some schemes, any deviation from using credit for

the purposes of cultivation has led to the expulsion of the farmer from the contract scheme, regardless

if the farmer, who might be illiterate or poorly educated, was in a position to fully understand the

terms of the contract (Watts 1994), or even initially had the ability to repay the loan. The risk of

indebtedness will be further elaborated when discussing the risks of contracting.

Employment generation. Contract farming is seen to have the potential to generate employment in

rural areas by its "positive multiplier effects" (Warning and Kay 2002: 255) on employment. The new

employment opportunities would either stem from the increased labour demand in rural wage

employment, or from the expansion of the rural non-farm economy (Maertens & Swinnen 2009). In

the first scenario, the increased income derived from contract farming would enable contracted

smallholders to invest in their farm, by e.g. hiring additional labour. According to the other scenario,

increased agribusiness presence in rural areas would generate employment for the rural non-farm

economy in areas such as processing, transportation and marketing. In fact, the employment factor is

used for defending the practice of contracting with a group of better off, middle peasants, since those

excluded from contracting schemes are thought to more or less directly be absorbed in rural wage

employment. To date, however, research indicates that rural labour markets are poorly understood, not

the least due to data gaps and poor, incompatible methodology (Oya 2013). Another issue is the

quality of rural wage employment, especially irregular employment in small-scale farming. Oya notes

that, contrary to the general assumption in research on rural labour markets, smallholder labour does

not exclusively constitute of intra-household labour, but also of hired, temporary workforce (Oya

2013). This workforce falls easily outside the scrutiny of state authorities or the civil society, and

therefore little is known of the quality of the employment offered. Also the quality of rural non-farm

employment varies greatly, and some occupations might traditionally be reserved to the poorest or

marginalized segments of the society, or characterized by a gender or an age bias (Oya 2013).

CF as a development opportunity. The defendants of contract farming also present it as a development

opportunity. Access to markets, productivity gains and the increased income would enable subsistence

farmers to escape poverty and thus contribute to the economic development on the country level.

Contract farming has even been held to engender a ‗win-win‘ situation, in which the contract would

present a mutually advantageous relationship between agribusiness and smallholders (Birthal et. al.

2005; Von Braun and Meinzen-Dick 2009). An equitable sharing of production risk is considered as

27

one characteristic of the imagined mutually beneficial agreement. Besides that, farmers would get

access to inputs, credits and markets, and consequently see their incomes rise, and the agrifood

company would get timely supply of crops, while benefiting from access to land and household

labour. Among some multilateral institutions and donors contracting is seen as the conclusion of a

‗dynamic partnership‘ between smallholders and the agrifood industry (Watts 1992; Baumann 2000).

The perceived ‗win-win‘ partnership or the opportunity and potential that contracting provides justify

the rhetoric on using contract farming as a solution to agricultural development.

In addition to these potentials, three further advantages of contract farming can particularly be found

in the international policy discourse on agricultural development. It is held by its proponents to

engender spillover-effects. Technology transfer to extra-contractual crops and non-participating

farmers, and enhanced macro-economic performance are among the most frequently cited spillover-

effects of contracting. Contracting is also put forth as a way to fulfil the quality requirements and

standards of the current world food regime (see chapter 1.2 for a detailed discussion on the

characteristics of the current world food regime). Through contract farming, the buyer ensures a

regularity of supply of a consistent quality from a large number of smallholders to whom the buyer has

provided inputs and technologies. Finally, contract farming has been advocated as a way to reduce the

risks of FDI in agriculture and to enhance the (political) acceptability of transnational corporations‘

(TNCs) involvement in developing-country agriculture. The mobilization of contract farming as a

more desirable alternative to land grabbing is an area of particular interest in this research on the

institutions' narrative.

3.3 The risks of contract farming

Power imbalances. The power imbalances in contract-farming operations constitute a special focus of

this research, since the discrepancies in power strongly influence the outcome of the schemes. All the

risks discussed can also be understood as direct or indirect consequences of the power imbalance

between the contractor and the small farmer. The uneven power relationship can be traced back to the

concentration of the market power in the hands of a few multinational companies in the agro-industry.

In 2004, for instance, a World Bank report showed that the market share of the four largest

agrochemical and -seed companies reached 60 and 33 per cent respectively (World Bank 2007). This

is striking, since it is conventionally believed that when market share exceeds 40 per cent, market

competitiveness begins to decline (World Bank 2007). The monopsony power of agribusiness enables

28

it to exercise control over all aspects of the contractual relationship, ranging from prescribing the

terms of the contract to transferring financial risks to the farmer. Companies can, among others,

engage in contractual hold-ups, avoid transparency in price determination, and reject the farmer's

produce on weak grounds (Da Silva 2005). In these situations, there is little a farmer can do in the

absence of alternative channels to sell their produce. In the long term and in settings where the state

lacks capacity, contracting can lead to an increasing dependence on the agribusiness in non-farm

related matters, such as the construction of infrastructure and the provision of social services (Da Silva

2005). As the dependency on agribusiness becomes deeper, the formally independent farmer

increasingly loses its autonomy. While the proponents of contract farming might admit the existence

of an uneven power relationship between farmers and the agro-industry, the creation and strengthening

of producer organizations or only stating the need to increase the bargaining power of the farmer are

often suggested remedies to the discrepancies of power (e.g. Kirsten and Sartorius 2010). The very

foundations of the agro-food system with its power imbalances are, however, less often questioned. In

the current world food regime, the contract therefore becomes a legal means by which the ago-industry

can naturalize and justify the unequal social relation between the buyer and the producer under

contract (Clapp 1994).

Autonomy loss. In contract farming, the power imbalances between smallholders and agro-food

companies directly compromise the autonomy of smallholder production. Clapp has described contract

farming as "disguised proletarianization" (Clapp 1994: 81) of small farmers, leaving them with formal,

but illusionary, ownership of their land, while the agrofood company exercises indirect, yet effective,

control over land and labour. In the absence of a competitive market and of alternative channels to sell

products, withdrawal from a contractual agreement is hardly an alternative for farmers. The ways by

which the contract can deprive smallholders of their autonomy are many, and relate particularly to

crop choice, methods of production and the labour process employed. As the time before harvest is the

most vulnerable to failure due to e.g. weather conditions, most of the risks involved in the production

are shifted to the farmer. Furthermore, farmers' dependency on prescribed technology reinforces

agribusinesses' capacity to control the farmer‘s production (McMichael 2013). Nevertheless, studies

on contract farming from a mainstream economics perspective are often reluctant to admit the loss of

autonomy, or they find the solution to the autonomy loss in access to information, property rights or

increased bargaining power (e.g. World Bank 2007; Kirsten and Sartorius 2010). It seems that

presenting simple solutions for farmer autonomy stems from an unwillingness to admit the deeply

rooted issues of inequality and power imbalances that characterize contract-farming operations.

29

Loss of cultivation methods and patterns. Watts has described the contract as defining "the social

space of autonomy and subordination that the grower occupies in relation to the labour process"

(Watts 1994: 27). As I have discussed above, once entering a contract relationship, smallholders'

autonomy over production methods and the labour process is jeopardized. Technological transfer to

smallholders prescribes the adoption of new inputs and methods of production that deviate from the

input-use in traditional peasant farming. Likewise, the imposition of specific cropping schedules can

alter the nature and the pace of work and disrupt farmers‘ customary production routines and labour

processes (Watts 1992). As a result, farmers are often compelled to abandon traditional cultivation

methods and patterns. As Da Silva notes, ―patterns that emerged from the optimal utilization of locally

available resources might be irreversibly lost‖ (Da Silva 2005: 18), and therefore not restored in case

the contractual relationship ends.

Indebtedness. While access to credit is put in the forefront of the benefits of contract farming, these

credit schemes trigger a dynamic of farmer indebtedness towards the creditor, and can cause

dependency. As McMichael eloquently puts it, ―resolving the agrarian and food crisis through a

project such as [contract farming] represents a 'spatio-temporal fix' enclosing producers in value-chain

technologies financed through debt dependency‖ (McMichael 2013: 673). The term spatio-temporal

fix refers to the capitalisation of a resource, often through opening it up to a new territory for capital

(McMichael 2013). In the context of value-chain agriculture, this resource is the smallholder labour.

By using a spatio-temporal fix, agribusiness capitalises smallholder agriculture through the provision

of new technologies and extension services. This was the case in tea outgrower-schemes in Zimbabwe,

where outgrowers had to finance the scheme's extension advisory service, which provided the inputs

and the credit to participating farmers (Jackson and Cheater 1994). McMichael further argues that the

capitalisation of smallholder agriculture is actually paid by the farmers themselves through the debt

they accrue towards agribusiness (McMichael 2013). The value chain thus uses smallholder labour as

means to create wealth that is absorbed by later stages of the chain. To sum up, the debt relationship

becomes a clear manifestation of the monopsony power of the agribusiness. Firstly, by lending to a

large pool of farmers the agrofood company spreads the risk of default, faces a larger group of

suppliers and can thus more easily reject commodities provided by smallholders, referring to

insufficient quality (McMichael 2013; Da Silva 2005). Secondly, the concentration of market power to

agribusiness firms can impede the entrance of additional buyers to the local market, therefore not leave

any other choice to smallholders than to contract and enter into a debt relationship in order to sell their

produce. Some studies on contract farming do recognize the risk of farmer indebtedness, but they tend

to relate to the incentives to use credit for household consumption and other extra-contractual needs

30

(e.g. Da Silva 2005), or to the loss of income in the event of production problems or changes in market

conditions (Eaton and Shepherd 2001). However, fewer studies acknowledge that debt accumulation

can become a means by which smallholders are subordinated into dependency relationships with agro-

food companies.

Food insecurity. While advocates of contract farming present it as a solution to the world food crisis,

contract farming can, in fact, cause or exacerbate food insecurity. These two antagonistic views of the

outcome of contracting originate both from the understanding of the nature of the food crisis, and from

the unit of analysis employed in examining the distribution of food. Contract farming is often practised

in the cultivation of classic export commodities, such as sugar cane, cotton, tea, and the soya bean.

When farmers are required to dedicate an increasing part of their land to the cultivation of such non-

food crops, they might do it at the cost of cultivating other crops, many of which can constitute of

household subsistence crops (Little 1994). Proponents of contract farming argue that the change in

cultivation patterns does not compromise food security of the contracting household. In this scenario,

contract farming would enable participating households to better meet their nutritional needs by the

increased income earned from producing to export markets (Glover 2002). Additionally, it has been

argued that as long as farmers are allowed to make their own decision on how to use their land while

under contractual schemes, they do not displace all subsistence crop cultivation with the growing of

the contract crop (Glover 2002). Defendants of contracting furthermore view that the higher

productivity associated with contract farming increase aggregate production and therefore would

contribute to eradicating hunger through increased food production and exports on a global level.

Agrarian political economists hold the latter view as fundamentally biased and ignores the root causes

of the world food crisis by failing to recognize that hunger and malnutrition are primarily not a

problem of quantity, but of access and distribution (e.g. McMichael 2009). Conclusions about the

purely positive impacts of contract farming on food security are characterized by what Little refers to

as "household myopia" (Little 1994: 228), namely the tendency to look at what happens to the

participating households in terms of food security. By narrowing the analysis to the participating

households, mainstream literature has in many instances concluded that contract farming increases

food security. Insufficient attention has, however, been paid to what happens outside the participating

households. When less food crops are made available to local markets, food prices tend to rise. This

can render food unaffordable to the rural poor that do not participate in contract farming, since they

have not benefited from the improved purchasing power associated with contracting (Little 1994).

Hence, contract farming can give rise to further polarization in rural societies, where a better-off part

of the farmers see their nutritional status improve, and the marginalized part sink deeper into food

31

insecurity.

Gender imbalances. When promoting any business model as a tool for agricultural development, it is

essential to understand how social production and reproduction in agrarian societies are deeply

gendered. These considerations are all too often omitted from, or imperfectly understood by, studies

advocating contract farming. When introducing a contract into pre-established social structures with

distinct customs regarding patriarchate and property, the contract can act as a ―catalyst for gender or

generational conflicts‖ (Watts 1994: 69). In rural societies, men are generally the de facto owners of

the land that is cultivated by a household. Also, the division of labour according to crop is often deeply

gendered, where women take care of household subsistence and men are responsible for bringing

income to the household. The adoption of new means of production, such as contract farming, can

therefore disrupt the traditional patterns of labour and production relations (Carney 1994). Even by

including so-called traditional women's crops in contractual agreements, it is often the women who

will bear the burden of labour, while their husbands control the income generated by these activities.

Bulow and Sorensen studied the gender effects of contract farming in Kenya, and discovered that the

contracts were signed with the male head of the household, who also profited from the extension

services and received the credit associated with the scheme (Bulow and Sorensen 1993). They further

discovered that the introduction of outgrower schemes had further widened the income gap between

the spouses of a household, and tended to increase women‘s labour burden, since contracting often

requires the intensification of labour use in order to meet the supply requirements. Similar findings

have been made by case studies conducted in e.g. The Gambia (Carney 1994). Case studies thus

indicate that even if household incomes increase through contract farming, it is often the male

household head that independently decides how to use the income, as he tends to possess the effective

decision-making power over household consumption. Similarly with power imbalances and autonomy

loss, a number of studies on contract farming suggest 'magic bullet' -fixes to gender imbalances, by

e.g. making payment disbursements directly to the female member of the household (Eaton and

Shepherd 2001) or by increasing women's voice in contract planning (Cotula and Leonard 2010). Yet

these kinds of suggestions will have little effect if the male household head holds the intra-household

decision-making power. The tensions and contradictions contracting can cause within the household

are still insufficiently understood by mainstream literature, and can be traced back to a lacking

comprehension of the complex social and cultural causes of the gender bias in many agrarian societies.

Social stratification. One of the paradoxical outcomes of contract farming is the (further) stratification

32

of the rural society, at the same time as it is advocated as a development tool for the targeting of the

rural poor. The ways by which the social stratification can be intensified are several, and are not

necessarily related to income. Contract farming can lead to geographic differentiation, since

contracting often emerges in regions where commercial farming already is established, because these

areas tend to already have better infrastructure in place and a relatively easier access to markets (Little

1994). Furthermore, case studies have shown that many agrifood companies prefer to work with

wealthier middle-peasants, who have larger farms and a certain amount of capital at their disposal (e.g.

Baumann 2000; Singh 2002). In Côte d'Ivoire, for instance, contracted growers of palm oil tended to

belong to the middle peasantry, be younger and more educated than the average farmer, and

sometimes even be "urban or semi-urban weekend farmers rather than local peasants" (Daddieh 1994:

205). Another case study of Zimbabwe's sugarcane industry showed that growers have an average land

holding of ten hectares, which is well above the average farm size for African landowners (Jackson

and Cheater 1994). By contrast, participants in Ghana's oil palm scheme had on average lower literacy

levels, but were older and more experienced than the average farmer (Daddieh 1994). Contracted

growers were also required to be married and have at least five children, a condition that contributed to

the age structure (Daddieh 1994). Yet the exact extent to which contract farming is a direct cause of

social stratification remains debatable. Little points out that if contract farming occurs in settings

where class hierarchies already are deeply rooted, it would be difficult to assume that contracting were

the major cause of social differentiation (Little 1994). Nevertheless, given that differentiation by

contracting can occur in a variety of ways, as indicated by the Ghanaian case, there is a need for

profound understanding of the social and cultural norms and relations in the local context when trying

to understand how contract farming would contribute to the restructuring of social strata, or to the

reinforcing of existing inequalities.

Environmental degradation. Negative environmental externalities are not inherent to contract farming

operations, but result from any form of chemically intensive agriculture in general. Contract farming,

however, often includes the introduction of new input-intensive methods of production, and can imply

the cultivation of crops that are foreign to the region. Since cultivation patterns are gradually shaped

by the local environmental conditions, introduction of new crops or methods of production not

indigenous to the region can profoundly affect the biological balance of nature, and may lead to

environmental degradation and the depletion of natural resources. Analogically, extensive cultivation

of one or a few commercial crops may lead to soil degradation, subsequently affecting the growth of

other plants, which may lead to loss of biodiversity (Eaton and Shepherd 2001). Eaton and Shepherd

reveal that a fourth of the crops included in one contract-farming venture in China was grown on

33

unsuitable land for intensive cultivation, and in Fiji thirty per cent of contracted sugar cane production

is conducted on inappropriate soil (Eaton & Shepherd 2001). Since the negative ecological

consequences of the Green Revolution became apparent, more attention has been paid to

environmental sustainability of agriculture, and research and development is increasingly devoted to

environmentally sustainable farming methods. The World Bank, most prominently, advocates a new,

'greener' Green Revolution in Africa, referring to the intensification of agricultural production in an

environmentally sustainable manner (World Bank 2007). The greener Green Revolution also puts

smallholders at the forefront through contract farming, not the least because it is conventionally

believed to be more environmentally sustainable than large-scale, mechanized farming due to its

labour-intensity (McMichael 2009; Woodhouse 2009; 2010). The 'technology package' included in the

contract farming scheme is intended to lead to an intensification of smallholder production, but if the

intensification project is 'technologically-driven' through the ―reorganization of farming according to

new technological models and corresponding input use‖ (van der Ploeg 2014: 445), it can have further

exacerbating environmental consequences. An alternative view of sustainable intensification of

agriculture, a so-called 'socially-driven' or 'peasant-driven' intensification, would be based on the

farmer's initiative to intensify production, and on their control of the process and the farming resources

(van der Ploeg 2014). Intensification of production that would stem from the farmers‘ proper interests

and ownership of the process tends to be more sustainable, both environmentally and socially, than

technologically-driven production. Peasant-driven intensification is, however, often put aside in policy

debates to the benefit of input-intensive agriculture.

Socio-political externalities for the host country. The political and economic system of a state is the

result of an elaborate historical, social and cultural process. Therefore, the entrance of agribusiness

into a host country can disrupt the traditional governance structure in ways that can be unforeseeable

(UNCTAD 2009). Whether the changes require amendments in the legal framework, or changes in

customary rules and practices, the repercussions of these changes can be disruptive to the entire

society. The introduction of a new mode of production implies the restructuring of economic and

property relations, and consequently also social and cultural norms, in the host country. For instance,

if contract-farming schemes target already better-off peasants, it can favour the creation of new

agrarian elites with considerable political influence on governance matters. The powerful position of

this elite can even lead to the capture of development in the hands of a small group with particular

interests and loyalties. Finally, while much literature put forth are blueprints for successful contract

farming operations, less research has paid attention to how the specific economic and socio-political

context of the host country can lead to different outcomes of technically and conceptually identical

34

contract-farming ventures. Case studies of contracting in Ghana, Côte d‘Ivoire and Kenya show how

contract schemes should be analysed within the broader historical and political setting of a country,

and by examining the specific contract farming operations‘ evolutions over time (Daddieh 1994;

Jaffee 1994).

4. Methodology

In the next part, this thesis will move on to examine how the narrative around contract farming has

been structured and how it has evolved in selected multilateral institutions' publications from 1980 to

the present. The research will be conducted through 'discourse analysis'. The use of discourse analysis

in international development studies will be presented in the following, along with some concepts that

are relevant for the analysis. I will also build up two analytical frameworks to be used in this research.

4.1 Discourse analysis in international development studies

Discourse analysis entered the field of international development studies (IDS) in the 1980's and has

been used above all in critical IDS research. Discourse analysis is the study of the way in which texts

are constructed, the functions they serve, and the contradictions that run through them (Parker 2004).

It has also been defined as an ―ensemble of ideas, concepts, and categories through which meaning is

given to phenomena‖ (Hajer 1993: 45). The language used in a discourse is, therefore, a medium

through which a narrative is not just described, but also created (Hajer 1993). Discourse analysis in

IDS has further used Foucault's (2010 [1972]) concept of 'regimes of truth', which are products of

systems of power instead of objective truths known to natural sciences (Hall 2001). This means that

discourses are not politically or ideologically neutral, since they frame the understanding of the world

as viewed by the most powerful actors. Thus, these concepts become ―the structures of knowledge that

are an essential element of the legitimacy of asymmetrical power relationships within the existing

world-system‖ (Nay 2014: 211), and are furthermore used to create and reproduce unequal social

relations (Jorgensen and Phillips 2002). Though discourse is sometimes seen as representing an

intellectual framework or a paradigm, the positions mediated by a discourse can be diverse, even

contradictory, and the these positions tend to evolve over time (Gasper and Apthorpe 1996; Nay

2014).

35

Discourses are put forth in narratives and stories, which aim to bring together information and to

convey that information plausibly (Gasper and Apthorpe 1996). It has even been held that narratives in

development policy have a tendency come together into simplified storylines of a single truth, which

can subsequently be easily mobilized as policy blueprints (Roe 1991). The more ambiguous the

scenarios are on a micro-level, the more the policy makers are compelled to simplify the narrative in

order to normalize the uncertainties on the ground, and allow for a widespread application of the

policy. Hajer (1993) has described the process through which various actors come together around a

certain narrative, and how it becomes an organizational practice. Firstly, the actors involved try to

impose their views of a specific social construct through the exercise of power. The social construct

emerges from past discourses on how similar phenomena were dealt with, and it can often be linked to

specific actors or institutions (Hajer 1993). The process of actors coming together around a framed

narrative is called 'discourse coalition'. The narrative thus becomes a regime of truth, which

distinguishes some elements of a situation, while leaving out others. 'Discourse structuration' occurs

when ―a discourse starts to dominate the way a society conceptualizes the world‖ (Hajer 1993: 46).

Through the process of discourse structuration the other actors involved are willing to accept the

dominant discourse, or the regime of truth, that rises from discourse coalition. Finally, a discourse can

become 'institutionalized' if it is tied to specific institutions and actors. In this scenario, the discourse

―will solidify into an institution‖ (Hajer 1993: 46) and leads to the actual policy process being

conducted ―according to the ideas of a given discourse‖ (Hajer 1993: 48). Hajer's framework on

discourse coalition, structuration and institutionalization provide useful conceptual tools for the

analyses of this research.

4.2 Framework for analysis

This research will use two frameworks for the purpose of analysis. The first one will be used to

contextualize the discussion on contract farming by examining the so-called 'underlying' approaches to

agricultural development. The underlying approaches examine the role that the discourses conceive to

three actors in agricultural development: the smallholder, the agribusiness, and the state. The first

framework is descriptive in character and hence will not use pre-established elements for analysis, by

contrast to the second framework.

36

Table 2a: First framework for analysis

Underlying approaches to:

Smallholders

The agribusiness

The state

The second framework will be used to analyse how the discourse on contract farming is structured.

The 'potentials' and the 'risks' of contract farming, as discussed earlier in the literature review, will be

used as elements for analysing the discourses. The method used to build up a framework for analysis is

called analytic induction. Through analytic induction, the researcher seeks for certain qualitative

features in a sample, and then infers the existence of other features that might not be perceived in the

sample (Reichertz 2004). More simply put, induction is the inferring of general conclusions from

particular observations, or the aim to identify patterns of features and form hypotheses based on the

observed tendencies. The hypotheses are then reformulated as more samples are examined. The use of

working hypothesis is formalized and systematized through the analytic inductive method, which has

been considered as one of the merits of this method in social sciences research (Robinson 1951).

Table 2b: Second framework for analysis

Code Potentials Code Risks

P.1 technology transfer (TT) R.1 food insecurity and monoculture

P.1.1 input-intensive TT R.2 power imbalances

P.2 market access R.3 gender imbalances

P.3 increased income and productivity R.4 indebtedness

P.4 access to credit R.5 loss of cultivation patterns and methods

P.5 risk reduction and enhanced acceptability

through CF

R.6 autonomy loss

P.6 CF as an opportunity for development R.7 social stratification

P.7 employment generation R.8 environmental degradation

P.8 CF to fulfil quality requirements and

standards of value chains

R.9 socio-political externalities in the host

country

P.9 spillover effects from CF

Denying or criticizing a specific potential or a risk of contract farming in the discourse also contributes

to framing the institutions‘ narrative. Therefore, when a 'potential' or a 'risk' of contract farming is

37

negated by a discourse, it will be indicated by adding a minus sign (-) to the code of the element of

analysis concerned. For instance, if the potential of spillover effects is denied it will be coded as [-

P.8], and, analogically, negating the risk of food insecurity will be marked as [-R.1].

