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Contract Farming and Other Market Institutions as Mechanisms for Integrating Smallholder Livestock Producers in the Growth and Development of the Livestock Sector in Developing Countries

Year of publication 2008

Place of publication Rome, Italy ;

Pages 56 p.

Publisher FAO ;

Product type Book (series)

Series title Pro-Poor Livestock Policy Initiative (PPLPI) Research Report

Edition 1

Synopsis (short abstract) This is the 45th of a series of Working Papers prepared for the Pro-Poor Livestock Policy Initiative (PPLPI). The purpose of these papers is to explore issues related to livestock development in the context of poverty alleviation. Livestock is vital to the economies of many developing countries. Animals are a source of food, more specifically protein for human diets, income, employment and possibly foreign exchange. For low income producers, livestock can serve as a store of wealth, provide drau ght power and organic fertiliser for crop production and a means of transport. Consumption of livestock and livestock products in developing countries, though starting from a low base, is growing rapidly.

Language English

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    This report provides an overview of the theoretical underpinnings of the emergence of contract arrangements versus reliance on spot markets. Transaction costs economics is the dominant school of thought in the literature on contracts, particularly with respect to the rationale of firms to vertically integrate instead of engaging in direct exchange in the open market. Vertical integration and other forms of exchange organisation are traced to the objective of economic agents to reduce transaction costs in an environment where market imperfections predominate and economic agents behave opportunistically.
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    Contract Farming as an Institution for Integrating Rural Smallholders in Markets for Livestock Products in Developing Countries: (II) Results in Case Countries
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    This report provides an assessment of the efficiency and effectiveness of contract farming as an institution for integrating rural smallholders in markets for livestock products, using detailed reviews of particular case studies on contract farming in India, Thailand, the Philippines and Viet Nam, and in which the principal author participated. Two forms of contracts engaged in by producers and market intermediaries existed: formal and informal contracts. In general, formal contracts were writte n contracts between an integrator company and a farmer, where the rights and obligations of each party were strictly defined. Informal contracts were unwritten but nevertheless binding agreements between a farmer and his market intermediary, which could either be a trader for inputs or outputs, or with a cooperative which he is a member of, on the provision of inputs or the marketing of output, or both.
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    Support to Smallholder Producers, in particular Livestock Farms - TCP/MOL/3803 2024
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    The agriculture sector in the Republic of Moldova is characterized by a dualistic structure, comprising a small number of large-scale enterprises and a substantial presence of small-scale family farms. The latter group faces numerous challenges hindering development, including limited financial opportunities, fragmented agricultural land, a diminished ability to manage market and weather risks, and constrained access to production resources. This leads to the adoption of short-term survival strategies that compromise their long-term resilience. Nonetheless, these smallholder family farms play a crucial role in the agricultural landscape of the Republic of Moldova, contributing to over 62 percent of the country's total agricultural produce in 2016. The United Nations declared the period 2019-2028 as the United Nations Decade of Family Farming (UNDFF), underlining the pivotal role of family farms, pastoralists, and smallholders in achieving food security, improved nutrition, livelihoods, efficient natural resource management, and environmental protection, as well as promoting inclusive and sustainable development. The Republic of Moldova was one of the nations that endorsed the declaration. The Global Action Plan (GAP) for the Decade of Family Farming underscores the significance of creating a supportive policy framework to bolster family farming. By the year 2024, the GAP aims to achieve the development of 100 National Action Plans (NAPs) for family farming through collaborative efforts between governments and family farmers' organizations.
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