Exploratory Analysis of Contract Farming: Evidence from Ethiopia’s Barley Contract Farming

  • Yohannes Workeaferahu Elifneh
Keywords: Contract Farming, Farmers, Smallholder, Sponsoring Firms


The advent of multinational brewing companies to the Ethiopian brewery sector has contributed to the introduction of Contract Farming Arrangements (CFAs) among small scale malt barely farmers in various parts of the country. That is, subsequent to the arrival of multinational brewing companies to the Ethiopian business landscape, the major brewing companies have introduced CFAs with smallholder barley farmers from major barley growing areas of the country, particularly in Arisi, Sebeta, and North Gondar areas. However, no systematic, empirical study has been conducted to assess the ongoing contract farming practices implemented by those breweries in terms of progress, achievements and challenges encountered.

Accordingly, this study endeavours to provide an original, empirically anchored evidence, on the prospects and challenges of the ongoing barley CFAs with particular focus on the perspectives of the smallholder barley farmers towards addressing existing challenges they face and in order to better delivery the CFA for the benefits both the smallholder farmers and the sponsoring companies involved by way of better organizational commitment. Towards this end, an exploratory, qualitative studies approach was employed to assess the concurrent barley CFAs that the prominent foreign and local breweries are implementing. In doing so, the study conducted in depth interviews with fifteen respondents, including six managers from three sponsoring companies and nine individual farmers’ representatives. This study has hugely benefited from the unique opportunity that CFA offers in terms of assessing the direct relationship between the sponsoring firms and the smallholder farmers involved.

The study results show that there are diverse organizational support activities that the sponsoring firms are rendering to the smallholder farmers in the CFAs such as providing improved quality seeds, subsidizing prices of improved quality seeds, input credit, premium prices, and agronomical support in terms of training and technical assistance. Nonetheless, there are certain concerns raised by some of the smallholder farmers that deserve due consideration of the sponsoring firms, which can be addressed through further organizational commitments from the part of the sponsoring firms of the CFAs.


Download data is not yet available.


Abebe, G. K., Bijman, J., Kemp, R., Omta, O., & Tsegaye, A. (2013). Contract farming configuration: Smallholders’ preferences for contract design attributes. Food Policy, 40, 14-24.

Ariza-Montobbio, P., & Lele, S. (2010). Jatropha plantations for biodiesel in Tamil Nadu, India: Viability, livelihood trade-offs, and latent conflict. Ecological Economics, 70(2), 189-195.

Arumugam, N., Mohamed Arshad, F., Chiew, E. F. C., & Zainal Abidin, M. (2010). Supply chain analysis of fresh fruits and vegetables (FFV): Prospects of contract farming. Agricultural Economics, 56(9), 435-442.

Azumah, S., Donkoh, S., & Ehiakpor, D. (2016). Examining the determinants and effects of Contract Farming on Farm Income in the Northern Region of Ghana. Ghana Journal of Science, Technology and Development, 4(1), 1-10.

Barrett, C. B., Bachke, M. E., Bellemare, M. F., Michelson, H. C., Narayanan, S., & Walker, T. F. (2012). Smallholder participation in contract farming: comparative evidence from five countries. World Development, 40(4), 715-730.

Bellemare, M. F. (2010). Agricultural extension and imperfect supervision in contract farming: evidence from Madagascar. Agricultural Economics, 41(6), 507-517.

Bellemare, M. F. (2012). As you sow, so shall you reap: The welfare impacts of contract farming. World Development, 40(7), 1418-1434.

Bellemare, M. F. (2015). Contract Farming: What’s In It for Smallholder Farmers in Developing Countries? Choices, 30(3), 1-4.

Bhaumik, S. K. (2008). Reforming Indian agriculture: Towards employment generation and poverty reduction essays in honour of gk chadha. India: SAGE Publications.

Bijman, J. (2008). Contract farming in developing countries. An overview of the literature, Wageningen University, Department of Business Administration (Working Paper).

Clapp, R. A. (Ed.). (1994). The moral economy of the contract : Living under Contract: Contract Farming and Agrarian Transformation in Sub-Saharan Africa: Wisconsin: The University of Wisconsin Press.

Delgado, C. (1999). Sources of growth in smallholder agriculture in sub-Saharan Africa: the role of vertical integration of smallholders with processors and marketers of high value-added items. Agrekon, pp. 165-189.

Easterby-Smith, M., Thorpe, R., & Jackson, P. R. (2008). Management research. (3rd ed.). London: Sage.

Eaton, C., & Shepherd, A. (2001). Contract farming: Partnerships for growth. FAO Agricultural Services Bulletin No. 145. Rome: Food and Agriculture Organisation.

FAO. (2013). Contract farming for inclusive market access. Rome.

Glover, D. (1990). Contract farming and outgrower schemes in East and Southern Africa. Journal of Agricultural Economics, 41(3), 303-315.