4.3 Sources for analysis

This research will examine the narrative on contract farming as structured and framed by multilateral

institutions' discourses. Nay describes how multilateral institutions can function as policy forums that

affect the circulation and framing of ideas, how they actively participate as ―norm entrepreneurs‖ by

selecting, internalizing and reframing ideas, and how they can effectively enforce those ideas by

engaging in monitoring and evaluation activities in member states (Nay 2014: 213). In this way,

multilateral institutions produce and diffuse knowledge, which is influenced by their particular

interests, and selective policy objectives and perceptions (Nay 2014). Nay's views on multilateral

institutions as powerful actors in knowledge-production and -dissemination show the importance of

analysing their discourse in order to understand the emergence and possible institutionalization of

contract farming in agricultural and rural development policies.

The discourses of the following multilateral institutions will be inspected: the World Bank, the Food

and Agriculture Organization of the United Nations (FAO), the United Nations Centre on

Transnational Corporations (UNCTC), the United Nations Conference on Trade and Development

(UNCTAD), the African Development Bank (AfDB), and the International Fund for Agricultural

Development (IFAD). These institutions were chosen because they are all mandated to work with

issues that relate to agriculture and development, and thus it is expected that each institution has

constructed a narrative of contract farming. The World Bank is the leading multilateral institution to

grant loans and technical assistance for the purpose of poverty reduction. The Food and Agriculture

Organization of the United Nations (FAO) is the main intergovernmental organization working on

issues regarding food and rural livelihoods. The United Nations Centre on Transnational Corporations

(UNCTC) was founded in 1974 to deal with issues relating to TNC‘s and FDI. The UNCTC was

dismantled in 1992 when the United Nations Conference on Trade and Development (UNCTAD) took

up its activities. The African Development Bank Group (AfDB) mobilizes resources for the promotion

of economic development and social progress on the African continent. The International Fund for

Agricultural Development (IFAD), which mobilizes funds for rural development, was until the mid-

1990's indirectly dependent on the policies of its 'cooperating institutions', namely the World Bank, the

38

International Monetary Fund (IMF) and regional development banks (IFAD 1998). After a process of

restructuring in 1995, the IFAD gained more autonomy in project design and implementation and has

since 2005 almost entirely phased out its dependency on the cooperating institutions and developed

into an independent knowledge-producing organization (IFAD 2013).

A selection of official publications by these multilateral institutions will be used as sources for

analysis. I have chosen four reports by the World Bank, nine by the FAO, three by IFAD, two by the

UNCTC, two by the UNCTAD, and four by the AfDB (a complete list of the sources can be found in

ANNEX). The chosen reports are institutional flagship publications or diverse sorts of policy or

strategy documents, all having in common that they have been endorsed by the institution as a whole,

and therefore can be claimed to represent the vision of the entire institution. Due to the strict

interpretation I took on institutional endorsement of each report, some comprehensive studies on

contract farming, conducted by specific departments instead of the entire institution in question, had to

be left outside of the analysis. While not being a part of the analysis of this study, the differences in

tone and content of the reports left out imply of an existence of ―significant internal tensions‖ (Nay

2014: 214) inside these organizations, due to the myriad of actors involved in the politico-bureaucratic

structures, constantly fighting to influence internal decision-making processes. In order to examine the

evolution of the narrative over time, the institutions' publications will be divided into two periods: the

first period consisting of publications from 1980 to 2006, and the second period including documents

from 2007 to present day (2014). I start the analyses from the year 1980, as it constitutes the beginning

of intensive private-sector involvement in contract farming in Sub-Saharan Africa. The year 2007, on

the other hand, marks the culmination of the investment rush into agriculture in Sub-Saharan Africa

and the subsequent controversy on land grab. For these reasons, the reports are initially grouped into

pre- and post-2007 documents.

II. ANALYSIS OF MULTILATERAL INSTITUTIONS' DISCOURSE ON CONTRACT FARMING

The narrative of the chosen multilateral institutions will be analysed in this part of the thesis. The

frameworks for discourse analysis developed in the previous chapter, based on the literature review

and on analytic induction, will be applied to all reports under scrutiny. Subsequently I will proceed

with the analysis of the patterns and disruptions found in the discourses. The reports have been

grouped in two ways: by two periods, as I have justified in the previous chapter (1980-2006 and 2007

to present), and by institutions, in order to facilitate the analytical work and the identification of

39

patterns and disruptions. The same logic will be used for each grouping: application of the framework

and subsequent analysis. This part will conclude by summarizing the main findings and analysing the

evolution of the institutions' narratives on contract farming over time, with a special focus on how

power relationships are expressed in the narrative.

1. The first period: 1980-2006

1.1. The World Bank

Accelerated Development in Sub-Saharan Africa: An Agenda for Action, more commonly known as

the Berg Report (WB.1), and the World Development Report 1982: Agriculture and Economic

Development (WDR-82) (WB.2) stand out as the main World Bank policy documents on agriculture

from the first period under research. Their discourses will be supplemented by the World Development

Report 1990: Poverty (WDR-90) (WB.3) and the World Development Report 2000/2001: Attacking

Poverty (WDR-00/01) (WB.4). The latter reports do not make much direct reference to contract

farming, but their view on the role of smallholders and agribusiness in developing-country agriculture

shed light on the World Bank's narrative on contract farming.

Table 3a: World Bank's reports under analysis; first period

Code Year Title Report cover

WB.1 1981 Accelerated Development in Sub-Saharan Africa:

An Agenda for Action

(The Berg report)

WB.2 1982 World Development Report 1982: Agriculture and

Economic Development

(WDR-82)

40

WB.3

1990

World Development Report 1990: Poverty

(WDR-90)

WB.4

2000 World Development Report 2000/01: Attacking

Poverty

(WDR-00/01)

T

1.1.1 Applying the first framework: underlying approaches (World Bank, 1st period)

The Bank's reports in the first period advocate for increased private-sector investment in developing-

country agriculture to the detriment of government-operated schemes. The Berg report paints a picture

of a stagnant, often state-controlled agriculture in Sub-Saharan Africa, describing it as a continent of

―sluggish agricultural performance‖ (WB.1: 2) where ―there was a misallocation of investment,

notably an excessive emphasis on large-scale government-operated schemes‖ (WB1: 49). The WDR-

82 notes in connection to state-run schemes that ―Some governments have taken bold steps to improve

efficiency of distribution systems by opening up the sector to...private traders‖ (WB.2: 50). Finally,

the WDR-00/01 describes experiences with interventionist states as ―inward-looking‖ and having

―various degrees of success‖, whereas ―market-friendly reforms [where they] have been successfully

implemented, on average economic stagnation has ended and growth has resumed‖ (WB.4: 62). The

imagined private-sector investment in developing-country agriculture is furthermore seen to involve

foreign actors. The WDR-82 declares ―internationally financed projects in agriculture are necessary to

overcome obstacles, to demonstrate how to increase output, and assist in devising programs to benefit

the poor‖ (WB.2: 6). The envisaged private-sector led agricultural development would, however, not

be separated from a smallholder-focused strategy. The Berg report states that ―the smallholder sector

should be the focus of a growth-oriented rural development strategy‖, painting out a picture of a

society of small farmers whose ―massive potential has yet to be realized‖ (WB.1: 50), and describing

smallholder farming as ―a more cost-effective way to raise output than other alternatives currently

allow‖ (WB.1: 51). The Berg report mentions the Kenyan case of rapid agricultural growth through

smallholder farming, which would ―strongly attest to the desirability of promoting smallholder

agriculture‖ and show that ―small farmers are very responsive to opportunities for profitable

innovation‖ (WB.1: 51). The same kind of discourse based on economic rationality is found in the

41

WDR-82:

―all farmers...respond to economic incentives. Far from being ―tradition-bound peasants‖, farmers have

shown that they share a rationality that far outweighs differences in their social and ecological

conditions.‖ (WB.2: 5-6).

Similarly, the WDR-00/01 describes China's move from communal to family farming as a process

where ―skilled, hard-working and strongly motivated‖ peasants ―responded to the new opportunities

with great vigour‖, which generated an unforeseen agricultural growth (WB.4: 68). The priority to

smallholder production is justified on the basis of the inverse relationship in farm size and

productivity. The Berg report states that smallholders ―frequently far more productive than large

farms‖ (WB.1: 51) and the WDR-82 that ―small farmers can be highly productive, typically producing

more from each acre than large farmers do‖ (WB.2: 6). The Berg report, while affirming the

desirability of smallholder schemes, sees that it can co-exist with privatized, large-scale plantations:

―priority to smallholders does not mean that only they warrant attention. The agricultural sector is

highly dualistic in some countries, with larger private farms providing major shares of marketed

output...any growth-oriented strategy must include these islands of high productivity agriculture.‖

(WB.1: 52)

The WDR-00/01 refers to small farmers as ―perhaps more efficient‖ in producing than larger

plantations, and states that land-poor farmers have therefore ―benefited even more‖ from the

liberalization of land markets (WB.4: 68). Furthermore, the WDR-90 relates the low rate of adoption

of Green Revolution technologies in Sub-Saharan Africa to ―severe biases against peasant agriculture‖

(WB.4: 69). The WDR-00/01 and the WDR-90, by contrast to WDR-82 and the Berg report, do not

explicitly single out smallholders as a priority in agriculture or poverty reduction strategies. The

Bank's reports view, however, that the focus on smallholder agriculture is to be selective. The Berg

report states that this is needed in order to ensure a ―rapid payoff‖ (WB.1: 52) from investment. The

Berg report justifies targeting by stating:

―In a smallholder-based strategy which places production first, larger farmers can be used to spearhead

the introduction of new methods. (This has been done in many cases in the past, but the approach has

been frowned upon in recent years, as it has conflicted with the equity concerns, not so much of

governments as of foreign sources of finance.) In practice, this means a recognition that smallholders

with a few hectares more than the average are legitimate beneficiaries of development efforts.‖ (WB.1:

52)

42

The WDR-82 discourse includes the same, albeit slightly less pronounced, view on agricultural

development, as a process which does not necessarily aim to include the entire smallholder population,

by stating that ―it is…for farmers to take the inevitable risks associated with large rewards‖ (WB.2:

57). Also the WDR-00/01 sees targeting as admissible by stating that, though ―market-oriented reform

have different effects on different segments of society‖ and the poor may either come out as winners

or losers of those reforms, it is an ―impossibility of compensating every loser‖ in view of the ―urgent

need‖ for reform (WB.4: 76).

1.1.2 Applying the second framework: potentials and risks of CF (World Bank, 1st period)

Most of the World Bank's reports put forth a discourse that encourages dissemination of technologies

to small farmers by the private sector (P.1). The WDR-82 states that ―The private sector...plays an

important role in the diffusion of technology and advice to farmers‖ (WB.2: 74), and the Berg report

notes that ―The role of the private sector in input procurement and distribution should also be

enlarged. The private sector should contribute to the distribution of inputs down to the farm level.‖

(WB1: 66). Also the WDR-00/01 puts forth an example of Zimbabwe, where private buyers provided

extension and inputs to small farmers, as producing ―particular gains for smallholders‖ (WB.4: 68)

(P.1). The WDR-90 not only states the desirability of a trajectory of intensive-input agricultural

change, but negates its possible adverse effects to the poor (-R.7):

―Many in the 1970s thought that the Green Revolution would do little or nothing to help the poor, but

recent appraisals suggest that most of these fears were unfounded.― (WB.3: 60).

The WDR-82 qualifies programmes involving smallholders as having been ―remarkably successful‖

(P.6), benefiting the population widely and generating ―handsome returns‖ to the entire economy (P.9)

(WB.2: 84). Contract farming appears among these programmes through case studies on horticulture

in Greece and milk production in India. Based on the Greek case study, the WDR-82 argues how

smallholders, who produce to international supermarket chains under contract, see their productivity

and income rise ―significantly‖ (WB.2: 75) (P.3) as a result from accessing markets:

―The companies will coordinate small farmers' output under production and delivery contracts, operate

grading and handling facilities, and provide a reliable and timely supply of quality products to

supermarket chains in Europe. In this way, Greek vegetable farmers will benefit from expanding and

43

assured markets and better prices, despite the small average size of their holdings‖ (P.2) (WB.2: 75)

Contract farming is furthermore seen by the Berg report to generate spillover-effects through larger

farms under contract demonstrating new farming methods to the smaller farmers ―over the fence‖

(WB.1: 53) (P.9), making the report conclude that ―This trickle-down theory worked because the

larger farmers proved to be the greater risk-takers and thus were more innovative.‖ (WB.1: 53).

Finally, the employment-generating effects of contract farming are put forth by the WDR-00/01,

which holds that those peasants that do not have the means to access global markets would benefit of

―agricultural booms‖ through ―demand spillovers‖ in the rural non-farm sector (P.7) (WB.4: 67). To

conclude, most of the potentials of contract farming appear in the World Bank's discourse in the first

period of analysis. By contrast, all of the risks of contract farming are absent.

Table 3b: Summary of main findings: World Bank, 1st period

Elements for analysis

The Berg report WDR-82 WDR-90 WDR-00/01

Smallholder - Smallholders to be the

focus of a growth-oriented rural

development strategy.

- Smallholders a cost-

effective way to raise output

-Inverse relationship farm

size-productivity

-Targeting larger

smallholders

-All farmers respond to

economic incentives

-Their responsibility to take the risks

-Inverse relationship

-In the past severe biases

against peasant agriculture

-Inverse relationship

-skilled, hard-working and

strongly motivated smallholders that respond to

new opportunities with great

vigor, which generates an unforeseen agricultural

growth

Agribusiness -Dualistic agriculture

with large private farms

could be maintained.

-Internationally financed

projects in agriculture are

necessary to bring about development

NR

NR

State -Misallocation of

investment in agriculture

in SSA with an excessive emphasis on government-

operated schemes

-State interventions have

in some instances been

counterproductive.

NR

-Interventionist states as

inward-looking and having

had various degrees of success

P.1 + P.1.1

-The role of the private

sector in input procurement and

distribution should be

enlarged down to the farmlevel

-The private sector plays

an important role in the diffusion of technology

NR

-In Zimbabwe, private buyers

provided extension and inputs to small farmers, which

produced particular gains for

smallholders

P.2

NR

-Greek vegetable farmers

under CF benefit from

expanding and assured markets and better prices.

NR

NR

P.3 NR

-Farm incomes have been NR

NR

44

raised significantly

P.4 NR NR NR NR

P.5

NR

-The CF programs seem on the whole to have been

remarkably successful,

benefits have been widely spread

NR

NR

P.6 NR NR NR NR

P.7

NR

NR

NR

-Those peasants that do not

have the means to access

global markets would benefit of agricultural booms through

demand spillovers in the rural

non-farm sector

P.8 NR NR NR NR

P.9 -Larger farms demonstrating new

farming methods to the

smaller farmers ―over the fence‖. This trickle-down

theory worked because

the larger farmers proved to be the greater risk-

takers and thus were

more innovative.

-Handsome returns have accrued to the economy

as a whole from CF

NR

NR

P.10 NR NR NR NR

R.1 NR NR NR NR

R.2 NR NR NR NR

R.3 NR NR NR NR

R.4 NR NR NR NR

R.5 NR NR NR NR

R.6 NR NR NR NR

R.7 NR NR NR NR

- R.7

NR

NR

-Many in the 1970s thought

that the Green Revolution would do little or nothing to

help the poor, but recent

appraisals suggest that most of these fears were

unfounded

NR

R.8 NR NR NR NR

R.9 NR NR NR NR Note: NR = no reference

1.1.3 Analysis of findings (World Bank, 1st period)

All four World Bank reports grant the private sector the leading role in agricultural development

strategies, which would not, however, be decoupled from a focus on smallholders. In fact, the Bank‘s

narrative from the first period of analysis communicates a clear enthusiasm of smallholder farming.

Peasant farming is advocated on the basis of economic rationality, since their productivity is seen to be

high due to the exploitation of household labour, and since the mere number of peasant farmers

constitutes an unexplored resource. However, while promoting a smallholder-inclusive business

models, the WDR-82 and the Berg report, most prominently, encourage targeting ―larger‖

45

smallholders for participation in private-sector schemes. The Berg report and the WDR-82 justify the

selectivity, in addition to seeing that it ―makes sense‖ economically, by imagining that lead farmers

would disseminate new farming methods by demonstrating ―over the fence‖ to other peasants. The

World Bank's narrative is thus structured around spillover effects, imagining a scenario in which the

fruits of economic growth would ultimately benefit also the peasants excluded from development

projects. In addition, by stating that ―all farmers […] respond to economic incentives‖ and that ―they

share a rationality that far outweighs their differences‖ (WB.2: 91), the WDR-82 resorts to the idea of

individual efforts and responsibility that underlie the neoliberal ideology, as the ability for farmers to

benefit from commercialized production is seen as ultimately hinging on the farmer's ability to take

―the inevitable risks associated with large rewards‖ (WB.2: 57). By making agricultural production

ultimately the sum of economic rationality and individual aversion to risk, both the Berg report and the

WDR-82 justify ex-ante the risks that partnerships with agribusiness entail for farmers. How the

ability to cope with these risks is dependent on the physical and social resources at the farmer's

disposal is carefully omitted from this narrative. Furthermore, by stating that reforms inevitably

generate winners and losers, the Bank qualifies the existence of inequality and relations of power as

natural.

In the World Bank's discourse from the first period of analysis, contract farming is put forth as a

strategy to combine a focus on smallholders with a private-sector led agricultural intensification. By

giving more space to the private sector in the distribution of inputs and demonstration of modern

farming methods to smallholders, the Berg report and the WDR-82 advocate for a central role to be

given to the agro-industry for the conception and control over peasant farming. In all these reports, the

transformation of smallholder agriculture is thought to be carried out through a Green Revolution

trajectory of intensification. The WDR-90 even negates that these technologies would affect adversely

poor farmers, thus omitting from its narrative the risk of further social differentiation that Green

Revolution processes can engender. Moreover, the selectivity that contract farming engenders is

considered as inevitable and to be solved by the so-called 'trickle-down' effect that would eventually

spread the fruits of economic growth to the entire rural population. The risks of contract farming,

including power imbalances, food insecurity, gender imbalances, farmer indebtedness, loss of

cultivation methods, loss of the farmer's autonomy over the production, environmental degradation,

and socio-political externalities are strikingly absent from the World Bank's narrative. Even when the

WDR-82 acknowledges the strong market concentration in the European vegetable market, it chooses

to focus the discussion on economic reasoning, leaving the power imbalances between small farmers

and the agro-industry unproblematized. The discourse put forth by the World Bank during the first

46

period of analysis thereby constitutes an appraisal of industrialized agriculture, which would be led by

private capital, selecting a group of worthy peasants to produce for export. The asymmetrical power

relationship between the private sector actors and smallholders is completely omitted from the

narrative of these World Bank reports.

1.2 FAO

The narrative of the FAO on contract farming in the first period is expressed by the State of Food and

Agriculture 1981: rural poverty in developing countries and means of poverty alleviation (SOFA-81)

(FAO.1), and the State of Food and Agriculture 1983: the situation in Sub-Saharan Africa and women

in developing agriculture (SOFA-83) (FAO.2). The FAO's vision of the role of the agro-industry and

its linkages with smallholders is elaborated in State of Food and Agriculture 1997: The

agroprocessing industry and economic development (SOFA-97) (FAO.3).

Table 4a: FAO's reports under analysis; first period


FAO.1 1981 The state of food and agriculture 1981: World Review; Rural

Poverty in Developing Countries and Means of Poverty

Alleviation

(SOFA-81)

FAO.2 1982 The state of food and agriculture 1983: World review: the

situation in Sub-Saharan Africa; Women in developing

agriculture

(SOFA-83)

FAO.3

1997 State of Food and Agriculture 1997: The Agroprocessing Industry

and Economic Development

(SOFA-97)

47

1.2.1 Applying the first framework: underlying approaches (FAO, 1st period)

The SOFA-81 and the SOFA-83 shed light upon the complexity of poverty by stating that ―rapid

economic growth and reliance on the "trickle down" of its benefits are not enough to solve the poverty

problem and, indeed, in many circumstances may have made matters worse‖ (FAO.1: 91). Therefore,

both the SOFA-81 and SOFA-83 call for active governmental policies in bringing about rural

development. The SOFA-83 puts forth the possibility of parastatal marketing agencies contracting

with farmer's cooperatives for the purchase of produce as an example of a state-regulated form of

private-sector venture with smallholders: ―widespread reprivatization would not necessarily be more

effective and could be rejected by some on grounds of equity and principle, but forms of joint ventures

could be tried‖ (FAO.2: 70). Notably, contract farming emerges in the FAO's narrative from the 1980's

as a tool to promote the participation of the state in development projects:

―Although there are numerous examples of smallholders being integrated into plantation production as,

for example, through out-grower schemes, these have been the result of deliberate government policy to

promote them.‖ (FAO.1: 94).

The FAO-narrative in the 1980's also expresses a favourable view of the potential of peasant

production, in terms of their capacity to increase productivity by using less economic and ecological

resources:

―Smallholders have not been less efficient users of land and other inputs than larger farmers. Despite

several handicaps such as a lower ability to take risks and less access to institutional credit and

extension services, the rates of adoption of suitable improved technology and the use of growth

promoting inputs by smallholders often compare favourable with those of larger holders of land.

Smallholders also tend to use and conserve non-renewable sources of energy more efficiently and they

economize on scarce capital since more labour is combined with intermediate inputs.‖ (FAO.1: 96)

Also traditional farming methods are valued. By reminding that ―traditional peasant agriculture has

adapted itself reasonably well to the uncertainties‖ (FAO.2: 69), the SOFA-83 warns of the

consequences of dismantling traditional farming systems for the purpose of introducing new ones, and

along with it the traditional, peasant-elaborated ways of protection against risk, which can lead to ―the

result that farmers resent adopting proposed new systems‖ (FAO.2: 69). The SOFA-97, however,

views agricultural modernization as a task to be led by the agroprocessing industry and FDI. By

stating the ―importance of processing relative to primary agriculture‖ as proven by the ratio of the

48

value-added production to agricultural GDP (gross domestic product) (FAO.3: 231), the SOFA-97

highlights the central role of agroprocessing in the agriculture sector. Furthermore, the SOFA-97

qualifies agroprocessing industries as ―essential elements in the attainment of food security goals‖

(FAO.3: 237) through its impact on incomes. The role of the state is confined to establishing ―a legal

and regulatory framework that only governments can provide‖ (FAO.3: 261). Consequently, the agro-

industry is seen as mainly a private-sector venture, since, according to SOFA-97 ―budgetary

constraints are requiring governments to look increasingly to the private sector as the main source of

investment in agro-industry‖ (FAO.3: 262). The SOFA-97 puts forth the ―many beneficial feedback

effects‖ that the agro-industry has on the economic development of the host country, ranging from

―substantial‖ (FAO.3: 263) increases in employment demand to technological transfer, access to

markets and ―the acceptance of new ideas in farming itself‖ (FAO.3: 236), all leading to ―capital

accumulation in rural areas‖ (FAO.3: 237). The role given to the small farmer in the development of

the agro-processing industry is either as labour in vertically integrated production, or as producers

under contract:

―vertical integration and vertical coordination activities appear to be increasing in the sector. This can

be seen in the progressive incorporation of large agricultural estates into food multinationals and in the

rapid increase of preproduction contracts between farmers and industry.‖ (FAO.3: 255)

1.2.2 Applying the second framework: potentials and risks of CF (FAO, 1st period)

Contract farming appears mostly indirectly in the FAO‘s discourse in the SOFA-reports from the

1980's, and mainly through the discourse on unequal power relations that small farmers are

subordinated into. The SOFA-81 discusses rather extensively the weak bargaining power of farmers in

general, mentioning the existence of ―monopoly elements in the distribution network‖ (FAO.1: 103)

and the manipulative practices that buyers can exercise against farmers that individually sell their

produce (R.2). As to gender power imbalances, the SOFA-81 recognizes the ―legal and customary

barriers regarding their access to land and other resources‖ (FAO.1: 100) that women face in rural

societies, which can impede their ability to access new farming opportunities (R.3). The social

differentiation that increased commercialization of farming can cause is also discussed. The SOFA-81

states that small farmers might be ―unwilling‖ or ―unable‖ to adopt a proposed new technology

package, because they lack access to these technologies or to the initial resources to make use of them

(R.7) (FAO.1: 102). In addition, the SOFA-81 states that policies favouring export crop production

can, due to geographical or ecological location, or the size of land holdings, exacerbate differentiation

among smallholders, causing a situation where ―many small farmers...are excluded from these

activities‖ (R.7) (FAO.1: 111). The SOFA-81 also recognizes that intensified cropping and the

49

introduction of new crop varieties can effectively exclude a segment of the smallholder population that

do not have the means to adopt new farming methods or to protect themselves against risk:

―In these various ways, one of the outcomes of economic growth through rising agricultural

productivity may be a descent into poverty for those agricultural producers who cannot maintain the

average level of productivity increase. This is the source of a major criticism of the ―Green Revolution‖

type of agricultural development‖ (R.7) (FAO.1: 92)

The SOFA-97, on the other hand, discusses contract farming from the agribusiness‘ point of view,

and in connection to an increased demand in quality standards and as a way to reduce transaction

costs:

―The objective of reducing transaction costs accounts for much of the growth of vertically integrated

companies, and explains some of the attempts to coordinate agricultural supply with industry

needs...Cost reductions may also derive from the consolidation of upstream contracts with labour, land

and other inputs of agricultural production. A second cause of vertical integration lies in the need for

agro-industrial production to meet the quality standards required by an increasingly specific and

diversified consumer demand‖ (P.8) (FAO.3: 255)

The SOFA-97 furthermore sees contract farming to take place in developed countries, whereas

plantation agriculture is discussed in relation to developing-country settings:

―The initiative for the introduction of different varieties and practices has usually come from the

processing enterprises. As a result, for some commodities, especially fruit and vegetables for canning

and freezing, raw material production and processing are increasingly "vertically integrated" in the

developed countries through various forms of contract farming. In the developing countries, the large-

scale plantation production of such crops and sugar, coffee, tea, sisal and rubber is based on the vertical

integration of raw material production and processing.‖ (FAO.3: 235)

Risks of contracting are almost completely absent in the SOFA-97, as only the possible ―undesirable

environmental side-effects‖ (R.8) are discussed as critical aspects of agribusiness activities in general

(FAO.3: 242). With regards to the power of agribusiness companies, the SOFA-97 settles for stating

that, while ―much criticism has...been voiced against FDI and the role of multinational

corporations...in general, the WTO does not believe that [the market power of multinational

corporations] can constitute a sufficient case against FDI‖ (-R.2) (FAO.3: 254).

50

Table 4b: Summary of main findings; FAO, 1st period

Elements for

analysis

SOFA-81 SOFA-83 SOFA-97

Smallholder -Smallholders able to adopt new

technologies compare favourably

to larger farms

-Smallholder farming more ecological

-Traditional peasant agriculture well

adapted to uncertainties

-Dismantling traditional farming

systems can lead to farmers resenting the adoption of new

systems

-The role of the small farmer in the

development of the agro-processing

industry is either as labour in vertically integrated production in developing

countries, or as a producer under contract

in developed countries

Agribusiness -Monopoly elements in

distribution network.

-Privatization might be rejected on

equity grounds

-Many beneficial feedback effects e.g. TT,

employment, access to markets, all leading to capital accumulation.

-Agroprocessing industries essential in

attaining food security through its impact

on incomes.

-Importance of processing as value added in agricultural GDP relative to primary

production.

-Budgetary constraints are requiring

governments to look increasingly to the private sector as the main source of

investment in agro-industry

State -Successful outgrower schemes

have been the result of deliberate government policies

-Joint ventures encouraged -Legal and regulatory framework needed

for markets to operate

P.1 + P.1.1 NR NR NR

P.2 NR NR NR

P.3 NR NR NR

P.4 NR NR NR

P.5 NR NR NR

P.6 NR NR NR

P.7 NR NR NR

P.8

NR NR -Vertical coordination for reducing

transaction costs especially in developing-country contexts

P.9 NR NR NR

P.10 NR NR NR

R.1 NR NR NR

R.2 -Manipulative practices that buyers can exercise against

farmers.

NR

NR

-R.2

NR

NR

-The market power of multinationals

acknowledged but held not to make a sufficient case against FDI

R.3 -Legal and customary barriers

hinder women's access to land and other resources

NR

NR

51

R.4 NR NR NR

R.5 NR NR NR

R.6 NR NR NR

R.7 -An outcome of economic

growth through rising agricultural productivity may be

a descent into poverty for those

agricultural producers who cannot maintain the average level

of productivity increase. This is

the source of a major criticism of the Green Revolution type of

agricultural development.

-Risk of exclusion also in

connection to policies favouring

export crop production

NR

NR

R.8

NR

NR

-Agroprocessing industries can also give

rise to undesirable environmental side-

effects

R.9 NR NR NR

1.2.3 Analysis of findings (FAO, 1st period)

The FAO-discourse in the 1980's reveals itself as rather critical to mainstream development policies on

agricultural development. It draws attention to the complexity of poverty and contests so-called

‗trickle-down‘ effects, thus distancing itself from simplistic explanations and 'magic bullet' solutions

for rural poverty reduction. By qualifying successful contract farming schemes as a result of deliberate

government policies, and by recognizing the implications on equity that privatization can entail, the

focus on promoting an active state is translated into a scepticism about strong agribusiness

involvement in developing-country agriculture. Though increasing the productivity of smallholder

farming is seen as necessary, the SOFA reports from the 1980's also value traditional peasant farming

as risk-averse and an ecological alternative to the introduction of intensive-input agricultural methods.

Furthermore, both the narratives on smallholder agriculture found in the SOFA-81 and the SOFA-83

incorporate the notion of power to a large extent, and discuss power in connection to partnerships

between smallholders and agribusiness. The SOFA-81 criticizes a Green Revolution –path of

agricultural intensification by recognizing that the lack of empowerment is a constraint for making use

of new technologies, thus acknowledging that technology is not socially neutral. The SOFA-81 also

brings up the notion of power in connection to the differentiation that certain cultivation patterns can

create. It warns of the risks of aggravated social differentiation that follow from the introduction of

policies favouring export in developing-country settings, as these are deemed to often follow the

interests of actors with more economic and social resources. By warning of the dismantling of

52

traditional farming systems, and by admitting the risk of increased stratification of rural societies from

the introduction of commercialization and privatization of agriculture, the FAO-discourse in the 1980's

is conscious of how the reorganization of farming affects social structures in rural societies. Finally,

the SOFA-81 also refers to gender power imbalances, however, it settles for advocating the removal of

legal and customary barriers for women‘s access to land and other resources, instead of going into

discussion on the intra-household power imbalances that can impede women from benefiting from

commercial farming. Notably, no potentials of contract farming are put forth in the FAO's discourse

from the 1980's.

The SOFA-97, on the other hand, puts forth a discourse on contract farming that is clearly divergent

from the narrative of the SOFA-81 and SOFA-83. By viewing the private sector as the main source of

investment for the agro-industry, the SOFA-97 abandons the active role of the state in agriculture, and

conceives the states' role to establishing an enabling environment for the private sector. By putting

forth the importance of processing in agricultural GDP, it recognizes the capture of value by the later

stages of the value chain to the detriment of the primary (supply) stage, however the implications this

value-capture has on producers' livelihoods are not discussed. Furthermore, by structuring a narrative

around the importance of agribusiness in improving food security through income generation, the

SOFA-97 leaves out considerations for food availability in local markets and the effects that higher

food prices have on populations that are unable to seize opportunities for increasing their incomes. The

SOFA-97 only discusses contract farming from the point of view of the agro-industry, by evoking

reduced transaction costs. Notably, contracting is seen as a business model to implement with larger

farms in developed countries, whereas plantation agriculture is seen as possibly more suitable in

developing-country settings. The SOFA-97 strikingly leaves out the risks of contract farming in

particular, and agribusiness activities in general, from its discourse, with the exception of admitting

the potential negative environmental impacts of agribusiness activities. The SOFA-97 furthermore

ignores the implications of TNC's market power for the small farmer.

By promoting active government policies in contract farming ventures, and by acknowledging the risk

of further social stratification that can result from interactions between small farmers and the private

sector, the SOFA-81 and SOFA-83 put clearly forth the inequitable power relations that are embedded

in contract farming. Meanwhile, and by contrast to the SOFA-reports from the 1980‘s, the SOFA-97

discourse on agribusiness is remarkably silent on the power relations embedded in agribusiness

ventures with smallholders. It reduces contract farming to an economic relation by relating it to less

53

transaction costs, and thus structures its narrative only from the firm's point of view. The shift in the

FAO‘s narrative is remarkable: whereas the notion of power is discussed in the SOFA-81 and SOFA-

83 in context to technology transfer, social differentiation, increased commercial farming, agribusiness

activities, and gender, the SOFA-97 omits the risks of contract farming, and thereby also the power

imbalances, from its discussion.

1.3 UNCTC and UNCTAD

The UNCTC's Transnational Corporations in World Development: Third Survey (UNCTC-83)

(UNCTC.1) and the Transnational Corporations in World Development: Trends and Prospects

(UNCTC-88) (UNCTC.2) express the UNCTC's narrative on TNC's vertical coordination schemes in

developing countries. In the 2000's, the UNCTAD, as the successor of the UNCTC, discusses linkages

between foreign and domestic entrepreneurs in the World Investment Report 2001: Promoting

Linkages (WIR-01) (UNCTAD.1).

Table 5a: UNCTC's and UNCTAD's reports under analysis; first period


UNCTC.1

1983 Transnational Corporations in World Development: Third

Survey

(UNCTC-83)

UNCTC.2 1988 Transnational Corporations in World Development: Trends and

Prospects

UNCTC-88)

UNCTAD.1

2001 World Investment Report 2001: Promoting Linkages

(WIR-01)

54

1.3.1 Applying the first framework: underlying approaches (UNCTC and UNCTAD, 1st period)

Both the UNCTC and UNCTAD construct their narrative from a macro-perspective on the economy,

and pay therefore considerable attention to the role of transnational corporations in developing

countries. The WIR-01 describes the agro-industry as ―of special interest as it is one of the most

linkage-intensive industries and also of great importance in many developing countries‖ (UNCTAD.1:

145). The UNCTC-88 notes ―firms are finding that they can use non-equity arrangements to exploit

certain types of assets, such as organization or product or process technology, suitable to small-scale

production or to other conditions in developing countries‖ (UNCTC.2: 70). The bargaining power of

host-country governments is held to be inferior in relation to TNC‘s. When comparing the role of host-

country governments and foreign TNC‘s, the UNCTC-83 notes that TNC's ―frequently retain

substantial benefits and advantages‖ from the production through their control over processing and

marketing activities (UNCTC.1: 42). Indeed, the UNCTC-83 goes on to state that even in settings

where governmental ownership and control over agricultural production has increased, it has ―not

significantly reduced their dependence on transnational corporations‖ with regards to technologies,

markets and distribution channels (UNCTC.1: 212). The UNCTC-83 elaborates further on the power

imbalances between the state and the agribusiness as a result of market structure:

―Relative weakness of the bargaining power of the developing countries is due in part to the structural

characteristics of the market where a multiplicity of competing sellers are pitted against a relatively

small and organized group of buyers often acting in collusion with one another‖ (UNCTC.1: 213)

As a response to unequal power balances, the WIR-01 views that the state can help domestic suppliers

in increasing their bargaining power against TNC‘s through regulatory instruments:

―Domestic suppliers – because they are typically small in size and economically weak – can be at a

disadvantage when negotiating with buyers...Governments can help to a certain extent to balance the

negotiating positions of buyers and suppliers. For example, guidelines, model contracts or similar

instruments setting out minimum requirements may be useful.‖ (UNCTAD.1: 173)

The role of the smallholder is not discussed by the reports.

55

1.3.2 Applying the second framework: potentials and risks of CF (UNCTC and UNCTAD, 1st period)

Contract farming appears both directly, when referring to developing-country farmers in production

relationships with TNC‘s, and indirectly, when discussing small host-country enterprises involved in

so-called ‗non-equity modes of production‘ (NEMs) with TNC‘s, in the narrative of these institutions.

The UNCTC-88 acknowledges the important political dimension that influences TNC participation in

non-equity arrangements, as it points out the ―reduced exposure to the commercial and political risks

that accompany FDI‖ as ―especially important‖ in explaining the tendency of increasing non-equity

modes of investment in developing countries since the 1970‘s (UNCTC.2: 67). On the same issue, the

UNCTC-83 notes ―In some of the cases where their direct ownership of estates or plantations has been

curtailed, the companies have come to play an indirect role in agricultural production through contract

production‖ (UNCTC.1: 218). The UNCTC-83 further points out that TNC's have lessened their direct

agricultural production in developing countries, and instead ―diversified into other food allied

industries‖, participating indirectly in agriculture ―through contract production‖ (UNCTC.1: 218).

The UNCTC does not discuss the potentials of contract farming. By contrast, the discourse on power

relations in the UNCTC's reports is prominent in relation to agribusiness ventures with smallholders.

The UNCTC-88 states ―most non-equity arrangements also carry the implication that host-country

enterprises will assume all or most of the risks associated with investment projects‖ (R.2) (UNCTC.2:

71). Power and dependency are subsequently elaborated on in connection to seed production. The

UNCTC-83 highlights the existing ―dominance of a few firms‖ in holding patents for the production

of many commercial seeds (UNCTC.1: 220) (R.2). Since the quality of the seed is not transmitted to

the offspring, farmers ―need to rely on the continuous purchases of hybrid seeds each year‖ from these

companies, thus they are made dependent on the seed company (R.4) (UNCTC.1: 220). Power

relations are also held to interfere at the macro-level. The UNCTC-83 discusses the TNC‘s influence

on the socio-cultural system of the host countries, by the ―propagation of social and cultural impulses‖

(R.9) (UNCTC.1: 224). The influence is held to affect structures of social relations, institutions, and

consumption patterns, among others. The position of the UNCTC-83 is subsequently explained and

seen also to influence structures of production:

―Even if many of the socio-cultural changes that can be associated with transnational corporations may

be unavoidable concomitants of development or other forces, it is often suggested that transnational

corporations deserve special attention in this context, principally because they play an important role in

many host societies. First, it is argued, this role is based on the considerable resources that many of

them command through their global affiliate networks and other interconnections by means of which

56

they contribute to the shaping of production structures of host countries (e.g., what is produced and how

it is produced).‖ (UNCTC.1: 225)

The UNCTC-83 further highlights that these impulses touch mainly the wealthier tire of the

population, leaving the ―masses of the poor...in Sub-Saharan Africa ...comparatively insulated‖ (R.7)

(UNCTC.1: 224). On the socio-cultural impacts of TNC-participation in developing countries, the

UNCTC-88 even states that the superimposition of a Western ―subculture‖ as a consequence of TNC

participation can have ―devastating‖ effects, including a ―breakdown of social structures‖ (R.9)

(UNCTC.2: 220). As regards to environmental effects, the UNCTC-83 acknowledge that TNC-led

activities ―undoubtedly have a predominant share of global production and marketing of

chemicals...which may be toxic or hazardous‖ to the environment (UNCTC.1: 223) (R.8). The

discourse is reiterated in the UNCTC-88, which states that TNC's ―operate in a wide span of pollution

and hazard-intensive industries‖ which ―have the potential for causing adverse effects on...the

environment‖, and furthermore mentioning agribusiness as an environmentally sensitive area in which

TNC's are ―especially active‖ (R.8) (UNCTC.2: 228). The UNCTC-88 furthermore states that TNC's

have a ―strong incentive ...to adopt strategies to capture revenues while keeping costs external‖ (R.8)

(UNCTC.2: 229).

The UNCTAD's WIR-01 focuses on discussing contract farming from the firm's point of view, and

thus frames its discourse around the potentials. Contract farming is linked by WIR-01 to the necessity

of maintaining quality standards for the produce:

―The food industry generates extensive and strong local linkages as a result of the use of perishable

agricultural inputs, such as milk and vegetables. Difficulties in importing the required inputs, coupled

with restrictions on land ownership in many countries, can make it necessary for foreign affiliates in

food processing to rely on sourcing from domestic producers and to engage in efforts to develop new

and upgrade existing suppliers.‖ (P.8) (UNCTAD.1: 145)

The WIR-01 further mentions contract farming as one of the measures for TNC‘s to strengthen their

relationships with producers, and highlights the impact it has on technology transfer:

―Growers are contracted to plant the processors‘ crops on their lands and to deliver to the processors, at

pre-agreed prices and quantities of output based upon anticipated yields and contracted acreage.

Towards this end, a processor usually provides the farmers with selected inputs like seeds/seedlings,

57

information on agricultural practices and regular inspection of the crop and advisory services on crops.

Farmers have the choice to leave some part of the output free from the contract arrangement to sell it in

the open market‖ (P.1) (UNCTAD.1: 145)

The WIR-01 puts forth two areas in particular in which buyers engage with local growers: in

introducing and developing new hybrid varieties of crops and seeds (P.1) and in guaranteeing loans

(P.4). The WIR-01 concludes, using an example from India, that technology transfer to farmers ―has

apparently had a positive impact‖ by contributing to ―better farming practices‖ (P.1) and by having

subsequently resulted in ―increased incomes and yields‖ for farmers (P.3) (UNCTAD.1: 45). In a case

study of Nestlés contracting with Chinese coffee growers, the WIR-01 mentions the transfer of

technology that the firm engaged in notably through putting up two ―experimental, demonstration and

teaching farms‖ (P.1) (UNCTAD.1: 27). Meanwhile, the WIR-01 acknowledges that ―forming and

maintaining linkages involve costs and risks‖ and views that ―it is more likely that foreign affiliates

source from domestic suppliers and engage in supplier development when the technological and

managerial gaps between them and their local suppliers are not too wide‖ (UNCTAD.1: 153). Whereas

the UNCTC-discourse puts forth many of the risks of contract farming, including power imbalances,

social stratification, environmental degradation and indebtedness, the UNCTAD‘s WIR-01 highlights

its benefits through discussing several of the potentials of contract farming, and none of its risks.

Table 5b: Summary of main findings; UNCTC and UNCTAD, 1st period

Elements for

analysis

UNCTC-83 UNCTC-88 WIR-01

Smallholder NR NR NR

Agribusiness -TNC's controlling the marketing process.

-TNC's have an indirect role

in agricultural production

through CF in settings where ownership of estates or

plantations have been

curtailed.

-NEM:s motivated by reduced political and commercial risk.

- TNCs retain substantial benefits

and advantages through control

over processing and marketing.

-Firms can exploit assets suitable for small-scale production or

other conditions in developing

countries.

-Food industry as one of the most linkage-intensive industries and of

great importance in developing

countries.

State -Increased governmental

ownership and control over

agricultural production has

not significantly reduced their dependence on TNCs

-Weakness of the bargaining

power of the developing countries

is due in part to the structural

characteristics of the market

-Government policies can promote

linkages between TNCs and host-

country enterprises.

-Governments can help to a certain

extent to balance the negotiating positions of buyers and suppliers by,

for example, setting up guidelines,

model contracts or similar instruments

P.1 + P.1.1 -In India, technology transfer to farmers has apparently had a positive

impact by contributing to better

58

NR

NR

farming practices.

-Experimental demonstration and teaching farms for coffee growers in

China.

-A processor usually provides the

farmers with selected inputs like seeds/seedlings, information on

agricultural practices and regular

inspection of the crop and advisory services on crops.

P.2 NR NR NR

P.3 NR NR -Increased incomes and yields for farmers in India as a result of TT.

P.4 NR NR NR

P.5 NR NR NR

P.6 NR NR NR

P.7 NR NR NR

P.8

NR

NR

-The high perishability of produce can make it necessary for foreign buyers

to engage in contract farming.

P.9 NR NR NR

P.10 NR NR -Restrictions on land ownership in

many countries can make it necessary to engage in CF

R.1 NR NR NR

R.2 -Dominance of a few firms in

holding patents for the

production of many commercial seeds

-Most NEMs carry the

implication that host-country

enterprises will assume all or most of the risks associated with

investment projects.

NR

R.3 NR NR NR

R.4 -Since the quality of the seed

is not transmitted to the offspring, farmers need to

rely on the continuous

purchases of hybrid seeds each year

NR

NR

R.5 NR NR NR

R.6 NR NR NR

R.7 -Access to inputs and

services remains unequal.

-Credit is not always

available for small farmers.

-TNC-provoked social and

cultural impulses leave masses of the poor in SSA

comparatively insulated.

-Income inequality might be

NR

NR

59

aggravated by TNC activities

R.8 -TNCs undoubtedly have a predominant share of global

production and marketing of

chemicals which may be toxic or hazardous to the

environment

-Agribusiness as an environmentally sensitive area in

which TNCs are particularly

active.

-TNCs have a strong incentive to adopt strategies to capture

revenues while keeping costs

external.

NR

R.9 -TNCs influencing socio-

cultural systems of host countries, affecting e.g.

institutions and social relations

-Superimposition of a Western

subculture as a result of TNC-participation can have devastating

effects, including a breakdown of social structures

NR

1.3.3 Analysis of findings (UNCTC and UNCTAD, 1st period)

The notion of power prominently frames the UNCTC's narrative, including in the discourse on

contract farming. Power relations are recognized not only in the context of market power and

bargaining power, but also in connection to political power, when stating that increases in NEM-

production can be explained by reduced political and commercial risk in comparison to direct TNC-

involvement in developing countries. By recognizing that NEM-production implies that most of the

production risks are born by the small entrepreneur, the UNCTC contests that contract farming could

entail 'win-win' scenarios of equal benefits to smallholders and agribusiness. The UNCTC also does

not see the establishment of farmer organizations as a 'magic bullet‘ -answer to power imbalances, as

it puts forth the limited success of many experiences with producer organizations. Furthermore, the

UNCTC recognizes the influence that TNC's have on economic and social power relations by

discussing the risks of social differentiation, indebtedness, and socio-political externalities in the host

country that can follow contract-farming schemes.

The UNCTAD's discourse emerges as strikingly different from the UNCTC‘s reports' narrative, as the

WIR-01 communicates a narrative on contract farming in which power relations are largely absent.

While mentioning the tendency of TNCs to work with NEM partners with more resources at their

disposal, the WIR-01 does not problematize the impact selectivity can have on social differentiation.

Instead, the report elaborates on the merits of income generation and technological transfer that result

from contracting. Notably, contract farming is described as a firm‘s necessity in order to respond to

specific economic and political criteria, i.e. quality standards required by the world food system, and

for the purposes of circumventing legislation that restrict foreign ownership of land. By stating that

60

farmers are free to sell a part of their produce to open markets, the WIR-01 ignores the actual

possibility for farmers of doing so, if the structure of the market gives the contracting firm a

monopsony power in the locality. While power relations were central in the structuration of the

UNCTC narrative, they are strikingly absent in the discourse of the WIR-01.

1.4 AfDB

The AfDB's Policy and Operational Guidelines for the Industrial Sector (AfDB-84) (AfDB.1),

published in 1984, and the Agriculture and Rural Development Sector Bank Group Policy (AfDB-00)

(AfDB.2) from the year 2000, communicate the AfDB's vision of the role of smallholders and

agribusiness in agricultural development. The AfDB-84 was adopted as a first clearly articulated

lending policy for the industrial sector, including the agro-industry. It does not directly discuss

contract farming, however, its views on agribusiness and investment priorities in agriculture shed light

on the AfDB's view on smallholder agriculture and its linkages with the agro-industry. By the

beginning of the 2000's the AfDB would have, through the AfDB-00 report, included contract farming

in its discourse on agricultural development.

Table 6a: AfDB's reports under analysis; first period 1980-2006


AfDB.1

1984 Policy and operational guidelines for the industrial sector

(AfDB-84)

AfDB.2 2000 Agriculture and Rural Development Sector Bank Group Policy

(AfDB-00)

61

1.4.1 Applying the first framework: underlying approaches (AfDB, 1st period)

The AfDB-84's policy recommendations build directly on the Lagos Plan of Action (OAU 1981),

adopted by the Organization of African Unity (which was replaced in 2002 by the African Union) as a

―blueprint for the development of all sectors including agro-industry‖ in Africa (AfDB.1: 1). The

Lagos Plan made agriculture as a priority sector, with the goal of increasing food production enough to

achieve food self-sufficiency (OAU 1981). The Plan further encourages small farmers to achieve

higher levels of productivity, linking it to increasing farm incomes and improving food security (OAU

1981). The Plan also makes reference to ―adequate and realistic agrarian reform programmes

consistent with political and social conditions prevailing in the respective countries‖, in which

improving the organisation of agricultural production should be made a priority (OAU 1981: 13).

Furthermore, the AfDB-84 and the AfDB-00 share a vision of agricultural development that is to be

led by the private sector. The AfDB-84 describes the previous role of the government as ―pervasive‖

and ―not always positive‖ (AfDB-84: 6), and further sees governmental operations' ―traditional

inefficiency‖ as a reason to ―consider increasing the dosage of private enterprise in the productive

mix‖ (AfDB.1: 27). Also the AfDB-84 names the production of agricultural inputs and implements,

along with the processing of agricultural products, as ―specific priority industries‖ (AfDB.84: 41). The

pivotal role for the private sector in the agro-industrial development is clearly stated in the AfDB-00

lending principles:

―A well-developed private sector holds the key to future agricultural and overall economic growth in

Africa. Consequently, promoting agri-business and assisting RMCs3 to strengthen linkages between

farmers and agro-industry in order to improve farmers' access to markets is critical for generating and

sustaining economic growth. Bank lending should, therefore, enhance and reinforce private sector

contribution to agricultural development by increasing the ability of entrepreneurs to invest, produce,

price, market, and export their products in a competitive environment‖ (AfDB.2: 28)

The AfDB-00 goes on to state that the key areas of the AfDB's core assistance programmes include the

expansion of private sector agribusiness and, notably, ―more effectively linking private sector firms to

rural households through contract farming and outgrower schemes‖ (AfDB.2: 29). The role of the

smallholder in agricultural development is especially put forth by the AfDB-00. It states that African

smallholder agriculture requires ―a shift from the highly diversified, subsistence-oriented

agriculture...towards a more commercially-oriented agriculture with improved access to markets and

strong linkages with agro-industry‖ (AfDB.2: 22) and continuing by stating that ―additional funding

3 Regional Member Countries

62

will be available...to support privatization and complementary programs with rural households

participating in contract farming and private-sector, agro-industrial outgrower schemes‖ (AfDB.2: 32).

The AfDB-84, on the other hand, only echoes the conclusions of the Lagos Plan by linking

smallholder productivity increases to improved food security.

1.4.2 Applying the second framework: Potentials and risks of CF (AfDB, 1st period)

The AfDB-00 discourse relates contract farming to many of its benefits. It calls for a renewed focus on

the post-harvest end of the continuum by ―improving farmers' access to markets‖ (P.2) and also

qualifies farmers as ―the most dominant group of the private sector to be targeted‖, seeking to assist its

member states in the strengthening of linkages between farmers and the agro-industry in order to

―improve real incomes of farmers‖ (P.3) (AfDB.2: 25). The AfDB-00 furthermore judges that more

effective linkages between the private sector and small farmers through contract farming are

―necessary to minimize post-harvest losses, improve value-added to agriculture…and generate

employment‖ (P.8/P.7)(AfDB.2: 29). The AfDB-00 envisages contract farming as a means to carry out

technology transfer to farmers, and consequently ―will encourage complementary private sector

extension efforts with participants in contract farming and outgrower schemes‖ (P.1) (AfDB.2: 36).

Moreover, the AfDB-00 commits itself to supporting agribusinesses in providing credit to farmers

under contract (P.4) (AfDB.2). With regard to the consequences of changing cultivation patterns, the

AfDB-00 negates that it could aggravate food insecurity:

―In the context of liberalization of agricultural markets, competitive conditions demand that rural

households and countries focus on those commodities that they can produce most profitably...In this

new environment, the question of whether producers should concentrate on food crops or export crops

has become less relevant. Research findings have established ample empirical evidence of positive

synergies between cash crops and food crops in farming systems and farm-household food security and

investment strategies. Thus, what matters most for improved household food security is income growth,

whether the source of income growth is higher production of food crops or export crops‖ (-

R.1)(AfDB.2: 32).

Whereas the AfDB-00 discusses extensively the benefits of contract farming, none of its risks of are

mentioned.

63

Table 6b: Summary of main findings; AfDB, 1st period

Elements for

analysis

AfDB-84 AfDB-00

Smallholder -Higher productivity of small farmers linked to

increasing incomes and improving food security

-Increases funding for contract farming schemes

-The Bank recognizes farmers as the most dominant

group of the private sector to be targeted

Agribusiness -Increased funding for agribusiness.

-Agricultural processing as specific priority

industry

-Advocates for strong linkages between farmers and

the agro-industry

-Private sector holding the key to agricultural and economic growth

State -Previous pervasive role of government not always positive

-Governmental operations traditionally

inefficient, which is a reason to consider

increasing the role of the private sector

NR

P.1 + P.1.1 NR -Encourages private sector extension efforts in CF

P.2 NR

-Focus to be put on the post-harvest end of the production continuum by improving farmers' access

to markets

P.3

NR

-Strengthening farmers' linkages with the agro-

industry through contract farming and outgrower schemes in order to increase farmers' incomes

P.4 NR -Agribusiness-supported credit schemes are financed

by AfDB loans

P.5 NR NR

P.6 NR NR

P.7 NR -CF necessary for the generation of employment

P.8

NR

-CF necessary for minimizing post-harvest losses and

improve value-added to agriculture

P.9 NR NR

P.10 NR NR

R.1 NR NR

-R.1

NR

-Research findings have established ample empirical

evidence of positive synergies between cash crops

and food crops in farming systems and farm household food security and investment strategies.

-What matters most for improved household food

security is income growth, whether the source of

income growth is higher production of food crops or export crops.

R.2 NR NR

R.3 NR NR

R.4 NR NR

R.5 NR NR

R.6 NR NR

R.7 NR NR

64

R.8 NR NR

R.9 NR NR

1.4.3 Analysis of findings (AfDB, 1st period)

The AfDB's narrative prescribes policies that reflect the so-called 'Washington consensus', with its

increased emphasis on private actors to bring about economic growth through the development of a

lucrative and cross-national agro-industrial sector. By making processing a priority, while linking

smallholder productivity increases to improved food security, the AfDB-84 leaves a large policy space

for TNC's to engage in smallholder-inclusive business models in which farmers would supply the

produce to the agribusiness for processing. The AfDB‘s view on smallholder linkages with the agro-

industry becomes explicit in the AfDB-00. The transfer of technologies in contract farming is only

envisaged to concern higher-value crops, however, the risks that changes in cultivation patterns may

have on local food security are omitted from, and even denied by, the AfDB-00 narrative. The AfDB's

narrative on the world food crisis is thereby in line with mainstream economics view, which sees food

security as essentially a result of income poverty, and not of availability or access. By linking

increased income to greater food security, the AfDB-00's narrative establishes a systematic

relationship between discursive components (Thompson 2004). Put more clearly, the discursive

components of 'income' and 'food security' are systematically linked to each other in the AfDB's

discourse, the former giving rise to the latter, thus producing to a narrative that omits power relations

as a cause of food insecurity.

By putting forth the numerous benefits of contract farming, such as market access, income increases,

and access to credit, and by leaving out all risks, contract farming is advocated as having a significant

role in the industrialization of agriculture and the organization of production into value chains. In

addition, when the AfDB-00 sees that contract farming has become a necessity in order to add value to

agriculture and reduce post-harvest losses, it ignores the tendency of value to be captured at later

stages of the chain and to the detriment of the participating smallholder. The AfDB-00 discourse

thereby advocates a scenery where smallholders are incorporated into value-chain production in which

the post-harvest, hence the lucrative phases, are controlled by the agro-industry. In sum, the AfDB's

narrative effectively calls upon a transformation of African agriculture into intensified,

commercialized production that is led by the agro-industry. Organization of smallholders into value-

chain production through contract farming, under the auspices of a dominant agro-industry, is

promoted without consideration for power imbalances, whether they are manifested in gender-, food-,

65

debt- or production relations.

1.5 IFAD

The Rural Poverty report 2001: the challenge on ending rural poverty (RP-01) (IFAD.1) is the first

flagship publication of the IFAD since it became an autonomous knowledge-producing organization,

and therefore the only report from the first period that I will scrutinize. The RP-01 analyses the

reasons behind the incidence of poverty in rural areas and proposes policies to alleviate rural poverty.

Table 7a: IFAD's reports under analysis, 1st period 1980-2006


IFAD.1 2001 Rural Poverty Report 2001: the challenge of ending rural poverty

(RP-01)

1.5.1 Applying the first framework: underlying approaches (IFAD, 1st period)

The RP-01 views agribusiness as a power actor in rural settings as the RP-01 puts forth that

―monopolization of processing, credit, marketing and technical capabilities by the large companies

makes the smallholders‘ re-entry to the market fundamentally inequitable.‖ (IFAD.1: 169). The RP-01

continues by stating that, while farmers ―can reap benefits‖ from commercial transactions, they are

―precariously placed in buyer-driven commodity chains‖ (IFAD.1: 184) and constitute ―passive,

rather than active, players in the market; that they can be exploited by those with whom they have

market relations‖ (IFAD.1: 170). The unequal power relations are further associated to contract

farming schemes with the agribusiness, which can, according to the RP-01, lead to ―a scenario of

growth of smallholder production without smallholder development‖ (IFAD.1: 169). At the same time,

the RP-01 acknowledges the 'inverse relationship' in productivity and farm-size by stating

―Smallholder farming offers important advantages. Indeed, researchers generally agree that

smallholder farms use resources, labour, land and inputs more efficiently in land- or capital-scarce,

labour-surplus economies than large-scale farms‖ (IFAD.1: 184). The RP-01 also notes that ―with the

liberalization of the markets, there is renewed recognition of the importance of farmer organization‖

66

(IFAD.1: 171) however noting that the key to their success is ―the establishment of small-scale

groupings in homogeneous structures, with a particular purpose and where a sure market outlet is

available‖ (IFAD.1: 172). The role of the state is perceived to be an active one, since ―in the absence

of intervention, it is quite possible that [private-sector led] development would be highly unbalanced

in geographical terms, inequitable in socio-economic terms, and could even further exacerbate poverty

for some rural people.‖ (IFAD.1: 162). The RP-01 furthermore argues ―all efforts to benefit the poor

through institutional reform face a serious problem. Institutions are usually created and run in the

interests of the powerful.‖, thus being critical to discourses that only rely on institutions to bring about

desirable outcomes for development (IFAD.1: 11)

1.5.2 Applying the second framework: potentials and risks of CF (IFAD, 1st period)

Contract farming appears in RP-01 as means through which small farmers access export markets

through commercial linkages with larger farms:

―As independent producers, smallholders find it particularly hard to meet supermarket requirements for

quality (and consistency of quality), reliability of supply, and health, safety and ethical assurances.

However, they are occasionally contracted to service the export food market. In Zimbabwe, they are

becoming increasingly involved in horticulture, producing for larger commercial farms engaged in

packing. Around 3000 smallholders are growing for export on a contract basis, but face high quality

requirements: much of their (sub-standard) produce is sold in the local fruit market‖ (P.2) (IFAD.1:

183-4)

Furthermore, the RP-01 discourse links contract farming to power relations. It states that ―there are

clear examples of companies acting with enlightened selfinterest, smallholder farmers have in some

cases found themselves unable to negotiate or withdraw their business‖ (R.2). Furthermore, the RP-01

states that in many schemes, smallholders have ―ultimately derived very low net returns as the large-

scale private buyers exercise economic power to take the lion‘s share of value added‖ (R.2) (IFAD.1:

169). Also the market structure is seen as a source of power asymmetries, as the RP-01 highlights that:

―Many rural markets are characterized by extreme asymmetry of relations between, on the one hand,

large numbers of small producers/consumers and, on the other, a few buyers/sellers. Such market

relations are inequitable, frequently uncompetitive, and rarely to the advantage of the small producer.‖

(R.2) (IFAD.1: 167)

Moreover, the RP-01 narrative lifts out the risk of farmer's autonomy loss when smallholders produce

67

crops for sale to agribusiness, as it states that ―many of the poor are currently passive participants,

often obliged to sell low (immediately after harvest) and buy high, with little choice of where they

conduct transactions, with whom, and at what price.‖ (IFAD.1: 161), which leads farmers to

―effectively operating as employees rather than as partners‖ to the agribusiness (R.6). The same

narrative is repeated in the context of fruit export through contracting in Chile, where the RP-01

highlights ―the asymmetric distribution of power and the over-dependence of smallholders on export

companies‖ (R.2/R.6), further elaborating that ―the large-scale export firms have established a contract

system tailored to their needs; small growers have little choice but to accept the conditions.‖ (R.2/R.6)

(IFAD.1: 184). The RP-01 also recognizes the differentiation that can emerge from interventions

aiming to give smallholders access to export markets, by observing in connection to contract farming

in horticulture in Kenya that ―supermarkets remain wary, appearing to feel that there is less risk in

sourcing from a small number of large producers‖ (R.7) (IFAD.1: 185). Moreover, the RP-01 holds

that trade liberalization has given a ―special competitive advantages to those in rural areas endowed

with better market access and contacts‖ (R.7) (IFAD.1: 162) and given rise to some situations where

―smaller farmers may be excluded from new technology altogether.‖ (R.7) (IFAD.1: 174). The RP-01

continues by stating ―meeting agri-food standards often requires substantial investments, in technology

and monitoring, often out of reach of small farmers‖ (R.7) (IFAD.1: 185). The report also recognizes a

gender-bias in contract farming operations by stating that ―as commercialization and agro-processing

expands, women tend to be linked to the markets through employment in such industries rather than

being involved in trading themselves‖ (R.3) (IFAD.1: 174). The risks of changing cultivation patterns

and food insecurity, as well as farmer indebtedness and environmental degradation, are not put forth

by the RP-01.

Despite the critical posture towards smallholder-agribusiness linkages, the RP-01 suggests that the

rural poor can benefit from globalization through contract farming:

―The evidence suggests that there are benefits associated with globalization that can be realized by the

rural poor, in a variety of different ways: as independent producers, as contracted producers or

outgrowers, or as employees working in association with large commercial agricultural or agribusiness

enterprises. In Guatemala, new export marketing channels for vegetables boosted the production of

high-value labour-intensive crops. Small farmers (average 0.7 ha) realized large income gains from

specialization, while employment in agriculture increased by 45%. In Central America, the value of

fruit, vegetables and flower exports increased by 17.2% a year in 1985-92‖ (P.3/P.7/P.9) (IFAD.1: 183)

68

Table 7b: Summary of main findings; IFAD, 1st period

Elements for

analysis

RP-01

Smallholder -Small farmers are precariously placed in buyer-driven commodity chains, being passive, rather than active, players in the

market; that they can be exploited by those with whom they have market relations.

-CF risks giving rise to a scenario with growth of smallholder production without smallholder development.

-Farmer organization has received renewed recognition for gaining bargaining power in contracts

Agribusiness -Monopolization of processing, credit, marketing and technical capabilities by the large companies

State -In the absence of intervention, it is quite possible that [private-sector led] development would be highly unbalanced in

geographical terms, inequitable in socio-economic terms, and could even further exacerbate poverty for some rural people.

-Efforts to benefit the poor through institutional reform face a serious problem. Institutions are usually created and run in the

interests of the powerful.

P.1 + P.1.1 NR

P.2 -As independent producers, smallholders find it particularly hard to meet supermarket requirements for quality (and consistency of quality), reliability of supply, and health, safety and ethical assurances. However, they are occasionally

contracted to service the export food market. In Zimbabwe, they are becoming increasingly involved in horticulture,

producing for larger commercial farms engaged in packing.

P.3 -Income gains for small farmers in CF schemes

P.4 NR

P.5 NR

P.6 -CF perceived as one way through which benefits associated with globalization could be realized for farmers

P.7 NR

P.8

NR

P.9 -The value of fruit, vegetables and flower exports increased by 17.2% a year in 1985-92 in Central America, as a result of

smallholder access to markets including through CF

P.10 NR

R.1 NR

R.2 -There are clear examples of companies acting with enlightened self-interest, smallholder farmers have in some cases found

themselves unable to negotiate or withdraw their business, large-scale private buyers exercise economic power to take the

lion‘s share of value added.

-Extreme asymmetry of relations between small producers/consumers and a few buyers/sellers.

-Such market relations are inequitable, frequently uncompetitive, and rarely to the advantage of the small producer.

-Example of CF in Chile where asymmetric distribution of power.

-Large-scale export firms have established a contract system tailored to their needs; small growers have little choice but to accept the conditions

R.3 -Women tend to be linked to the markets through employment in rather than being involved in trading themselves

R.4 NR

R.5 NR

R.6 -Smallholders effectively operating as employees rather than as partners.

-Many of the poor are currently passive participants, often obliged to sell low and buy high, with little choice of where they

conduct transactions, with whom, and at what price.

-Example CF in Chile of farmer over-dependence on export companies

R.7 -Supermarkets remain wary, appearing to feel that there is less risk in sourcing from a small number of large producers.

-Meeting agri-food standards, as required in farming under contract, often requires substantial investments, in technology and monitoring, often out of reach of small farmers

-Special competitive advantages to those in rural areas endowed with better market access and contacts

69

-Smaller farmers may be excluded from new technology altogether.

R.8 NR

R.9 NR

1.5.3 Analysis of findings (IFAD, 1st period)

The RP-01 discourse is strongly articulate on power relations in rural settings, and this posture extends

to the commercial relations between farmers and agribusiness in contract farming schemes. The RP-01

sees market concentration as an obstacle for smallholders to participate as equal partners in contract

farming schemes with the agro-industry, and relates the asymmetrical power relations to farmers'

autonomy loss and to a scenario of growth without smallholder development. The RP-01 narrative is

also framed around the existence of power relations within rural societies which stems from unequal

access to resources, and can aggravate social differentiation. Also the power imbalances in gender

relations are captured by the RP-01 discourse, when it recognizes the gender-bias in accessing

opportunities for trading produce. However, the RP-01 does not elaborate any further on the social

division of labour inside the household, and how changes in crop cultivation patterns can alter intra-

household power relations between men and women. Finally, the RP-01 is critical to the position

adopted by the post-Washington consensus, which sees the strengthening of institutions as solution to

power imbalances, by viewing that institutional change tends to be conducted for the benefit of the

powerful actors. However, and notwithstanding the lengthy discussion on the existence and

consequences of relations of power, the RP-01 narrative leaves the window open for contract farming

as being one mode through which benefits associated with globalization can be realized for farmers,

through its impact on incomes, market access and employment. Moreover, contracting is seen to

improve macro-economic indicators through its export-generating impact.

With the discourse put forth by the RP-01, the IFAD narrative from the first period under analysis is

framed around the existence of unequal power relations between the different actors involved in world

agriculture. By structuring its poverty analyses around the role of power relations as embedded in all

social relations, including the social relations of production that are mobilized in contract farming, the

IFAD distinguishes itself clearly from mainstream economic narratives that tend to naturalize the

existence of power relations. Still, even when admitting the fundamentally inequitable power relations

between smallholders and the agribusiness, the RP-01 narrative suggests a scenario where

smallholders could benefit from the new conditions of globalized production through contract farming.

How these benefits would materialize despite the asymmetries of power is, however, left unaddressed

by the RP-01.

70

2. The second period of analysis: 2007-present

2.1 World Bank

The World Bank's narrative on contract farming from the second period of analysis appear in the

World Development Report 2008: Agriculture for Development (WDR-08) (WB.5) and Rising Global

Interest in Farmland: Can it Yield Sustainable and Equitable Benefits? (WB.6), also known as the

Deininger report. The WDR-08 was published at the height of the investor rush to Sub-Saharan

African agriculture. The subsequent Deininger Report was released in a context of growing criticism

towards land grabbing, and seeks to clarify the Bank's position on private investment in developing-

country agriculture.

Table 8a: World Bank's reports under analysis; second period


WB.5

2007 World Development Report 2008: Agriculture for

Development

(WDR-08)

WB.6 2011 Rising Global Interest in Farmland: Can it Yield Sustainable

and Equitable Benefits?

(the Deininger Report)

2.1.1 Applying the first framework: underlying approaches (World Bank, 2nd

period)

The WDR-08 discourse is structured around the idea of a new context in world agriculture,

characterized by ―new markets, far-reaching technological and institutional innovations, and new roles

for the state, the private sector, and civil society‖ (WB.5: 8). In this scenario, the private sector would

take a leading role in agricultural development through their control over value-chain agriculture:

71

―The horticulture revolution, unlike the green revolution, has been driven largely by the private sector

and the market. This has implications for the organization of value chains, with specialized

agribusinesses and supermarkets increasing their share in these markets‖ (WB.5: 59)

In the context of the investor rush in land, the Deininger report states ―Increased investor interest in

agriculture provides opportunities to developing countries with large primary sectors and high levels

of rural poverty, gaps in productivity, and large amounts of land‖ (WB.6: 2). The smallholder would

also have a central role in the Bank's vision of developing-country agriculture. The WDR-08 reiterates

the need of a ―productivity revolution in smallholder farming‖ (WB.5: 1) and the Deininger report

moreover sees ―Smallholder agriculture as the main pillar of poverty-reducing agricultural growth‖

(WB.6: 43). Contract farming appears in the WDR-08 as a novel production model through which

smallholders would participate as partners of the private sector:

―The private sector can enable smallholders to participate as partners in modern procurement systems

and exports. It can setup innovative vertical coordination arrangements with farmers or producer

groups.‖ (WB.5: 134)

Contract farming is also viewed in the Deininger report as central to the Bank's agenda for agriculture,

as it states that ―Owner-operated farms, linked to processors and exporters via contracts or other forms

of productive partnerships...will continue to be a key pillar of rural development.‖ (WB.6: 31).

Notably, the WDR-08 only conceives that a part of the smallholder population would integrate

private-sector led contract farming schemes, as it states that ―Heterogeneity in the smallholder sector

implies that a group of entrepreneurial smallholders is likely to respond when markets offer new

opportunities‖ (WB.5: 92). Furthermore, the Deininger report articulates its view of the future of

developing-country agriculture as one in which peasants would become fewer and the size of their

holdings would grow:

―Investors increasingly provide capital, technology, and access to markets through contract farming to

meet demand for high value products. As countries reach the stage of declining agricultural population

due to rural-urban migration, land consolidation facilitated by efficient land markets will gradually

increase farm size‖ (WB.6: 35; 87)

The Bank views that the role of the state would be restricted to delivering public goods and

maintaining institutional preconditions to enable the private sector a maximal leeway. The WDR-08

72

elaborates on the conceived new role for the state in the following:

―The state has a role in market development—providing core public goods, improving the investment

climate for the private sector—and in better natural resources management by introducing incentives

and assigning property rights. Strengthening the capacity of the state in its new roles of coordinating

across sectors and partnering with the private sector and civil society is urgently needed for

implementing the agriculture-for-development agendas‖ (WB.5: 23)

The Deininger report furthermore holds that previous ―lack of success of a large number of

investments can partly be attributed to the fact that the institutions tasked to process these ventures

were ill-equipped and ill-prepared to deal with the sudden influx of interest.― (WB.6: 125) By

reconciling the increased investor interest in land with the need to increase smallholder productivity,

the state, donors, the private sector, and the international community would, according to the WDR-

08, be able to come together and put agriculture ―afresh at the center of the development agenda‖

(WB.5: 1). All together, this would open up a ―window of opportunity that should not be missed‖

(WB.5: 21).

2.1.2 Applying the second framework: potentials and risks of CF (World Bank, 2nd

period)

Contract farming is put forth several times as an ―institutional innovation‖ (WB.5: 8; 175; 237) by the

WDR-08. The WDR-08 views that ―Producer organizations and contract farming are essential for

these smallholders to take part in value chains and cater to supermarket demands‖ (P.2/P.8) (WB.5:

241) and moreover sees contract farming as a means to provide small farmers with technologies,

inputs and credit:

―Other supermarkets and processors enter into production contracts, which sometimes include the

supply of inputs, credit, and extension services...For many small farmers, these contracts are the only

means to acquire inputs and use support services‖ (P.1/P.4) (WB.5: 128)

Also the Deininger report states ―Investors increasingly provide capital, technology, and access to

markets through contract farming‖ (P.1/P.2) (WB.6: 87). The WDR-08 furthermore argues ―the

technical assistance to farmers also generates indirect benefits, as farmers apply the improved farm

practices for the contract crops to other crops‖ (P.9) (WB.5: 128). The Deininger report also puts forth

73

spillover effects by stating ―Private investment—largely through contract farming—can promote

diversification into high value crops, especially for export markets.‖ (P.9) (WB.6: 89).

The WDR-08 qualifies the Green Revolution as ―one of the major success stories of development‖

(WB.5: 159), and calls for ―greening the Green Revolution‖ (WB.5: 188) by stating that ―Better

technologies and better ways of managing water and modern farm inputs are now available to make

intensive farming more sustainable‖ (P.1.1) (WB.5: 199). Furthermore, the WDR-08 sees that ―Recent

studies of contract farmers show that they have significantly higher incomes than other farmers.‖ (P.3)

(WB.5: 237) and that “Institutional innovations such as contract farming can reduce the transaction

costs and risks of smallholders‖ (WB.5: 237) (P.10). Also credit access is conceived as a part of

vertical coordination schemes:

―Yet another way to increase agricultural access to capital is financial intermediation through linked

agents in value chains (input suppliers or output processors)... Those agents are often more able to cost-

effectively monitor on-farm behaviour (eliminating information asymmetries), thus reducing monitoring

costs and enabling financial institutions to accept nonstandard forms of wealth as collateral‖ (P.4)

(WB.5: 147)

Farmers who would be excluded from contract-farming schemes are conceived by the WDR-08 to

indirectly benefit through increased labour demand:

―Participating farmers use much more labour-intensive practices because of requirements for field

practices, sorting, and packing. Because they are more likely to double-crop over the year, participating

farmers hire 2.5 times more labour (typically from local asset-poor households). So even if small

farmers do not participate directly, they can benefit through farm employment‖ (P.7) (WB.5: 127)

Most prominently, the Bank‘s discourse frames contract farming as an opportunity in developing-

country agriculture. The Bank links it to ―win-win‖ scenarios as the smallholder and the agribusiness

are seen to enter a mutually advantageous partnership where risks are equally shared: ―By supplying

inputs and providing assured markets and prices, contracting firms share production and marketing

risks with farmers‖ (P.6) (WB.5: 128). The Bank elaborates further on the development opportunity

contracting would provide in the following extracts:

74

―Recent changes in the global food market, in science and technology, and in a wide range of

institutions that affect competitiveness are creating new challenges for smallholder entrepreneurs. They

are also opening new opportunities. By addressing these challenges and seizing these opportunities,

smallholders can escape poverty through the farming pathway‖ (P.6) (WB.5: 93)

―Smallholders‘ income is 2 times to 10 times what they could obtain from wage employment only. This

does not imply that there may not be opportunities for productive partnerships between investors and

smallholders...Such opportunities would not require the transfer of land but would be based on more

traditional contracting and outgrower schemes‖ (P.6) (WB.6: 35)

The Deninger report moreover puts forth contract farming as an advantageous alternative to land

acquisitions:

―Large-scale farming is only one option for farming the land...small farmers may find it more profitable

to retain their activity rather than accept a wage job. In these circumstances it may be advantageous for

both smallholders and large-scale investors to enter into partnerships rather than an agreement involving

the transfer of land‖ (P.10) (WB.6: 34)

While being very articulate on the potentials of contract farming, the Bank's discourse also

incorporates some of the risks. When recognizing that ―multinational agroenterprises increasingly

dominate the agribusiness sector along the value chain‖ (WB.5: 135) the WDR-08 sees that small

farmers ―may need to build their bargaining power through their producer organizations‖ (WB.5: 118)

in their interaction with the private sector. Meanwhile, the Deininger report discusses power

imbalances by stating that ―projects may not be socially sustainable if companies are perceived to treat

... contract farmers in ways that are illegal, inequitable, or do not conform to the original

understanding of the contract on the part of the community.‖ (R.2) (WB.6: 142). The Deininger report

furthermore highlights case studies showing that ―Where land was maintained by original owners,

issues familiar from the contract farming debate—terms of payment for produce, scope for side-

selling, terms of credit, and monopsonistic behaviour by processers with a de facto local monopoly on

buying produce—emerged in Indonesia, Liberia, Mexico, Mozambique, and Tanzania‖ (R.2) (WB.6:

70), and also discovering that in contract-farming schemes in Zambia ―Farmers find the crop is more

labour intensive than advertized...Long-term contracts lock in land use, which prevents farmers from

switching to higher value crops‖ (R.6) and that ―no farmers have yet been paid for their seeds‖ (R.2)

(WB.6: 124). Also the risk of indebtedness among farmers is raised by the WDR-08 in connection to

an outgrower scheme in Zambia, but is seen as a result of side-selling by farmers:

75

―The costs of the inputs were to be paid by farmers upon sale of their seed cotton. But the rapid entry of

other buyers created overcapacity in ginning and fierce buyer competition. The outgrower schemes

began to fail because of rampant side-selling by farmers to other traders offering high prices without

grading and defaults on input loans. As the defaults increased, the cost of credit increased, which led to

more defaults or exits from the outgrower program.‖ (R.4) (WB.5: 124).

Environmental impacts of intensive-input agriculture are not discussed by the WDR-08 in connection

to contract-farming schemes. The Deininger report, however, notes that ―Despite the potentially far-

reaching environmental and social impacts of many projects, implementation of environmental and

social impact assessments is deficient in many settings‖ (R.8) (WB.6: 57), including in some of the

studied outgrower schemes in Zambia. Meanwhile, the World Bank does not discuss contract

farming‘s potentially harmful effect on local food security. Aggravated social stratification, the loss of

cultivation methods, gender power imbalances, and socio-political externalities that can result from

contract farming are also omitted from the World Bank's discourse.

Table 8b: Summary of main findings: World Bank, 2nd

period

Elements for

analysis

WDR-08 Deninger report

Smallholder -Smallholders to participate as partners of the private

sector through CF.

-Heterogeneity in the smallholder sector implies that a

group of entrepreneurial smallholders is likely to

respond when markets offer new opportunities.

-Smallholder agriculture as the main pillar of

poverty-reducing agricultural growth.

-CF will continue to be a key pillar of rural

development.

-As countries reach the stage of declining agricultural population due to rural-urban migration,

land consolidation facilitated by efficient land

markets will gradually increase farm size.

Agribusiness -Private sector to take a leading role in the agriculture for development agenda.

-The horticulture revolution has been driven largely by

the private sector and the market. This has implications

for the organization of value chains, with specialized agribusinesses and supermarkets increasing their share

in these markets.

-The private sector can enable smallholders to

participate as partners by setting up innovative vertical coordination arrangements with farmers or producer

groups.

-Increased investor interest in agriculture provides opportunities to developing countries with large

primary sectors and high levels of rural poverty,

gaps in productivity, and large amounts of land

State -The state has a role in market development—

providing core public goods, improving the investment climate for the private sector—and in better natural

resources management by introducing incentives and

assigning property rights.

-Strengthening the capacity of the state in its new roles of coordinating across sectors and partnering with the

private sector and civil society is urgently needed for

implementing the agriculture-for-development agenda.

-Lack of success can partly be attributed to ill-

equipped and ill-prepared institutions faced with the land rush.

P.1 + P.1.1 -For many small farmers, CF the only means to acquire -Investors increasingly provide capital,

76

inputs and use support services.

-The technical assistance to farmers also generates indirect benefits, as farmers apply the improved farm

practices for the contract crops to other crops.

-The Green Revolution as ―one of the major success

stories of development‖

-Better technologies and better ways of managing water and modern farm inputs are now available to

make intensive farming more sustainable

-Greening the green revolution

technology...through contract farming to meet demand for high value products.

P.2 -Producer organizations and contract farming are

essential for these smallholders to take part in value chains

-Investors providing access to markets through CF

P.3 -Recent studies of contract farmers show that they

have significantly higher incomes than other farmers.

NR

P.4 -Another way to increase agricultural access to capital is financial intermediation through linked agents in

value chains.

-Those agents are often more able to cost-effectively

monitor on-farm behavior (eliminating information asymmetries), thus reducing monitoring costs and

enabling financial institutions to accept nonstandard

forms of wealth as collateral

NR

P.5 -Contracting firms share production and marketing risks with farmers.

NR

P.6 -Recent changes in the global food market, in science and technology, and in a wide range of institutions that

affect competitiveness are creating new challenges for

smallholder entrepreneurs. They are also opening new

opportunities. By addressing these challenges and

seizing these opportunities, smallholders can escape poverty through the farming pathway.

-Smallholders‘ income is 2 times to 10 times what they could obtain from wage employment only. This

does not imply that there may not be opportunities

for productive partnerships between investors and

smallholders (in gaining access to technology, for

example, as illustrated by the poor performance of some smallholders without such access). Such

opportunities would not require the transfer of land

but would be based on more traditional contracting and outgrower schemes.

P.7 -CF can also provide opportunities for landless people and women by increasing labor demand. Because they

are more likely to double-crop over the year,

participating farmers hire 2.5 times more labor. So even if small farmers do not participate directly, they

can benefit through farm employment

NR

P.8 -Producer organizations and contract farming are

essential for these smallholders to take part in value chains and cater to supermarket demands

NR

P.9 -The technical assistance to farmers also generates

indirect benefits, as farmers apply the improved farm

practices for the contract crops to other crops

-Private investment—largely through contract

farming—can promote diversification into high

value crops, especially for export markets.

P.10 -Institutional innovations such as contract farming can reduce the transaction costs and risks of smallholders

-Large-scale farming is only one option for farming the land...small farmers may find it more profitable

to retain their activity rather than accept a wage job.

In these circumstances it may be advantageous for both smallholders and large-scale investors to enter

into partnerships rather than an agreement involving

the transfer of land

R.1 NR NR

77

R.2 -Multinational agroenterprises increasingly dominate the agribusiness sector along the value chain.

-Smallholders may need to build their bargaining

power through their producer organizations

-Where land was maintained by original owners, issues familiar from the contract farming debate—

terms of payment for produce, scope for side-

selling, terms of credit, and monopsonistic behavior by processers with a de facto local monopoly on

buying produce—emerged in Indonesia, Liberia,

Mexico, Mozambique, and Tanzania.

-No farmers have yet been paid for their seeds (case studies on CF)

-Farmers find the crop is more labor intensive than

advertized.

R.3 NR NR

R.4 -The outgrower schemes began to fail because of rampant side-selling by farmers to other traders

offering high prices without grading and defaults on

input loans. As the defaults increased, the cost of credit

increased, which led to more defaults or exits from the

outgrower program.

NR

R.5 NR NR

R.6 NR -Long-term contracts lock in land use, which

prevents farmers from switching to higher value crops

R.7 NR NR

R.8 NR -Outgrower schemes not subject to environmental

impact assessment (case study Zambia)

R.9 NR NR

2.1.3 Analysis of findings (World Bank, 2nd

period)

The Bank's narrative in the second period inscribes to the so-called 'post-Washington consensus' with

its emblematic focus on the private sector-led development coupled with civil society participation for

the purpose of satisfying demands for democracy. Agribusiness is conceived to take the leading role in

the process of transformation of developing-country agriculture, and the establishment of producer

organizations should satisfy equity concerns resulting from uneven market power. The role of the state

would, according to the World Bank, be reduced to becoming a partner in this process, and establish

preconditions for a lucrative private-sector led agricultural development. The smallholders would,

however, also have their part to play in the Bank's agenda for the so-called 'New Agriculture'. For the

entrepreneurial smallholder this would mean integrating into agribusiness-led business models, while

the excluded peasants would either enter wage employment in farms or migrate to the non-farm sector.

Through this vision, the decreasing number of small farmers would translate into increasing land

holdings, thus giving rise to an emerging class of middle-sized farmers and a declining peasantry.

The mobilization of a discourse on the New Agriculture effectively gives the Bank an occasion to

construct a narrative where the novel context would bring with it challenges, but also a 'window of

78

opportunity' to promote perceived innovative models for agricultural development and poverty

reduction in developing countries. Contract farming emerges prominently as one of these models.

Both reports see contract farming as a means to provide smallholders with technologies to intensify

production, in order to fulfil quality requirements and cater to affluent consumers through export

markets. The WDR-08 moreover imagines a spillover effect to non-contractual crops, without

questioning the applicability of the given technology to the other crops. The Bank conceives that the

technology transfer resulting from contract farming would lead to a new 'greener' Green Revolution in

Sub-Saharan Africa: one where the private sector would lead the process of an more sustainable

intensification of agriculture, yet by still using inputs intensively. In this way, the Bank continues to

conceive the trajectory of agricultural change as one of technologically-driven intensification that

could even amount to an industrialization of agriculture. Market access and income increases are also

linked to contract farming in the Bank's reports, as well as spillover-effects in employment and

exports. Reduced risks and transaction costs for the small farmer are put forth as merits of contracting,

while ignoring the risks and costs that capture into value chains imply to farmers. In addition, access

to credit in connection to contract farming schemes is applauded, while corresponding risk of

indebtedness is argued to be a result of farmer side-selling. By taking this stance, the Bank sees that

the success or failure of contract-farming ventures hinges on farmers' individual responsibility, instead

of the dynamics of power that creditor-debtor relationships can unleash. Moreover, by describing

small farmers as heterogeneous in order to justify targeting better-endowed smallholders, the WDR-08

sugarcoats the existence hierarchies and power relations within the group of smallholders. Farmers

that are excluded from contract farming are imagined by to profit from rural wage employment,

without regard to the risks for increased dualism it could create in the labour market, and its

potentially aggravating effect on rural social stratification. The enthusiasm for contract farming is

communicated through the Bank's vision of a 'win-win' scenario where the benefits with agribusiness

would be equally shared. By claiming that ―productive partnerships‖ between agribusiness and the

peasantry is still at an early stage of realization, and consequently these experiences could ―provide

valuable lessons‖ and ―identify good practices‖ (WB.6: 26) for the realization of the ―potential

benefits‖ that are ―inherent‖ to investment in land (WB: 91), the Bank's narrative bear witness of a

certain path dependency to a narrative where capitalism and equality would not be opposing forces.

Most of the risks of contract farming are absent from the Bank's narrative. The Deininger report

admits that unequal power relations can affect contractual clauses and practices, and farmer autonomy

over land use. Meanwhile, the WDR-08 settles for stating that smallholders would become equal

partners to the private sector by empowering their producer organizations. By sole reliance on civil

79

society actors to ―overcome these initial hurdles and become professional entrepreneurs‖ (WB.5: 128),

the issue of unequal power between the investor and the farmer is effectively swept under the rug.

Furthermore, by discussing the risks of contracting only in connection to inequitable contractual

clauses or a lacking framework for regulation and enforcement, the Bank views that the unequal power

relationship can ultimately be neutralized by technical solutions, such as changing clauses of the

contract. The broader implications of uneven power relations, and the risks it bears for food insecurity,

loss of cultivation methods, and gender relations are omitted from the Bank's narrative. Likewise,

considerations for the risks of further social differentiation and socio-political externalities on the host-

country level are absent from the Bank's discourse. In sum, the World Bank's narrative conceives

contract farming as vehicular to push forward its agenda on the industrialization of agriculture through

private-sector control. The WDR-08 visions this to happen through the so-called 'agriculture for

development' -agenda, which would entail the rolling back of the state and the embracing of increased

private-sector investment in developing-country agriculture. The Bank's narrative has through the

Deininger report, though, been reframed to turn the 'windows of opportunity' of foreign land

investment into 'potentially mutually advantageous partnerships' between farmers and investors.

Throughout the Bank's narrative on private-sector involvement through contract farming, whether

presented as an unambiguous opportunity or as a potential partnership, the implications of the

inherently unequal power relationships is either superficially addressed, or manifestly absent.

2.2 FAO

Contract farming appears in five SOFA reports from the second period of analysis, in addition to a set

of (voluntary) guidelines for best practices in contract design and enforcement. In the following, we

will analyse the State of Food and Agriculture 2008: biofuels: prospects, risks and opportunities

(SOFA-08) (FAO.4), the State of Food and Agriculture 2009: livestock in the balance (SOFA-09)

(FAO.5), the State of Food and Agriculture 2010-11: women in agriculture (SOFA-10-11) (FAO.6),

the State of Food and Agriculture 2012: Investing in Agriculture for a Better Future (SOFA-12)

(FAO.7), the State of Food and Agriculture 2013: Food systems for a better nutrition (SOFA-13)

(FAO.9) and the Guiding principles for responsible contract farming operations from 2012 (FAO-GP)

(FAO.8).

80

Table 9a: FAO's reports under analysis; second period


FAO.4

2008 State of Food and Agriculture 2008: biofuels: prospects, risks

and opportunities

(SOFA-08)

FAO.5 2009 State of Food and Agriculture 2009: livestock in the balance

(SOFA-09)

FAO.6 2010 State of Food and Agriculture 2010-11: women in agriculture

(SOFA-10-11)

FAO.7 2012 State of Food and Agriculture 2012: Investing in Agriculture

for a Better Future

(SOFA-12)

FAO.8 2012 Guiding principles for responsible contract farming operations

(FAO-GP)

FAO.9 2013 State of Food and Agriculture 2013: Food systems for a better nutrition

(SOFA-13)

81

2.2.1 Applying the first framework: underlying approaches (FAO, 2nd

period)

The SOFA-08 and -09 both evoke the inverse relationship in productivity and farm size when stating

that smallholders ―can avoid problems related to supervision and monitoring and can be more flexible‖

(FAO.4: 82), and because smallholder farming enjoys ―cost advantages of providing family labour at

well below the minimum wage‖ (FAO.5: 27). The SOFA-12 puts forth the role of farmers as ―by far

the largest source of investment in agriculture‖ and sees that they ―must therefore be central to any

strategy for increasing investment in the sector‖ (FAO.7: 95). The dominant role of agribusiness is

acknowledged by the SOFA-13 as it describes how the market concentration in the food sector ―has

raised concerns about the power of food companies‖ (FAO.9: 37). The SOFA-12 is concerned of the

impacts of large-scale investments in land on the local population and reiterates the need to promote

inclusive business models:

―Large-scale investment in agriculture may present opportunities but land acquisition also poses special

challenges in terms of potential impacts on smallholders and the rural poor. It is important to improve

the governance of large-scale investment and promote inclusive business models that allow local

populations to benefit.‖ (FAO.7: 73)

The state is conceived to have an active role in facilitating investment since ‖a favourable investment

climate is indispensable for investment in agriculture, but it is not sufficient…to ensure that large-

scale investment meets socially desirable goals.‖ (FAO.7: 95). The SOFA-09 views that government

assistance in agriculture is needed because ‖the forces of economic change…mean that some

smallholders will need assistance to make the transition out of the sector.‖ (FAO.5: 7)

2.2.2 Applying the second framework: potentials and risks of CF (FAO, 2nd

period)

The FAO‘s reports from the second period put forth many of the potentials of contract farming.

Technology transfer is seen by the SOFA-reports as a characteristic of successful contract-farming

schemes. The SOFA-12 states ―Some positive examples of effects of FDI in agriculture were also

found of technology adoption and skills acquisition – in the case of outgrower schemes‖ (P.1) (FAO.7:

68). Furthermore, the SOFA-13 notes, ‖these contracts may include provision of inputs, credit and

technical and marketing assistance.‖ (P.1) (FAO.9: 43). The Green Revolution technologies adopted in

India are moreover described by the SOFA-09 as a ‖successful example‖ of technology transfer in

82

contract farming (P.1.1) (FAO. 5: 49). Market access is furthermore seen as a benefit of contracting.

The SOFA-09 sees that contracting has the ‖ potential to incorporate smallholders in high-value

supply chains from which they would otherwise be excluded.‖ (P.2) (FAO.5: 49) and the FAO-GP

states ‖Contract farming continues to gain importance…as a tool to promote the access of smallholder

farmers to markets.‖ (P.2) (FAO.8: 1). Income increases are also seen as a benefit as the SOFA-12

puts forth the ‖higher incomes for outgrowers selling products and services to the nucleus farm‖ (P.3)

(FAO.7: 68). Also the SOFA-13 sees that contract farming ―can enable farmers to increase their

productivity and profits through better access to inputs and timely receipt of payments.‖ (P.3) (FAO.9:

43), and the FAO-GP makes income increases a purpose of contract farming: ―The aim is that the

agreement should promote agricultural production and guarantee a secure market for the commodity,

thereby allowing farmers to earn increased revenue.‖ (P.2/P.3) (FAO.8: 1). The SOFA-12 elaborates

on the benefits of credit access by noting that through value-chain financing, ―many smallholders are

able to secure funds that would otherwise not be available through conventional financing institutions,

and agribusinesses are able to secure products and client loyalty that would likewise be difficult

without the financing.‖ (P.4) (FAO.7: 61). The FAO links contract farming further to ‖meeting the

increasingly stringent demands of urban consumers‖ (P.8) (FAO.6: 13) and to ‖improved acceptability

to stakeholders and overcome land constraints‖ (P.10) (FAO.4: 83). The potential of contract farming

is put forth by the FAO by stating that ―More inclusive partnership models exist that are more likely to

achieve desirable developmental objectives by successfully combining assets of local farmers and

investing companies‖ (P.6) (FAO.7: 69) and ―the limited evidence on large-scale corporate

investment…indicates that alternatives to land acquisitions, in which farmers keep or strengthen their

control over land and which may create linkages to the surrounding economy, are more likely to

provide benefits for all stakeholders.‖ (P.6) (FAO.7: 71).

The FAO also discusses the risks of contract farming. Regarding food insecurity, it states that

―evidence is mixed regarding whether contract farming increases overall household incomes or creates

conflicts between the production of cash crops and food crops‖ (R.1) (FAO.6: 13) but also that ―cash

crop production by smallholders need not come at the expense of food security. It may stimulate

private investment which ultimately also benefits food-crop production or food security in general‖ (-

R.1) (FAO.4: 80-81). The FAO-GP puts forth the risk of power imbalances in its discourse:

―If the conditions that are stipulated in a contract farming agreement are detrimental to the interests of

either partner, be it for reasons of imbalances in market power, opportunistic behaviour or other unfair

practices, the relationship between buyer and farmer will most likely deteriorate‖ (R.2) (FAO.8: 1).

83

The SOFA-10-11 and the SOFA-12 discuss the gender imbalances that can result from contract

farming:

―Evidence shows, however, that female farmers are largely excluded from modern contract-farming

arrangements because they lack secure control over land, family labour and other resources required to

guarantee delivery of a reliable flow of produce.‖ (R.3) (FAO.6: 13)

‖Contracting as outgrowers did not improve women‘s intra-household control and decision-making

powers over use of land and income from it.‖ (R.3) (FAO.7: 70).

However, the SOFA-09 argues that contract farming can promote women‘s empowerment by stating

that ―This kind of arrangement can also encourage gender equality by providing equal access to

resources, including capacity building targeted equally at women and men.‖ (-R.3) (FAO.5: 49). Only

the SOFA-08 discusses the risk of indebtedness by stating ―Default by contract farmers can be a major

problem in the operation of such schemes.‖ (R.4) (FAO.4: 83). Regarding farmer autonomy, the

SOFA-09 notes, ‖contract farming has not always been welcomed by small producers because it often

offers them reduced margins and less independence‖ (R.6) (FAO.5: 49). The risk of exclusion is also

elaborated on by the SOFA-09:

‖ Concentration in the input and processing sector combined with vertical integration leads to

increasing farm size because larger integrators prefer to deal with larger production units. In the

short term, contract farming may benefit smallholders, but over the long term, integrators prefer

to deal with a few large producers rather than a large number of small producers.‖ (R.7) (FAO.5:

27).

Environmental risks and socio-political externalities are not expressed by the FAO:s narrative.

Table 9b: Summary of main findings: FAO, 2nd

period, table 1(2)

Elements for

analysis

SOFA-08 SOFA-09 SOFA-10-11

Smallholder -Smallholders can avoid problems

related to supervision and

monitoring and can be more flexible.

-Cost advantages of providing

family labour at well below the

minimum wage.

NR

Agribusiness NR NR NR

State NR -The forces of economic change

mean that some smallholders will

need assistance to make the transition out of the sector.

NR

84

P.1 + P.1.1 NR -CF successful in India, where it was coupled with Green

Revolution strategies and

technology transfer

NR

P.2 NR -CF also has potential to incorporate smallholders in high-

value supply chains from which

they would otherwise be excluded.

NR

P.3 -Increasing incomes through CF NR NR

P.4 -Credit availability through CF NR NR

P.5 NR NR NR

P.6 NR NR NR

P.7 NR NR NR

P.8 NR NR -CF can help small farmers to

overcome the technical barriers and transaction costs involved in

meeting the increasingly

stringent demands of urban consumers in domestic and

international markets

P.9 NR NR NR

P.10 -From the contractors‘ perspective, CF can improve acceptability to

stakeholders and overcome land

constraints.

NR NR

R.1 NR NR -Evidence is mixed regarding

whether contract farming

increases overall household incomes or creates conflicts

between the production of cash

crops and food crops.

-R.1 -Cash crop production by smallholders need not come at the

expense of food security. It may

stimulate private investment which ultimately also benefits food-crop

production

NR NR

R.2 NR NR NR

R.3 NR NR -Evidence shows, however, that

female farmers are largely excluded from modern contract-

farming arrangements because

they lack secure control over land, family labour and other

resources required to guarantee

delivery of a reliable flow of produce.

-R.3 NR -This kind of arrangement can

also encourage gender equality

by providing equal access to resources, including capacity

building targeted equally at

women and men.

NR

R.4 -Default can be a major problem in CF

NR NR

R.5 NR NR NR

85

R.6 NR -Contract farming has not always been welcomed by small

producers because it often offers

them reduced margins and less independence

NR

R.7 NR -Concentration in the input and

processing sector combined with

vertical integration leads to increasing farm size because

larger integrators prefer to deal

with larger production units. In the short term, contract farming

may benefit smallholders, but

over the long term, integrators prefer to deal with a few large

producers rather than a large

number of small producers.

NR

R.8 NR NR NR

R.9 NR NR NR

Table 9c: Summary of main findings: FAO, 2nd

period, table 2(2)

Elements for

analysis

SOFA-12 SOFA-13 FAO-GP

Smallholder -Farmers are by far the largest source of investment in agriculture. Farmers must

therefore be central to any strategy for

increasing investment in the sector.

NR NR

Agribusiness -Large-scale investment in agriculture may present opportunities but land

acquisition also poses special challenges

in terms of potential impacts on smallholders and the rural poor. It is

important to improve the governance of

large-scale investment and promote inclusive business models that allow

local populations to benefit.

-The market concentration has raised concerns about the

power of food companies.

NR

State -The indispensable role of government

in ensuring an appropriate enabling environment for socially desirable

private investment and in investing in

essential public goods.

NR NR

P.1 + P.1.1 -Some positive examples of effects of

FDI in agriculture were also found of technology adoption and skills

acquisition through CF

-These contracts may include

provision of inputs, credit and technical and marketing

assistance

NR

P.2 NR NR -Contract farming

continues to gain importance as a tool to

promote the access of

smallholder farmers to markets.

P.3 Higher incomes for outgrowers selling

products and services to the nucleus

farm

-CF can enable farmers to

increase their productivity and

profits through better access to inputs and timely receipt of

payments.

-The aim is that the

agreement should promote

agricultural production and guarantee a secure market

for the commodity, thereby

allowing farmers to earn increased revenue.

86

P.4 -Through value-chain financing, many smallholders are able to secure funds

that would otherwise not be available

through conventional financing institutions, and agribusinesses are able

to secure products and client loyalty that

would likewise be difficult without the financing.

NR

NR

P.5 NR NR NR

P.6 -More inclusive partnership models

exist that are more likely to achieve

desirable developmental objectives by successfully combining assets of local

farmers and investing companies.

-The limited evidence on large-scale corporate investment indicates that

alternatives to land acquisitions, in

which farmers keep or strengthen their control over land and which may create

linkages to the surrounding economy,

are more likely to provide benefits for all stakeholders.

NR

NR

P.7 NR NR NR

P.8 NR NR NR

P.9 NR NR NR

P.10 NR NR NR

R.1 NR NR NR

R.2 NR NR -If the conditions that are

stipulated in a contract

farming agreement are detrimental to the interests

of either partner, be it for

reasons of imbalances in market power,

opportunistic behaviour or

other unfair practices, the relationship between buyer

and farmer will most likely

deteriorate.

R.3 -Contracting as outgrowers did not improve women‘s intra-household

control and decision-making powers

over use of land and income from it.

NR NR

R.4 NR NR NR

R.5 NR NR NR

R.6 NR NR NR

R.7 NR NR NR

R.8 NR NR NR

R.9 NR NR NR

87

2.2.3 Analysis of findings (FAO, 2nd

period)

The FAO‘s narrative in the 2nd

period of analysis puts forth the potential of smallholders, both by

invoking the inverse relationship in productivity and farm size, and by calling for investment strategies

that target smallholders. The agribusiness is seen as a powerful actor, and the ―challenges‖ that land

acquisition poses for the smallholder is mobilized as a reason to promote 'inclusive business models'

between farmers and investors. At the same time, the FAO‘s narrative grants a central role for the state

in ensuring that these business models bring about benefits for the participants. The role of the state is

seen as especially important in assisting smallholders that need to abandon the farming sector due to

―forces of economic change‖ (FAO.5). Whether or not these forces stem from agribusiness

involvement in smallholder farming is not explicited in the FAO‘s discourse. However, the FAO's

affirmation implies that it conceives the trajectory of agrarian change to result in the gradual growth of

farm size, and the disappearance of the small peasantry. This vision is also reiterated in the discourse

on contract farming, which would, according to FAO, result on the preference of buyers to deal with

larger farms in the long term.

The FAO‘s narrative on contract farming from the second period of analysis emerges as somewhat

inconclusive on discussing its potentials and risks. The potentials of technology transfer, market

access, increased incomes and access to credit are prominent in the FAO‘s discourse, and achieving

quality requirements of supply chains is also mentioned as a benefit of contracting. While not resorting

to 'win-win' narratives, the FAO is inclined to see contract farming as having the potential of bringing

mutual benefits to all parties involved. Notably, contract farming is singled out as a more acceptable

alternative to large-scale land acquisitions and as a tool for the investor to overcome land constraints.

These affirmations highlight a central motivation for engaging in contract farming: the acceptability

for stakeholders and the overcoming of land constraints implies a preference for capturing farmers into

contractual relationships instead of directly acquiring their land. The FAO‘s narrative is inconclusive

on the effect of changing cultivation patterns on food security, and the discussion on impacts on food

production is strikingly absent in the SOFA-13, though it is thematically dedicated to food systems.

The discussion revolves around the food security of families that are involved in contract production,

without regard to its consequences on non-participating households. Ambivalence is also a character

of the FAO‘s narrative on the gender implications of contract farming. While the SOFA-09 views that

contract farming encourages gender equality, the subsequent SOFA-10-11 puts forth evidence to prove

that women are excluded from contract-farming ventures. Power relations in contract farming are

framed in the FAO‘s narrative through the risks of exclusion based on farm size, the possibility of

88

default, and the loss of independence. Remarkably, the FAO does not critically discuss the power of

agribusiness and its consequences on smallholder-inclusive business models. Only the FAO-GP notes

that contractual agreements that do not protect smallholders from the exercise of power by the buyer

are likely to exacerbate. The FAO‘s narrative thereby departs from the idea that contracting can be

made mutually beneficial by improving contract design and enforcement. By taking a technocratic

approach to contracting, and focusing on contractual design and practices, the FAO's narrative reduces

contract farming to a technical tool for production, instead of considering it as a complex social

relationship of unequal power.

2.3 UNCTAD

The World Investment Report 2009: Transnational Corporations, Agricultural Production and

Development (WIR-09) (UNCTAD.2) and World Investment Report 2011: Non-Equity Modes of

International Production (WIR-11) (UNCTAD.3) put forth UNCTAD's narrative on contract farming

from the second period of analysis.

Table 10a: UNCTAD's reports under analysis; second period


UNCTAD.2 2009 World Investment Report: Transnational Corporations,

Agricultural Production and Development

(WIR-09)

UNCTAD.3 2011 World Investment Report: Non-Equity Modes of International

Production

(WIR-11)

2.3.1 Applying the first framework: underlying approaches (UNCTAD, 2nd period)

The UNCTAD‘s discourse acknowledges an important indirect role that TNC's play in developing

89

countries through contract farming by stating:

―contract farming is a key channel for linkages between TNCs located at various stages of the

agribusiness value chain – both upstream and downstream of agriculture – and in agriculture itself.

Hence, the impact of TNCs on agriculture should be evaluated by considering the full extent of their

participation, whether direct or indirect‖ (UNCTAD.2: 130)

It also sees potential beneficial effects of FDI, given that the investment is socially and

environmentally responsible:

―Private investment can contribute to long-term solutions to food security and development, provided

that such investment is socially responsible and environmentally sustainable…The seven principles4,

once implemented, could contribute to enhancing the positive and reducing the potential negative

effects of foreign investment in agricultural production.‖ (UNCTAD.3: 103)

The state is conceived as an active player in regulating agribusiness activities, and the UNCTAD

specifically mentions its role in promoting contract farming instead of other forms of TNC

involvement:

―Governments should formulate an integrated strategic policy and regulatory framework for TNC

activities in agricultural production…Governments could also promote contract farming between TNCs

and local farmers in the direction of enhancing farmers‘ predictable income, productive capacities and

benefits from global value chains‖ (UNCTAD.2: overview, XViii)

The WIR-11 continues on the topic by arguing ―If contract farming was given more pride of place in

government policies, direct investment in large-scale land acquisitions by TNCs would be less of an

issue.‖ (UNCTAD.3: overview, XXiii). The role of the smallholder in agricultural development is not

discussed by the UNCTAD.

4 Principles for Responsible Agricultural Investment that Respect Rights, Livelihoods and Resources (UNCTAD, FAO, IFAD and World

Bank, 2010)

90

2.3.2 Applying the second framework: potentials and risks of CF (UNCTAD, 2nd period)

The UNCTAD discusses many of the perceived benefits of contract farming. It links contracting to

technology transfer by highlighting that ‖The provision of technologies, for instance in the form of

new seeds and pesticides, can support local farmers in contract farming‖ (P.1) (UNCTAD.3: 168).

Moreover, the WIR-09 links TNC-provided extension to the take-up of the Green Revolution:

‖TNCs vary along the value chain, but overall they have the technological and other assets

available to support developing countries‘ strategies towards intensifying take-up of the green

revolution. The Report also demonstrates examples of this occurring through partnerships and

alliances with farmers…‖ (P.1.1) (UNCTAD.2: overview, XXXii).

Meanwhile, the WIR-09 does not see that technology transfer automatically produces spillover effects:

‖Farmers can apply some of their acquired skills to the production of other cash and subsistence crops.

However, this is not always possible, as some of the skills and techniques learned in contract farming

schemes are highly crop-specific and are not transferable to other products‖ (-P.9) (UNCTAD.2: 144).

Contract farming is further seen as vehicular for access to markets, as well as for increasing farmer‘s

incomes and productivity. The WIR-09 notes that ―contract farming can provide…access to markets‖

(UNCTAD.1: overview, XXVi) and that ‖Most empirical studies suggest that contract farming

schemes have raised the income of participating farmers‖ (P.3) (UNCTAD.2: 137), furthermore

highlighting that ‖Through their involvement in contract farming…TNCs in food processing and

trading can induce productivity and yield increases. Sometimes these effects can be significant‖ (P.3)

(UNCTAD.2: 140). Credit access is another of the perceived benefits, as the WIR-09 sees that contract

farming ‖can have a very important impact on agriculture in developing countries, in particular by

helping to ease financial and other investment constraints on local farmers, who might otherwise lack

access to financial services‖ (P.4) (UNCTAD.2: 136). The UNCTAD also states ‖contract farming is

linked to a very large number of jobs for smallholder farmers; its employment and poverty reduction

effects are generally viewed positively‖ (P.7) (UNCTAD.3: 149). Characteristically for UNCTAD‘s

focus on macroeconomic trends, the WIR-11 puts forth the export-generating effects of contracting by

seeing that these business models ‖by their nature create substantial export and foreign exchange

earnings‖ (P.9) (UNCTAD.3: 155), although it also notes that ‖value capture in the economy can be

small, depending crucially on the nature of…integration into lead TNCs‘ GVC5 and the balance of

power between them‖ (-P.9) (UNCTAD.3: 154). The WIR-09, however, relates contract farming to

5 Global Value Chain

91

value-retention in the host economy: ‖In order for TNC participation in agriculture to be a win-win

situation, the creation and retention of value added in the host country is important. This can be

achieved through contract farming…‖ (P.5) (UNCTAD.2: 175). Finally, the UNCTAD reiterates that

‖contract farming may in many cases be a promising alternative‖ (P.6) (UNCTAD.2: 191) and further

that ‖evidence from many developing countries shows that through contract farming host countries

can receive most of the benefits related to TNC participation, while avoiding a number of negative

consequences.‖ (P.6) (UNCTAD.2: 163). It is also seen as a favourable alternative to land

acquisitions:

―Specific laws on contract farming have been adopted in a few countries…With such provisions in

place, NEMs may be more appropriate than FDI in sensitive situations, since contract farming is more

likely to address responsible investment issues…than large-scale land acquisition‖ (P.10) (UNCTAD.3:

172)

‖Home countries should also consider whether overseas food production in the form of contract farming

could be a viable alternative to FDI.‖ (P.10) (UNCTAD.3: 188)

The UNCTAD includes many of the risks of contract farming in its discourse. The WIR-09 elaborates

on the risk of food insecurity and power imbalances in contracting:

‖much of [TNC-induced] production may be for exports...moreover, a large share tends to be in high-

value- added cash crops which are normally not the staple foods of the host countries concerned. In

addition, there is the danger that TNC involvement may adversely affect smallholders or other farmers,

either through direct competition in product markets…or through alternative uses for land, water and

other resources.‖ (R.1) (UNCTAD.2: 160).

―Contract farming arrangements offer opportunities for the abuse of asymmetric power relations. This

arises from the way TNCs – particularly trading firms –engage with smallholders, which gives the

former more influence in determining the production method and other quality determining factors. The

unequal distribution of market power in such arrangements can produce some very undesirable

outcomes. It has been argued that the bargaining power between TNCs and contract farmers is so

unevenly distributed that abuses occur regularly.‖ (R.2) (UNCTAD.2: 152)

―Ultimately, it is the TNC which orchestrates the value chain. Thus, the most important source of TNC

bargaining power, outweighing any countervailing forces that a host-country NEM may put forward, is

its role as the coordinator of the GVC itself.‖ (R.2) (UNCTAD.3: 129)

The WIR-09 notes that a risk of TNC-involvement in developing-country agriculture include ―the

92

possible disruption of traditional farming‖ (UNCTAD.2: 94) and furthermore that ―Farmers who

succeed as suppliers are often those who are willing to concentrate on the production of a smaller

variety of crops…hence improving farmers‘ links to markets and income prospects, but at the cost of

crop variety.‖ (R.5) (UNCTAD.2: 147). Farmers‘ autonomy loss and social stratification are also

issues evoked by the WIR-09:

―In some other cases, seeds provided by TNCs cannot be replanted, and farmers cannot set aside seeds

for planting in the next season, which means they have to buy them from suppliers. This has led to

concerns about the dependence of local farmers on specific inputs provided by TNCs.‖ (R.6)

(UNCTAD.2: 140)

―although farms might enter into a contractual relationship with the companies voluntarily, over time it

becomes difficult for them to exit the relationship, given the considerable fixed investments they will

have made. Thus these farms may become dependent on agribusiness firms, which weakens their

bargaining power.‖ (R.6) (UNCTAD.2: 180)

―The procurement practices of agribusiness TNCs, based on enforcing standards and establishing a

system of preferred suppliers, are likely to induce structural changes in agriculture in favour of larger,

more capital- and knowledge-intensive farming operations, to the detriment of small-scale farmers.‖

(R.7) (UNCTAD.2: 147)

―Not all farmers are in a position to benefit from the increased presence of transnational supermarket

chains or food processors in their countries‘ markets…Small-scale farmers in remote areas are

particularly ill-equipped to cope with the changing nature of the value chain.‖ (R.7) (UNCTAD.2: 148)

The UNCTAD also discusses the environmental impacts of contract farming. The WIR-11 highlights

that ―The specific environmental impacts of contract farming activities depend on contingent

factors…An important factor is the technical support or encouragement provided to the NEM by the

TNC, which can be controversial‖ (R.8) (UNCTAD.3: 161) and that ―Contract farming can have

serious impacts, among others through soil erosion and biodiversity loss‖ (R.8) (UNCTAD.3: 161).

On the same topic, the WIR-09 notes:

―By influencing the scale of production and the variety and quality of agricultural products, TNCs that

supply seeds and other inputs and purchase output for processing and/or distribution can affect land use

and other input use and production patterns, and thereby various aspects of the environment‖ (R.8)

(UNCTAD.2: 157)

Finally, the UNCTAD is concerned over the socio-political externalities that can result from contract

farming:

93

―There can be extensive repercussions for the existing social and political order arising from TNC

involvement in agriculture and rural communities. This aspect is important, because economic

institutions can function only as part of an often elaborate social, political and cultural context. As such,

disruption of an existing system due to the transformation of agriculture may have unpredictable

consequences, even if it is progressive and benefits the poor in the long run.‖ (R.9) (UNCTAD.2: 158)

On the same issue, the WIR-11 notes ―in the case of NEM operations, to the extent that the TNC is not

directly involved, some of these issues are weaker in scope, but they remain in essence‖ (R.9)

(UNCTAD.3: 160). The UNCTAD does not discuss gender imbalances or indebtedness in relation to

contract farming.

Table 10b: Summary of main findings: UNCTAD, 2nd

period

Elements for

analysis

WIR-09 WIR-11

Smallholder NR NR

Agribusiness -Contract farming is a key channel for linkages between TNCs located at various stages of the

agribusiness value chain – both upstream and

downstream of agriculture – and in agriculture itself. Hence, the impact of TNCs on agriculture should be

evaluated by considering the full extent of their

participation, whether direct or indirect

-Private investment can contribute to long-term solutions to food security and development,

provided that such investment is socially

responsible and environmentally sustainable…The seven principles, once implemented, could

contribute to enhancing the positive and reducing

the potential negative effects of foreign investment in agricultural production.

State -Governments should formulate an integrated

strategic policy and regulatory framework for TNC activities in agricultural production. Governments

could also promote contract farming between TNCs

and local farmers in the direction of enhancing farmers‘ predictable income, productive capacities

and benefits from global value chains.

-If contract farming was given more pride of place

in government policies, direct investment in large-scale land acquisitions by TNCs would be less of

an issue.

P.1 + P.1.1 -TNCs vary along the value chain, but overall they have the technological and other assets available to

support developing countries‘ strategies towards

intensifying take-up of the green revolution. The Report also demonstrates examples of this occurring

through partnerships and alliances with farmers…

-The provision of technologies, for instance in the form of new seeds and pesticides, can support local

farmers in contract farming

P.2 -Contract farming can provide access to markets NR

P.3 -Most empirical studies suggest that contract farming

schemes have raised the income of participating

farmers

-Through their involvement in contract farming and transfer of technology to host countries, TNCs in

food processing and trading can induce productivity

upgrading and yield increases. Sometimes these effects can be significant.

NR

94

P.4 -CF can have a very important impact on agriculture in developing countries, in particular by helping to

ease financial and other investment constraints on

local farmers, who might otherwise lack access to financial service.

NR

P.5

NR

NR

P.6 -Contract farming may in many cases be a promising

alternative.

-In order for TNC participation in agriculture to be a

win-win situation, the creation and retention of value added in the host country is important. This can be

achieved through contract farming and a number of

programmes

-Evidence from many developing countries shows that through contract farming host countries can

receive most of the benefits related to TNC

participation, while avoiding a number of negative consequences

-Specific laws on contract farming have been

adopted in a few countries…With such provisions

in place, NEMs may be more appropriate than FDI in sensitive situations, since contract farming is

more likely to address responsible investment

issues…than large-scale land acquisition

P.7

NR

-Contract farming is linked to very large numbers

of jobs for smallholder farmers; its employment

and poverty reduction implications are generally viewed positively.

P.8 NR NR

P.9

NR

-Contract farming also underline the significant export generation of efficiency-seeking NEMs.

-Modes such as...and contract farming, by their

nature create substantial exports and foreign

exchange earnings

-P.9 -Farmers can apply some of their acquired skills to the production of other cash and subsistence crops.

However, this is not always possible, as some of the

skills and techniques learned in contract farming schemes are highly crop-specific and are not

transferable to other products

-For efficiency-seeking NEMs, such as...contract farming, value capture in the host economy can be

small, depending crucially on the nature of a

NEM‘s integration into lead TNCs‘ GVC and the balance of power between the two.

P.10 - Home countries could consider whether overseas

food production in the form of contract farming may

be a viable and less controversial alternative to FDI

-Increasingly volatile commodity prices pushing

TNCs to seek stable sources of supplies and

predictability of costs and rising concerns in many countries regarding foreign ownership of

agricultural land

R.1 -Much of (TNC induced) production may be for

exports. Moreover, a large share tends to be in high-value-added cash crops, which are normally not the

staple foods of the host countries concerned. In

addition, there is the danger that TNC involvement may adversely affect smallholders or other farmers,

either through direct competition in product markets

or through alternative uses for land, water and other

resources.

NR

R.2 Contract farming arrangements offer opportunities

for the abuse of asymmetric power relations. This

arises from the way TNCs – particularly trading firms –engage with smallholders, which gives the former

more influence in determining the production method

and other quality determining factors. The unequal distribution of market power in such arrangements

can produce some very undesirable outcomes. It has

been argued that the bargaining power between TNCs and contract farmers is so unevenly distributed that

-Ultimately, it is the TNC, which orchestrates the

value chain. Thus, the most important source of

TNC bargaining power, outweighing any countervailing forces that a host-country NEM may

put forward, is its role as the coordinator of the

GVC itself.

95

abuses occur regularly.

R.3 NR NR

R.4 NR NR

R.5 -These risks include, the possible disruption of

traditional farming. -Farmers who succeed as suppliers are often those

who are willing to concentrate on the production of a smaller variety of crops…hence improving farmers‘

links to markets and income prospects, but at the cost

of crop variety.

NR

R.6 -In some other cases, seeds provided by TNCs cannot

be replanted, and farmers cannot set aside seeds for planting in the next season, which means they have to

buy them from suppliers. This has led to concerns

about the dependence of local farmers on specific

inputs provided by TNCs.

-Although farms might enter into a contractual

relationship with the companies voluntarily, over time it becomes difficult for them to exit the

relationship, given the considerable fixed investments

they will have made. Thus these farms may become dependent on agribusiness firms, which weakens

their bargaining power.

NR

R.7 -The procurement practices of agribusiness TNCs,

based on enforcing standards and establishing a system of preferred suppliers, are likely to induce

structural changes in agriculture in favour of larger,

more capital- and knowledge-intensive farming operations, to the detriment of small-scale farmers.

-Not all farmers are in a position to benefit from the

increased presence of transnational supermarket

chains or food processors in their countries‘ markets…Small-scale farmers in remote areas are

particularly ill-equipped to cope with the changing

nature of the value chain

NR

R.8 -By influencing the scale of production and the variety and quality of agricultural products, TNCs

that supply seeds and other inputs and purchase

output for processing and/or distribution can affect land use and other input use and production patterns,

and thereby various aspects of the environment

-Contract farming can have serious impacts, among others through soil erosion and biodiversity loss.

-The specific environmental impacts of contract

farming activities depend on contingent

factors…An important factor is the technical support or encouragement provided to the NEM by

the TNC, which can be controversial

R.9 -There can be extensive repercussions for the existing

social and political order arising from TNC involvement in agriculture and rural communities.

This aspect is important, because economic

institutions can function only as part of an often

elaborate social, political and cultural context. As

such, disruption of an existing system due to the

transformation of agriculture may have unpredictable consequences, even if it is progressive and benefits

the poor in the long run.

-Many socio-cultural and political issues arise from

TNC involvement in developing countries, including a range of externalities such as changing

consumption patterns and cultural values. In the

case of NEM operations, to the extent that the TNC

is not directly involved, some of these issues are

weaker in scope, but they remain in essence

96

2.3.3 Analysis of findings (UNCTAD, 2nd

period)

The UNCTAD‘s discourse emerges as rather balanced by putting forth many of the potentials, but also

the risks, of contract farming. The merits of contracting are recognized particularly in relation to

technology transfer, productivity increases, and market access, as well as in income and employment

generation. Prominently, contract farming is put forth as a less controversial alternative to direct FDI

in the form of land acquisitions by agribusiness. The UNCTAD is, however, ambivalent about the

macroeconomic spillover-effects of contract farming. It recognizes that the added value might be

captured by the later stages of the value-chain to the benefit of the foreign investor, but at the same

time sees that host-countries are more likely to retain added value from agriculture through contract

farming than through direct FDI. Furthermore, the UNCTAD views that most of the risks of contract

farming stem from the asymmetries of power between the investor and the host-country actors. The

power of the TNC is systematically put forth by the UNCTAD in connection to cultivation patterns

and the following environmental risks and food insecurity, on social stratification, and on the socio-

political order in the host country. Notably, these power imbalances are seen as strong enough to

countervail any efforts that the host country could adopt for the purpose of strengthening its

bargaining power, thus also questioning the establishment of producer organizations as a way for

farmers to become equal partners to the TNC. Thereby the UNCTAD recognizes that when TNC‘s are

involved in developing-country agriculture, it inevitably leads to some degree of farmer autonomy loss

and dependency vis-à-vis the foreign investor.

Notwithstanding the recognition of many of the risks of contract farming, the UNCTAD encourages

the propagation of contracting, seeing that through this form of TNC participation the host country can

benefit while avoiding a number of the negative consequences of foreign investment in agriculture.

These benefits are seen to materialize especially if value-added is retained in the host country and if

there are specific laws governing these investments and protecting farmers against the TNC‘s superior

bargaining power. The UNCTAD‘s narrative is thereby framed around a belief that, despite the

unavoidable power imbalances in TNC‘s relationships with farmers, contract farming has a potential

to benefit all participants if the farmers, as the vulnerable actors, are adequately protected by a

regulatory framework and active government policies.

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2.4 AfDB

The AfDB's Agriculture Sector Strategy 2010-2014 (AfDB-10-14) (AfDB.3) communicates the

AfDB's narrative of private-sector involvement in smallholder agriculture in the second period of

analysis. No other policy document discusses contract farming in the second period of analysis.

Table 11a: AfDB's report under analysis; second period


AfDB.3 2010 Agriculture Sector Strategy 2010-2014

(AfDB-10-14)

2.4.1 Applying the first framework: underlying approaches (AfDB, 2nd

period)

The AfDB-10-14 targets smallholders in its strategy to agricultural growth:

‖The potential role for agriculture in development is to reduce poverty and drive growth for

countries whose economies are agriculture-based. This potential has been underexploited

however, because of policy biases against agriculture that have resulted in underinvestment in

the sector, among other reasons. New opportunities for realizing this potential include the

pursuit of smallholder-driven approach to agricultural growth.‖ (AfDB.3: 5)

The AfDB-10-14 goes further on to state that ―The Bank‘s pro-poor focus will be reinforced by this

strategy through raising the productivity, revenue and income of smallholder farmers, including

women, by facilitating their entry into market oriented farming‖ (AfDB.3: 10). The role of

agribusiness is seen as vehicular to achieving these goals:

‖…the economic contribution of agriculture depends not only on producing more, but also on

sustainably developing the production/distribution chain and making links with markets. This

requires developing competitive and sustainable agro-industrial and agribusiness operations that

generate strong backward and forward linkages, and promoting demand for and adding value to

primary agricultural production.‖ (AfDB.3: 13)

98

The AfDB-10-14 also calls for a ‖close cooperation and synergy with development partners and the

private sector, this will effectively contribute to realizing the vision for African agriculture.‖ (AfDB.3:

9). The government is seen as having limited capacity in realizing the goals of the AfDB-10-14:

‖An array of sector and non-sector risks could affect the implementation of the AgSS6. Chief

among these are…the likelihood of slippages in government implementation performance due to

inadequate capacity‖ (AfDB.3: 19)

2.4.2 Applying the second framework: potentials and risks of CF (AfDB, 2nd

period)

The AfDB-10-14 relates the proliferation of contract farming to increased investment in agriculture by

stating that ‖High food prices have spurred foreign large-scale private sector investment in farming,

which offers the potential for growth in rental income and out-grower schemes, as well as improved

marketing and input/output supply chains‖ (P.6) (AfDB.3: 6). No other potentials or risks are

discussed by the AfDB-10-14.

Table 11b: Summary of main findings: AfDB, 2nd

period

Elements for

analysis

AfDB-10-14

Smallholder -The potential role for agriculture in development is to reduce poverty and drive growth for countries whose economies are

agriculture-based. This potential has been underexploited however, because of policy biases against agriculture that have

resulted in underinvestment in the sector, among other reasons. New opportunities for realizing this potential include the pursuit of smallholder-driven approach to agricultural growth.

-The Bank‘s pro-poor focus will be reinforced by this strategy through raising the productivity, revenue and income of

smallholder farmers, including women, by facilitating their entry into market oriented farming

Agribusiness

-Developing the production/distribution chain requires developing competitive and sustainable agro-industrial and

agribusiness operations that generate strong backward and forward linkages, and promoting demand for and adding value

to primary agricultural production.

-Coupled with close cooperation and synergy with development partners and the private sector, this will effectively contribute to realizing the vision for African agriculture.

State -An array of sector and non-sector risks could affect the implementation of the AgSS…Chief among these are…the

likelihood of slippages in government implementation performance due to inadequate capacity

P.1 + P.1.1 NR

P.2 NR

P.3 NR

P.4 NR

6 Agricultural Sector Strategy

99

P.5 NR

P.6 -High food prices have spurred foreign large-scale private sector investment in farming, which offers the potential for growth in rental income and out-grower schemes

P.7 NR

P.8 NR

P.9 NR

R.1 NR

R.2 NR

R.3 NR

R.4 NR

R.5 NR

R.6 NR

R.7 NR

R.8 NR

R.9 NR

2.4.3 Analysis of findings (AfDB, 2nd

period)

The AfDB‘s narrative on contract farming is limited in the second period of analysis, and rather

appears indirectly through the AfDB's approaches to smallholders, agribusiness and the state. The

AfDB-10-14 qualifies the pursuit of a smallholder-driven approach as a new opportunity for

unleashing the developmental role of agriculture by the commercialization of smallholder farming,

which would constitute a pro-poor approach to agriculture. The role of the agribusiness is put forth as

a generator of linkages between the host country and the agro-industry, and is seen as essential in

adding value to production, while constraints to the retention of value in the host economy are not

discussed. Finally, the government is seen as a possible constraint to successful implementation of the

AfDB‘s strategy, as the public sector is seen to have limited capacity in bringing about the suggested

policies. Contract farming emerges implicitly in the AfDB‘s narrative as an appropriate mechanism to

realizing the AfDB‘s vision of African agriculture. Contracting is seen as a virtuous in the context of

increasing food prices, thereby linking smallholder-inclusive business models to increasing export-

oriented food production. By making the commercialization of smallholder farming a priority through

improved linkages with the private sector, contract farming seen as virtuous for a process of agro-

industrialization of African agriculture. All of the risks of contract farming are excluded from the

AfDB‘s vision of the trajectory of agricultural change in Africa.

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2.5 IFAD

The follow-up to the IFAD's flagship report from 2001, the Rural Poverty Report 2011: New realities,

new challenges: new opportunities for tomorrow's generation (RP-11) (IFAD.2) sheds light on the

IFAD's narrative on smallholder-agriculture for rural poverty-reduction. The views put forth are

translated into technical guidelines for lending policies in the IFAD Strategic Framework 2011-2015

(IFAD-11-15) (IFAD.3).

Table 12a: IFAD's reports under analysis; second period


IFAD.2 2010 Rural Poverty Report 2011: New realities, new challenges:

new opportunities for tomorrow's generation

(RP-11)

IFAD.3 2013 IFAD Strategic Framework 2011-2015

(IFAD-11-15)

2.5.1 Applying the first framework: underlying approaches (IFAD, 2nd

period)

The RP-11 views smallholders as the main resource for enhancing national and regional food security:

―Agriculture in developing countries – notably in those that are agriculture-based – will need to play a

greater role in supplying national and regional food markets. In most countries, this will need to be

agriculture that is largely or entirely based upon smallholder production.‖ (IFAD.2: 32)

However, the RP-11 goes on to state ‖smallholder agriculture will not provide a route out of poverty

for all rural people. In all developing regions, people are increasingly looking to the non-farm

economy to provide them with new and different opportunities‖ (IFAD.2: 9). The IFAD-11-15 targets

agribusinesses as a source for investment to facilitate market access for smallholders by stating that ―A

101

key area of work for IFAD to leverage investment from commercial actors, notably agribusiness

companies that can facilitate the market integration of small-scale producers, strengthen their

capabilities, facilitate their access to key services and provide good non-farm employment

opportunities.‖ (IFAD.3: 48). The IFAD furthermore conceives an active role for the state in

agricultural development, stating that ―The focus on voluntarism and corporate self-regulation should

not detract from recognizing the key role of regulatory pressures associated with public policy, law

and effective states‖ (IFAD.2: 136) and ―Smallholders are most likely to be integrated into modern

food retail markets where there is...a facilitating public sector to create the needed conditions for the

business sector and smallholder farmers to engage‖ (IFAD.2: 120).

2.5.2 Applying the second framework: potentials and risks of CF (IFAD, 2nd

period)

The RP-11 relates contract farming to technology transfer, access to markets and credit, productivity

increases and reduced production risks:

‖Contracts often include embedded services such as discounted bulk input supply, access to

credit (usually in kind), supply of capital equipment and technical support to the production

process. For both the producer and the agribusiness, formal contracts can help manage risk,

reduce transaction costs and, over time, build trust. They can, although not in all cases, bring

advantages to smallholders, including increased productivity (made possible by the inputs and

technical support) and a stable, assured market with guaranteed prices that often exceed the

market going rate and that are less prone to volatility.‖ (P.1/P.4/P.10/P.3/P.2) (IFAD.2: 130)

With regard to technology transfer, the IFAD-11-15 commits to ―invest in strengthening the capacities

of small-scale producers to enable them to participate in the development of new technologies,

improve their understanding of their farm systems, and innovate and adapt new technologies‖ (P.1.1)

(IFAD.3: 33). Furthermore, the RP-11 puts forth contract farming as ―the major source of agricultural

credit for smallholder producers‖ and continues by stating that ―the evidence suggests the terms on

which smallholders have been able to access credit through this system has not been disadvantageous

to them‖ (P.4) (IFAD.2: 133). The RP-11 also links contract farming to increasing employment

opportunities in the rural non-farm sector for the benefit of the non-participating farmers:

―[In Senegal] a limited number of smallholder and medium-to-large producers are able to produce on

contract and to exacting standards, while former smallholder contractors now work on larger farms as

102

labourers and have benefited from it significantly. They have retained their smallholdings as well, in

many cases no longer growing beans on contract, but wage labour has become a larger proportion of

their growing household incomes. So while the consolidation of agricultural value chains can result in

exclusion of smallholders, particularly at the production end, the overall rural poverty impact may

ultimately be positive because of the opening up of new opportunities.‖ (P.7) (IFAD.2: 137-138)

Finally, the IFAD states in relation to contract farming that ―the changing engagement of the global

corporate sector in agricultural value chains can play a positive role in this regard‖ (P.6) (IFAD.2:

143) and that ―as local and international private companies increasingly invest in agriculture, IFAD

will partner with them to build mutually beneficial relations between small-scale producers and larger

enterprises. A promising example of such an arrangement is contract farming between agribusiness

enterprises and small-scale farmers‖ (P.6) (IFAD.3: 30). The IFAD 11-15 also commits to paying

―greater attention to…promoting win-win contractual arrangements in value chains‖ (P.6) (IFAD.3:

32).

Meanwhile, the IFAD admits that ―contract farming has pitfalls, and it can also be a source of risk for

both smallholders and agribusinesses‖ (IFAD.2: 131). The RP-11 elaborates on the implications of

agribusinesses‘ market power by stating that ―Market power is rarely equally distributed along the

value chain, and this enables the more powerful to pass costs and risks to the weaker actors – typically

smallholder farmers‖ (R.2) (IFAD.2: 116-117) and that ―Global and, in some cases, regional value

chains are becoming more integrated, often with growing centralization of control by a relatively small

number of firms…Within global markets, smallholders from poor countries remain by and large

disadvantaged because of…large power asymmetries‖ (R.2) (IFAD.2: 142). The RP-11 also puts forth

the risk of social stratification in connection to contract farming:

―Many agribusiness companies find it easier and more profitable to deal with fewer larger farmers who

incur lower transaction costs, and thus the benefits may bypass smaller farmers‖ (R.7) (IFAD.2: 132)

―Those who cannot meet the exacting standards of supermarkets, particularly for consistency of supply

and volume, are generally excluded from these value chains. Moreover, many supermarkets explicitly

seek to reduce their number of suppliers, which may mean eliminating small producers‖ (R.7) (IFAD.2:

120)

The IFAD does not discuss the risks of food insecurity, gender imbalances, indebtedness, loss of

cultivation methods, autonomy loss, environmental degradation or socio-political externalities in

103

relation to contract farming operations.

Table 12b: Summary of main findings: IFAD, 2nd

period

Elements for analysis RP-11 SF-11-15

Smallholder -Agriculture in developing countries – notably

in those that are agriculture-based – will need to

play a greater role in supplying national and regional food markets. In most countries, this

will need to be agriculture that is largely or

entirely based upon smallholder production.

-Smallholder agriculture will not provide a route

out of poverty for all rural people. In all

developing regions, people are increasingly

looking to the non-farm economy to provide

them with new and different opportunities

NR

Agribusiness

NR

-A key area of work for IFAD to leverage investment from commercial actors, notably

agribusiness companies that can facilitate the

market integration of small-scale producers, strengthen their capabilities, facilitate their access

to key services and provide good non-farm

employment opportunities.

State -Smallholders are most likely to be integrated into modern food retail markets where there

is...a facilitating public sector to create the

needed conditions for the business sector and smallholder farmers to engage

-The focus on voluntarism and corporate self-

regulation should not detract from recognizing

the key role of regulatory pressures associated

with public policy, law and effective states.

NR

P.1 + P.1.1 -Contracts often include embedded services

such as discounted bulk input supply…supply of

capital equipment and technical support to the production process.

-IFAD will…invest in strengthening the

capacities of small-scale producers to enable them

to participate in the development of new technologies, improve their understanding of their

farm systems, and innovate and adapt new

technologies

P.2 -CF can, although not in all cases, bring advantages to smallholders, including...a stable,

assured market with guaranteed prices

NR

P.3 -They can, although not in all cases, bring

advantages to smallholders, including increased productivity

-By improving capacity and providing the

stability of assured income, contracts over the

longer term can enable and create the incentives

for producers to invest underutilized resources –

particularly labour – in increasing production

levels and quality

NR

P.4 -Contract farming has been shown to be the major source of agricultural credit for

smallholder producers…and the evidence

suggests that the terms on which smallholders have been able to access credit through this

system have not been disadvantageous to them.

NR

104

-Contracts often include embedded services such as…access to credit

P.5 -Contracts can help, by managing risk, reducing

transaction costs and building trust between

smallholder farmers and agribusiness

NR

P.6 -The changing engagement of the global

corporate sector in agricultural value chains can play a positive role through CF

-As local and international private companies

increasingly invest in agriculture, IFAD will partner with them to build mutually beneficial

relations between small-scale producers and

larger enterprises. A promising example of such an arrangement is contract farming between

agribusiness enterprises and small-scale farmers

-IFAD will pay greater attention to... promoting win-win contractual arrangements in value chains

P.7

-While the consolidation of agricultural value

chains can result in exclusion of smallholders,

particularly at the production end, the overall

rural poverty impact may ultimately be positive because of the opening up of new opportunities.

NR

P.8 NR NR

P.9 NR

R.1 NR NR

R.2 -Market power is rarely equally distributed along the value chain, and this enables the more

powerful to pass costs and risks to the weaker

actors – typically smallholder farmers.

-Global and, in some cases, regional value chains are becoming more integrated, often with

growing centralization of control by a relatively

small number of firms…Within global markets,

smallholders from poor countries remain by and

large disadvantaged because of…large power

asymmetries

NR

R.3 NR NR

R.4 NR NR

R.5 NR NR

R.6 NR NR

R.7 -However, those who cannot meet the exacting

standards of supermarkets, particularly for consistency of supply and volume, are generally

excluded from these value chains. Moreover,

many supermarkets explicitly seek to reduce their number of suppliers, which may mean

eliminating small producers

-Many agribusiness companies find it easier and

more profitable to deal with fewer larger farmers who incur lower transaction costs, and

thus the benefits may bypass smaller farmers

NR

R.8 NR NR

R.9 NR NR

105

2.5.3 Analysis of findings (IFAD, 2nd

period)

The IFAD‘s narrative gives smallholder agriculture a leading role in increasing food production and

availability in domestic markets. Meanwhile, it also sees that peasant farmers will become fewer, as

some small farmers would profit more from integrating into the non-farm economy than from farming

on their own land. The agribusiness is seen to play an important role in this regard, by facilitating

market access to a part of the peasantry through contract farming, and by absorbing the other part in

wage employment. This process bringing together small farmers and the agribusiness would, however,

require a key role for the state in establishing laws and effective policies for governing the

development of value-chain agriculture. Within this context, the IFAD sees contract farming as having

many possible benefits. Technology transfer is seen as one of its potentials, though the IFAD also

underlines the importance of the farmers‘ participation in the process, thus opting for a ‗socially-

driven‘ approach to intensification of production. The IFAD further relates contract farming to access

to markets and credit, income generation and productivity increases, as well as risk reduction. Through

these potentials, the IFAD‘s narrative qualifies contract farming as a promising business model

through which the agribusiness can play a positive role in developing-country agriculture. The IFAD

also puts forth the possibility for contract farming to represent a mutually beneficial production model

by making a commitment to promote win-win contractual relationships in value chains.

While some of the risks of contract farming are acknowledged, others are omitted from the IFAD‘s

narrative. The IFAD acknowledges the unequal power relations between small farmers and the

agribusiness due to market structure, but does not discuss power relations inside the participating

households and how they can affect women‘s possibilities to benefit from contract-farming ventures.

Neither does the IFAD problematize the buyer also acting as a creditor in contract farming schemes,

thus ignoring the risk of capture of farmers into debt relationships with its commercial partner. While

admitting that a part of the smallholder population can be excluded from contract farming, the IFAD

perceives wage employment as a solution to these farmers, thus ignoring the risk for increased

differentiation it can create in rural labour markets and consequently in rural societies. The IFAD is

also silent on the subsequent loss of farmers‘ independence in such a scenario. Likewise, the IFAD

ignores the loss of autonomy for farmers that produce under contract. Though loss of autonomy over

production can divert land use away from food crops to cash crops, thus affecting cultivation patterns

and possibly local food security, these risks are also omitted from the IFAD‘s narrative. Like many of

the discourses previously scrutinized in our research, also the IFAD's narrative is framed by certain

potentials and risks of contracting, while leaving out the others.

106

3. The framing of the institutions' narrative on contract farming from 1980 to present

In this last part of this research, I will analyse the framing of the narrative on contract farming as

expressed by the totality of these multilateral institutions‘ discourses throughout the two periods of

analysis. Firstly, I will summarize the main findings on the patterns and disruptions in the narratives as

framed by the potentials and the risks of contract farming. I will discuss the potentials and the risks

separately. Secondly, I will summarize the overall evolution of the institutions' narrative on contract

farming through the lens of the two analytical frameworks used in this research. The evolution of the

narrative will be summarized by dividing the timeline into four groups: the 1980's, the 1990's, the

early 2000's (until 2006) and the recent period (since 2007). The research will conclude with an

assessment on how power relations are expressed in the institutions' narrative on contract farming.

3.1 The potentials of CF in the institutions' discourses: a summary

Technology transfer (P.1) has been a component of the narrative on contract farming since the

beginning of the period under analysis. In the 1980's, however, technology transfer as a private-sector

endeavour in contract-farming schemes was specific to the World Bank's discourse, and it was not

until the early 2000's that technology transfer entered other institutions discourses. In the second

period, it emerged as a main element of contract farming, common to all the institutions' discourses.

Furthermore, the idea of a New Green Revolution and a technologically-driven intensification of

agriculture has structured most of the institutions' narrative throughout the two periods, despite

increasing advocacy for a ―greener‖ and more sustainable world agriculture. Market access (P.2) was

only put forth by the World Bank in the 1980's, but has appeared prominently in the institutions'

narrative since the early 2000's. In the start of the second period, coinciding with the start of the land

rush, the discourse on contracting became increasingly framed by an enhanced access to value chains.

The income and productivity-generating (P.3) effects of contract farming have gone through a similar

evolution in the narrative, emerging in all the institutions' discourses in the early 2000's, while before

only being a part of the World Bank's narrative. Credit access (P.4) appeared in connection to contract

farming for the first time in the year 2000 (AfDB.2). In the second period of analysis, credit access has

structured all institutions' discourses. Likewise, the employment-generating effect (P.7) of contract

farming appeared in the narrative no earlier than in the 2000's, but became increasingly central to the

institutions' narrative on contract farming in the second period of analysis. Contract farming as a

means to upgrade farmer's produce to meet the quality requirements (P.8) of export agriculture has

been a component of the institutions' narrative since the 1990's. It has been framed as ―necessary‖ (e.g.

107

AfDB.2; UNCTAD.1) or ―essential‖ (WB.5) for helping smallholders to overcome ―increasingly

stringent demands of urban consumers‖ (FAO.6). Likewise, the narrative on contract farming has been

structured around spillover effects (P.9) throughout the two periods. Both macro-economic spillovers

through export-generation, and farmer-to-farmer knowledge-spillover effects, are conceived as results

of contract farming. At the same time, spillover effects are quite variably framed in the institutions'

narratives, and their automaticity have also been questioned (UNCTAD.3). Finally, contract farming

as a politically and socially more acceptable alternative (P.5) to other forms of TNC participation in

developing-country agriculture appears for the first time in the contract-farming discourse in the early

2000's, and becomes distinct in the narrative during the second period. Not unrelated to this, contract

farming emerges as an 'opportunity' or having 'potential' for development (P.6) in the institutions'

narrative during the second period of analysis. Notably, it is only mentioned twice in the institutions'

discourses during the first period, but in the second period all the institutions' discourses come

together to frame contract farming as an ―opportunity‖ (WB.5; WB.6), as having ―potential‖

(UNCTAD.2) or as being ―a promising example‖ (IFAD.3) and ―more likely to achieve desirable

developmental objectives‖ (FAO.7).

3.2 The risks of CF in the institutions' discourses: a summary

The risks of contract farming have been framed in the institutions' narrative rather selectively, by

incorporating some of its risks, though to different degrees depending on the institution, and by nearly

or completely omitting other risks. The consequences of the power imbalances (R.2) between the

smallholder and the agribusiness emerge as a main risk of contract farming in the institutions'

narrative, as they have appeared in the narrative since the beginning of our analyses and have been

framing most institutions' discourses at some point. However, the differences between the institutions

sensibility to the relations of power are striking. The discourses vary, however, from merely

acknowledging that monopsony power offers possibilities for abuse, which can be remedied by

stronger producer organizations (e.g. WB.5; WB.6; FAO.1), and viewing that uneven market power

should not be an obstacle for FDI (FAO.3), to qualifying such market relations as ―inequitable,

frequently uncompetitive, and rarely to the advantage of the small producer‖ (IFAD.1), and as

producing ―very undesirable outcomes‖ (UNCTAD.2). The framing of other risks vary substantially in

the institutions' discourses. The gender implications (R.3) of contract farming are more or less

comprehensively discussed during both periods, but only by the FAO and the IFAD. Likewise,

indebtedness (R.4) is only mentioned as a risk by a few institutions, and noticeably it has been omitted

from the institutions' narrative since 2007. The environmental impacts (R.8) of industrial agriculture in

108

the narrative on contract farming was institution-specific (UNCTC.1; UNCTC.2) during the 1980's.

While only briefly discussed in the 1990's, it prominently re-appeared in the second period as a

component of the narrative on contract farming, though, again, mainly put forth by one institution

(UNCTAD.2; UNCTAD.3). Similarly, the TNC-provoked social and political externalities in the host

countries have been specific to the UNCTC's and the UNCTAD's narratives, and have gone through

little restructuring throughout the two periods of analysis. Furthermore, the risks of the farmer's

autonomy loss (R.6) and social stratification (R.7) divide the institutions into two distinct groups,

framing the narrative of the FAO, UNCTAD and IFAD, while being almost or completely omitted

from, or even negated by, the World Bank's and the AfDB's narratives. Finally, the threats of food

insecurity (R.1) and the loss of cultivation patterns and methods (R.5) emerge as circumstantial in the

institutions' narrative. They are only acknowledged by a few institutions (FAO.6; UNCTAD.2),

sometimes even ambiguously, and emerge only in the second period of analysis. Meanwhile, the rest

of the institutions omit food insecurity and loss of cultivation methods and patterns from their

narratives, or frame contract farming as a way to improve household food security (AfDB.2) without

problematizing its effect on non-participating households or questioning practices that favour cash-

crop production.

Summarizing the evolution of each potential and risk provides us with insights on the overall framing

of the narrative on contract farming, and its evolution from 1980 to present. In the following, the

findings related to the evolution of the narrative will be presented through four subgroups: the 1980‘s,

the 1990‘s, the early 2000‘s (until 2006), and the most recent period (2007 to present).

3.3 The evolution of the narrative on CF from 1980 to present through the lens of the two analytical

frameworks: a summary

In the 1980's, contract farming appears mostly indirectly in the institutions' discourses through the role

they conceive for the smallholder and the agribusiness in agricultural development. Two differing,

through not necessarily countervailing, views on smallholders frame the narrative in the 1980's: one

that calls for the targeting of (better-off) smallholders for a cost-effective alternative for unleashing the

forces of economic growth (WB; AfDB), and another one valuing traditional peasant farming as risk-

averse and ecological (FAO). What these views have in common, however, is a focus on smallholder

farming as motivated by its potential to increase agricultural productivity and bringing about

development. These institutions also have opposing views on the role of foreign agribusiness in

109

developing countries, either encouraging a strengthened role for internationally financed

agribusinesses (WB; AfDB), or relating TNC-activities to exploitation and rejecting in principle

widespread privatization (FAO; UNCTC). Finally, a similar opposition is perceivable in the

institutions' views on the role of the state: while one view calls for a strong developmental state and

judges contract farming as successful when being subject to active state policies (FAO), another

conceives agricultural development to take place without state participation (WB; AfDB). The

ideological differences between the so-called 'market-liberal institutions (the World Bank and the

AfDB), on the one hand, and the so-called 'critical' institutions (the FAO, the UNCTAD and the

IFAD), on the other hand, were especially polarized in the 1980's, which is likely to influence how

these institutions framed their narrative on contract farming. The World Bank emerged as the only

institution to put forth potentials of contract farming in the form of technology transfer, increased

incomes and macro-economic spillover-effects through export generation. Contracting was

furthermore conceived as a means through which the privatization of farming and the consolidation of

farm size would be carried out in developing countries. By contrast, the institutions that were critical

to agribusiness-activities and gave more value to the peasant mode of production (FAO; UNCTAD),

mostly structured their narrative on contract farming around its risks, putting especially forth the

imbalances in market power, social stratification, and the environmental and socio-political

externalities in their discourse.

In the 1990's, few reports discuss contract farming or the role of smallholder farming in agricultural

development. While a focus on smallholders is not abandoned in principle, the narrative in the 1990

gives a dual role to the peasant farmer: as producers under contract in developed countries, or as

labour in large plantations in developing-country settings (FAO.3). Consequently, a central role is

given to the agribusiness, emphasizing its importance in value-creation to agriculture, and in attaining

food security through income-increases (FAO.3). By contrast to its former role as an avid supporter of

an active state, in the 1990's the FAO's discourse only calls for the establishment of a regulatory

framework in which markets can operate. The remarkable shift in the FAO's discourse, along with the

generally lesser interest in smallholder production in the other institutions' reports, suggest that the

focus in agriculture shifted away from smallholder farming to mostly TNC-operated, large-scale

agriculture. In the newly structured narrative, agribusiness would capitalize developing-country

agriculture, thus increase food production and add value to farming, and the peasant farmer in

developing countries would participate in this process through wage-labour (FAO.3). In this scenario,

which gives a changed role to developing-country agriculture, the potentials and risks of contract

farming are scarcely discussed. Only upgrading the farmer's produce to meet quality-requirements is

110

put forth as a potential of contracting, and environmental externalities appear as the only risk in the

institutions' discourse.

In the early 2000's, the institutions' discourse is re-orientated to emphasizing smallholder production.

This evokes again the institutions' opposing views on the role the of peasant farmer as in the debate

familiar from the 1980's. While one view reiterates in their discourses the inverse relationship between

farm size and productivity, and enthusiastically describes peasants as ―skilled and hard-working‖ that

are responsive to ―new opportunities‖ (WB.3), the other describes small farmers as powerless and

easily exploited in buyer-driven value chains (IFAD). Furthermore, the former view advocates for

strong linkages between small farmers and the agribusiness (AfDB), the latter highlights the power

that large companies can exercise through their monopsonic position in the market (IFAD). The

market-liberal institutions (WB; AfDB) continue to advocate for a private-sector led trajectory for

growth, however, the state would not anymore be completely absent from the narrative, but its role

would be constrained to establishing the institutional framework that would enable the poorest

segments of the population to benefit from growth. This view is opposed by critical institutions (FAO;

UNCTAD), which warn of the risk of aggravating inequality without government intervention, and

conceives a strong role for the government in promoting linkages between TNC's and host-country

actors. With the renewed focus on smallholder farming, contract farming makes a distinct return to the

institutions' discourse in the early 2000's. At this time, the institutions' narrative becomes primarily

framed by the potentials of technology transfer, market access and increasing incomes. Notably, both

the market-liberal and the critical institutions seem to have come together in linking contract farming

to these three potentials. In a second place, the institutions also put forth the potentials of employment

generation and meeting the quality requirements of value-chains. The early 2000's marks the first time

that risk reduction (UNCTAD.1) and the developmental potential of contract farming (IFAD.1)

integrate the institutions' narrative on contract farming. Finally, whereas the institutions' narratives are

all structured by several of contracting's potentials, the risks only appear in the narrative as institution-

specific (IFAD.1) and primarily on the risks of power imbalances, autonomy loss and social

stratification.

In the second period of analysis (since 2007), the mere number of reports under analysis indicates of

the propagation of contract farming in the institutions' discourse. It is coupled with a continued,

distinct focus on smallholder farming, but in this period more specifically on small farmers as key to

unleashing the forces of development. In addition to defending a focus on smallholder farming on the

111

basis of the inverse relationship in farm size and productivity, the institutions' narrative couples a

focus on smallholders to poverty-reducing agricultural growth (WB.6) and to increased food supply in

national and regional markets (IFAD.2). Meanwhile, the institutions' narrative conceives poverty

reduction in agriculture to take place by a dual path: by smallholder farming for the entrepreneurial

smallholder (WB.5) and, for those excluded of opportunities for commercial farming, by employment

in the rural non-farm economy (IFAD.2) or the urban labour market (WB.6). The subsequent

reduction of the number of farmers would to lead to gradually increasing farm sizes in developing

countries (WB.6). The trajectory of agrarian change conceived in the second period emerges as similar

to the market-liberal institutions' (WB; AfDB) discourse familiar from the 1980's, yet this time around

traditionally critical discourses adhere to the view (IFAD). The role of the agribusiness is also

increasingly related to food production and poverty-reduction in developing countries by all the

institutions' discourses. Moreover, while emphasizing the need to ensure socially and environmentally

desirable outcomes, the potential of agribusiness for food production and development is shared by the

institutions' narratives, as well as the opportunity increased investment in land can provide through

inclusive business models. Hence, the concerns over the equity-implications and uneven market power

that framed the critical institutions' (FAO's, UNCTC's and IFAD's) narratives in the earlier period have

been noticeably moderated. By contrast, the role given to the government continues to divide the

institutions' narratives into one that restricts government participation to the establishment of an

enabling environment for the private sector (WB; AfDB), and the other that calls for governmental

regulation of TNC-activities in agriculture (FAO; UNCTAD; IFAD). Notably, contract farming is

specifically encouraged by the latter institutions as an appropriate governmental policy for the

mitigation of the concerns over large-scale land acquisition by TN‘s (UNCTAD.1) and for bringing

about developmental outcomes, as well as for the purpose of aiding the transition out of the farming

sector for the group of excluded smallholders (IFAD.1).

The new scenario of a private sector-led agriculture for development in the institutions' narrative

effectively gives increased momentum to contract farming. The institutions' discourses have come

together in promoting contract farming as a tool for technology transfer, access to markets, and

increased revenue for smallholders. Furthermore, credit access enters the institutions' discourse, and

employment-creation and meeting quality standards continue to frame the narrative. Spillover-effects

also continue to be viewed as a potential, however, voices that question the automaticity of spillovers

are simultaneously raised (UNCTAD.3). It is also in this period that the narrative on contract farming

is increasingly structured as a way to reduce the risks resulting from TNC-involvement in agriculture,

and as a more acceptable alternative to land acquisitions. Strikingly, acceptability and risk reduction

112

become a component of all the institutions' discourse on contract farming in the second period.

Finally, the second period is also characterized by exponential growth of references in the discourses

to contract farming as an opportunity for development, or by having the potential to offer mutual

benefits for smallholders and agribusiness. Since 2007, the institutions have come together to

increasingly structure their narratives on contract farming as an ―opportunity‖ (WB.5; WB.6), a

―promising‖ alternative (UNCTAD.2; IFAD.3), a ―potential‖ (AfDB.3), and as more likely to ―provide

benefits for all stakeholders‖ (FAO.7) and ―achieve developmental objectives‖ (FAO.7).

The proliferation of contract farming in the institutions' discourse is also accompanied by increased

acknowledgement of its risks. Imbalances in market power is included in nearly all the institutions'

discourses, however, discrepancies remain in the relative importance that it is given in the institutions‘

discourses, varying from merely acknowledging the possibility of abuse in contractual relationships

(WB.6) to viewing that the power asymmetries ―outweighs any countervailing forces‖ (UNCTAD.3)

that developing countries can put forward, leaving smallholders ―by and large disadvantaged‖

(IFAD.2). Meanwhile, other risks continue to be institution-specific in the narrative. Especially social

stratification, and to a lesser extent autonomy loss, indebtedness, gender imbalances, environmental

degradation and socio-political externalities, continue to structure the critical group's narrative (FAO;

UNCTAD; IFAD), while they mostly remain absent from the market-liberal group's discourse (WB;

AfDB). Finally, food insecurity and loss of cultivation methods and patterns appear for the first time,

yet remaining institution-specific (FAO; UNCTAD) and inconclusive, in the narrative on contract

farming.

The evolution of the narrative can be visualized in the table 13 (below). The findings are colour-

coded: the potentials are marked in blue, the risks are marked in red, and the questioning or the

negation of a potential or a risk is marked in green. The elements to be found in at least 4/5 institutions

are squared, which helps to identify occurred discourse coalition and structuration.

113

Table 13: Evolution of the potentials and risks in the institutions' narratives

from 1980 to present: a summary

Code Element 1980's 1990's 2000's 2007→present

UA Smallholder Focus on smallholders

Targeting of middle

peasants as an

economic resource vs.

Valuing peasant

production

No focus on

smallholders

Developing-country

small farmers to become wage labour

Focus on smallholders

Cost-effectiveness of

smallholder farming

vs. Peasants as exploited

by powerful actors

Focus on smallholders

Smallholder farming key

to development

Idea of increasing farm size

UA Agribusiness FDI encouraged vs.

Privatization as threat to equity

Important for value-creation and food

production

Strong linkages with farmers needed

vs. Exploitation of farmers

Key role in food production and

development

UA State Weak vs. active state Provider of legal

framework for private-

sector operations

Provider of institutional

support

vs. Government

intervention needed

vs. Role in promoting CF

Coordinator between

sectors

vs. State regulation of CF

P.1+P.

1.1

Technology

transfer

WB − WB AfDB UNCTAD WB UNCTAD FAO

IFAD

P.2 Market access WB − AfDB IFAD WB UNCTAD FAO

IFAD

P.3 Increased income

and productivity

WB − AfDB UNCTAD IFAD WB UNCTAD FAO

IFAD

P.4 Credit access − − AfDB WB UNCTAD FAO

IFAD

P.5 Risk reduction and acceptability

− − UNCTAD WB UNCTAD FAO

IFAD

P.6 Opportunity or

potential

− − IFAD WB AfDB UNCTAD

FAO IFAD

P.7 Employment − − WB AfDB WB UNCTAD IFAD

P.8 CF for attaining

quality

requirements

− FAO AfDB UNCTAD WB FAO

P.9 Spillover-effects WB − IFAD WB UNCTAD

-P.9 Minimize potential of spillover-effects

− − − UNCTAD

R.1 Food insecurity − − − UNCTAD FAO

-R.1 Minimize risk of food insecurity

− − AfDB −

R.2 Power imbalances FAO UNCTC − IFAD WB UNCTAD FAO

IFAD

-R.2 Minimize risk of

power imbalances

− FAO − −

R.3 Gender imbalances FAO − IFAD FAO

-R.3 Minimize risk of gender imbalances

− − − FAO

R.4 Indebtedness UNCTC − − WB FAO

R.5 Loss of cultivation methods and

patterns

− − − UNCTAD

R.6 Autonomy loss − − IFAD WB UNCTAD FAO

R.7 Social

differentiation

FAO UNCTC − IFAD UNCTAD FAO IFAD

-R.7 Minimize risk of

social differentiation

− WB − −

R.8 Environmental

degradation

UNCTC FAO − WB UNCTAD

R.9 Socio-political

externalities in the

host country

UNCTC − UNCTAD

114

3.4 The relations of power in the institutions' narrative on contract farming

Applying the two analytical frameworks on the multilateral institutions' discourse on contract farming

reveal a number of patterns in the institutions' narrative. Firstly, contract farming has appeared in the

institutions' discourse whenever smallholder farming has been a focus in international development

policies on agriculture. This happened in the 1980's, and since the early 2000's, while the 1990's was

characterized by a shift in focus to large-scale agriculture in developing countries. In the 1980's the

institutions' views on peasant farming and agribusiness were polarized between, on the one hand,

seeing peasants as productive resources for FDI-led agro-industrialization and, on the other hand,

valuing traditional peasant farming and relating privatization to a risk of inequity. By consequence, a

clear opposition can be perceived between the institutions' narratives, one exclusively framed around

the potentials of contracting, and the other only structured of its risk. In the early 2000's the there were

still significant tensions between the two differing views on smallholders and agribusiness, however,

at this time the dichotomy was primarily based on whether or not small farmers risked being exploited

by agribusiness in smallholder-inclusive schemes, while agricultural intensification through

technological change increasingly structured all the institutions' discourses. Secondly, my findings

suggest that since 2007, the former opposition in the institutions' narratives has been abandoned in

favour of viewing smallholder farming as holding the key to development. Likewise, the dichotomy in

the institutions' discourse on agribusiness has been faded out when the concerns for equity and

exploitation have given place to the private sector as the engine for development and increased food

production. A similar trajectory of discourse coalition with regards to the role of the state is not to be

perceived in our analyses, as the institutions continue to give varying weight to state participation. Yet,

notably, when institutions encourage state intervention, it is since 2007 conceived as a way to regulate

TNC-activities in contract-farming schemes. Thirdly, my findings suggest that the coalition of the

institutions' discourses, as evident by the coupling smallholder-farming and private-sector schemes for

the purpose of agricultural development, has indeed contributed to the renewed momentum given to

contract farming in international development policies. Gradually since the early 2000's and into the

second period of analysis, discourse coalition and -structuration seems to have occurred around the

potentials of technology transfer, market access, and income generation and credit access, all related to

smallholder development. Similarly, coalition and structuration has taken place around contract

farming as presenting an opportunity for development. Fourthly, the structuration of the narrative on

contract farming as a development opportunity coincides with the coalition of the institutions'

discourses around the increased acceptability and reduced risk of TNC-participation in developing-

country agriculture through contracting instead of land acquisition. My findings suggest that contract

farming has indeed gained momentum in the institutions' discourse at the same time as land grab

115

claims started receiving attention. Fifthly, when it comes to the risks of contract farming, a pattern of

discourse coalition and -structuration is largely absent. While the institutions' discourses have

gradually evolved to increasingly incorporate the risks in their narratives, the discourses seem to only

have come together around the risk of abuse resulting from power imbalances between the smallholder

under contract and the buyer. Meanwhile, the institutions' narratives have also come together in

proposing either the empowerment of farmer organizations, or the setting-up of guidelines or state

regulation of contract farming operations, as remedies to the unequal power relationships. By

identifying a risk yet proposing a fix to it, the institutions' narrative has become structured like a

storyline, resembling what Gasper and Apthorpe call an ―archetypal folktale‖ (Gasper and Apthorpe

1996: 9) In a folktale, a 'problem' is encountered (in this case, the power imbalances in contract

farming), which will be 'solved' through the endeavour of a 'hero' (in this case, the producer

organization or regulatory guideline), finishing off with a 'happy ever after' -scenario where

smallholders would unambiguously gain from farming under contract. By structuring their narrative as

a folktale, the institutions narrative simplifies and neutralizes the issues stemming from unequal power

between the actors in the value-chain. Furthermore, by proposing a combination of empowering the

civil society and putting TNC-activities under the regulatory supervision of the state, the narrative not

only instrumentalizes the contemporary peasant movements for the purpose of agricultural

restructuring, but also satisfies the ideological requirements of the post-Washington consensus with its

emblematic focus on private agents as being virtuous for development.

In sum, while the narrative on contract farming has since the 1980's increasingly acknowledged some

of the risks, the institutions have progressively, throughout the periods under analysis, structured a

common, positive narrative of contract farming as a policy that ultimately benefits all stakeholders,

including the small farmer. The institutions thereby offer a solution to agricultural development that

seeks to maintain the status quo through reproducing the power structures embedded in capitalism. By

failing to sufficiently recognize risks of contract farming, stemming from the inherently unequal and

complex power relations, the institutions conceive contract farming as a central instrument through

which the agenda for agricultural change can be carried out. At the same time, the institutions support

the agro-industry in tightening its grasp of peasant farming and transforming agrarian societies to

serve the objectives of the world food system. In this way, the trend in land grab, which has lately

been vigorously criticized by multilateral institutions, risks only being substituted by a corresponding

power grab of peasant farming in Sub-Saharan Africa.

116

CONCLUDING REMARKS

This thesis has scrutinized the narrative on contract farming as expressed by multilateral institutions

from 1980 to present. The research has been carried out by discourse analysis using analytical

induction on a selection of the institutions' publications. For that purpose, two frameworks have been

built up: one used to examine the underlying approaches to the role of the state, agribusiness and the

smallholder in agricultural development, and the other to unveil how the potentials and the risks of

contract farming have structured the institutions' narrative. The research has aimed to show which

potentials and risks have framed the narrative, as well as how these discursive elements have evolved

in the narrative during the three decades under scrutiny. I have paid special attention to the patterns

and disruptions to be found in the institutions' discourse, and have especially aimed to reveal how the

heightened controversy over land grabbing has affected the structuring of the narrative on contract

farming in the institutions' agricultural development policies. Throughout these questions, I have

endeavoured to show how power relations have been structured in the institutions' narrative on

contract farming.

This research has shown that a wider focus on smallholder farming in agricultural development

policies has given momentum for contract farming in the institutions' narrative on developing-country

agriculture. Thereby it appeared prominently in the institutions' discourse in the 1980's, the early

2000's, and again after 2007 in connection to the increased investor interest in Sub-Saharan African

agriculture. While the institutions' narratives still put forth two, clearly opposing views on contract

farming in the 1980's, this research suggest that this dichotomy has since then gradually been effaced

through a process of discourse coalition. Since 2007 and the investor rush into land in Sub-Saharan

Africa, the institutions' discourses have come together in structuring contract farming as a

development opportunity. Simultaneously, a process of discourse coalition and structuration has

occurred with regards to the potentials of technology transfer, market access, and income generation

and credit access in contract-farming schemes. This research furthermore indicates that the discourse

coalition and structuration that have taken place coincide with coalition of the institutions' discourses

around contract farming as an alternative to land acquisitions. The findings suggest that the re-

emergence of contract farming in international development policies is indeed related to the increased

criticism towards land grab. In the meantime, this research indicates that a process of discourse

coalition and structuration has not occurred to the same extent with regards to the risks of contract

farming. Only the risk of power imbalances has brought the institutions' discourses together, while the

other risks have remained specific to certain institutions' narratives. Moreover, significant differences

117

persist in regards to the weight that these power imbalances have been given in the institutions'

discourse, and the power asymmetries are often framed as avoidable or 'fixable' if producer

organizations are empowered and contracts are regulated. In this way, the institutions narrate a

scenario where all stakeholders would ultimately gain from contract farming. The institutions'

narrative thus contributes to the reproduction of the relations of power that are embedded in

capitalism, and supports the agro-industry in its agenda for transforming smallholder farming and

agrarian societies to serve the objectives of the world food system.

This research indeed suggests that a power grab over smallholder farming may be taking place in Sub-

Saharan Africa, and that the international development discourse may have become an accomplice in

the process. Whether coalition and structuration of the institutions' discourses has also led to an

institutionalized narrative (Hajer 1993) on contract farming remains, however, undefined. Further

research is needed in order to determine to what extent the multilateral institutions' policies on contract

farming are concretized in agricultural development projects on the ground. In addition, since

development policies are highly responsive on external factors and trends in ideological theories, the

durability of the institutions' narrative on contract farming as it is structured to date can well be

questioned. Also contract farming, just as many development policies before, could only be replaced

by another ―buzzword‖ in the future.

118

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123

ANNEX: List of multilateral institutions‘ reports under analysis

AfDB.1 African Development Bank Group (1984), Policy and operational guidelines for the

industrial sector. Abidjan: AfDB.

AfDB.2 African Development Bank and African Development Fund (2000), Agriculture and Rural

Development Sector Bank Group Policy. Abidjan: African Development Bank.

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AfDB.

FAO.1 FAO ( 1984), The state of food and agriculture 1981: World Review ; Rural Poverty in

Developing Countries and Means of Poverty Alleviation. Rome: FAO.

FAO.2 FAO (1982), The state of food and agriculture 1983 : World review : the situation in Sub-

Saharan Africa ; Women in developing agriculture. Rome : FAO.

FAO.3 FAO (1997), State of Food and Agriculture 1997: The Agroprocessing Industry and

Economic Development. Rome: FAO.

FAO.4 FAO (2008) State of Food and Agriculture 2008 : Biofuels : prospects, risks and

opportunities. Rome: FAO.

FAO.5 FAO(2009) State of Food and Agriculture 2009 : Livestock in the balance. Rome : FAO.

FAO.6 FAO (2011), State of Food and Agriculture 2010-11 : Women in agriculture : closing the

gender gap for development. Rome:FAO.

FAO.7 FAO (2012), State of Food and Agriculture 2012: Investing in Agriculture for a Better

Future. Rome: FAO.

FAO.8 FAO (2012), Guiding Principles for Responsible Contract Farming Operations. Rome:FAO.

FAO.9 FAO (2013), State of Food and Agriculture 2013 : Food systems for better nutrition. Rome:

FAO.

UNCTAD.1 UNCTAD (2001) World Investment Report 2001 : Promoting Linkages. Geneva : UNCTAD.

UNCTAD.2 UNCTAD (2009) World Investment Report 2009: Transnational Corporations, Agricultural


UNCTAD.3 UNCTAD (2011), World Investment Report 2011: Non-Equity Modes of International


UNCTC.1 UNCTC (1983), Transnational Corporations in World Development: Third Survey. New

York: UNCTC.

UNCTC.2 UNCTC (1988), Transnational Corporations in World Development : Trends and Prospects.

New York : UNCTC.

WB.1 World Bank (1981), Accelerated Development in Sub-Saharan Africa : An Agenda for

Action. Washington DC : World Bank.

WB.2 World Bank (1982), World Development Report 1982 : Agriculture and Economic

Development. Washington DC : World Bank.

WB.3 World Bank (1990), World Development Report 1990 : Poverty. Washington DC : World

Bank.

WB.4 World Bank (2000), World Development Report 2000/01 : Attacking Poverty. Washington

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DC : World Bank.

WB.5 World Bank (2008), World Development Report 2008 : Agriculture for Development.

Washington DC : World Bank

WB.6 World Bank (2011), Rising Global Interest in Farmland : Can it Yield Sustainable and

Equitable Benefits ?. Washington DC : World Bank.

IFAD.1 IFAD (2001), Rural Poverty Report 2001 : the challenge of ending rural poverty. Rome :

IFAD.

IFAD.2 IFAD (2010), Rural Poverty Report 2011: New realities, new challenges: new opportunities

for tomorrow's generation. Rome: IFAD.

IFAD.3 IFAD (2013), IFAD Strategic Framework 2011-2015. Rome : IFAD.

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