Groenland, E. A. (2014). Employing the matrix method as a tool for the analysis of qualitative research data in the business domain. Retrieved from SSRN website: doi: http://dx.doi.org/10.2139/ssrn.2495330. Retrieved on 21 December 2014

Hueth, B., Ligon, E., Wolf, S., & Wu, S. (1999). Incentive instruments in fruit and vegetable contracts: input control, monitoring, measuring, and price risk. Review of agricultural economics, 21(2), 374-389.

Key, N. & Runsten, D. (1999). Contract farming, smallholders, and rural development in Latin America: the organization of agroprocessing firms and the scale of outgrower production. World Development, 27(2), 381-401.

Kirsten, J., & Sartorius, K. (2002). Linking agribusiness and small-scale farmers in developing countries: is there a new role for contract farming? Development Southern Africa, 19(4), 503-529.

Lastarria-Cornhiel, S. (2016). Feminization of agriculture: Trends and driving forces. Rimisp.

Miles, M. B., Huberman, A. M., & Saldaña, J. (2013). Qualitative data analysis: A methods sourcebook. Thousand Oaks: SAGE Publications.

Minot, N., & Sawyer, B. (2016). Contract farming in developing countries: Theory, practice, and policy implications.International Food Policy Research Institute, pp. 127-158.

Naidu, N. S., Mishara, D., & Askon, S. (2015). Review of Literature on Contract Farming and Contract Relationships and Directions for Future Research. Indian Journal of Agricultural Marketing, 29(3), 58.

Negash, M. (2015). Drivers of bioenergy crop adoption: evidence from Ethiopia's castor bean contract farming. Paper presented at the 2015 Conference, August 9-14, 2015, Milan, Italy.

Otsuka, K., Nakano, Y., & Takahashi, K. (2016). Contract Farming in Developed and Developing Economies. Annual Review of Resource Economics, 8(1), 1-6.

Poulton, C., Dorward, A., & Kydd, J. (2010). The future of small farms: New directions for services, institutions, and intermediation. World Development, 38(10), 1413-1428.

Prowse, M. (2012). Contract farming in developing countries: A review: Agence Française de Développement A Savoir.

Ramaswami, B., Birthal, P. S., & Joshi, P. K. (2006). Efficiency and distribution in contract farming: The case of Indian poultry growers. MTID Discussion Papers, 91.

Reardon, T., Barrett, C. B., Berdegué, J. A., & Swinnen, J. F. (2009). Agrifood industry transformation and small farmers in developing countries. World Development, 37(11), 1717-1727.

Rehber, E. (1998). Vertical integration in agriculture and contract farming: Food Marketing Policy Center, University of Connecticut.

Rowley, J., & Slack, F. (2004). Conducting a literature review. Management Research News, 27(6), 31-39.

Roy, E. P. (1963). “Contract Farming”. . Denville, Illinois 1963: The Interstate Printers and Publishers Inc.

Saenger, C., Qaim, M., Torero, M., & Viceisza, A. (2013). Contract farming and smallholder incentives to produce high quality: experimental evidence from the Vietnamese dairy sector. Agricultural Economics, 44(3), 297-308.

Savenye, W. C., & Robinson, R. S. (1996). Qualitative research issues and methods: An introduction for educational technologists. Handbook of Research for Educational Communications and Technology, 1171-1195.

Simmons, P. (2002). Overview of smallholder contract farming in developing countries. Rome: FAO.

Simmons, P., Winters, P., & Patrick, I. (2005). An analysis of contract farming in East Java, Bali, and Lombok, Indonesia. Agricultural Economics, 33(s3), 513-525.

Singh, G., & Asokan, S. (2005). Contract farming in India. India’s Agricultural Challenges: Reflections on Policy, Technology and Other Issues, Centad, New Delhi, 79-103.

Spiller, R. (2000). Ethical business and investment: A model for business and society. Journal of Business Ethics, 27, 149–160.

Sprinkle, G. B., & Maines, L. A. (2010). The benefits and costs of corporate social responsibility. Business Horizons, 53(5), 445-453.

Strauss, A., & Corbin, J. (1990). Basics of qualitative research: Techniques and procedures for developing grounded theory (2nd ed.): Newbury Park, CA: Sage.

Turner, D. W. (2010). Qualitative interview design: A practical guide for novice investigators. The Qualitative Report, 15(3), 754-760.

Wang, H. H., Wang, Y., & Delgado, M. S. (2014). The transition to modern agriculture: contract farming in developing economies. American Journal of Agricultural Economics, 96(5), 1257-1271.

Warning, M., & Key, N. (2002). The social performance and distributional consequences of contract farming: An equilibrium analysis of the Arachide de Bouche program in Senegal. World Development, 30(2), 255-263.

Webster, J., & Watson, R. T. (2002). Analyzing the past to prepare for the future: Writing a literature review. 26 (2), xiii-xxiii.

World Bank. (2008). World development report-agriculture for development. In W. Bank (Ed.). Washington, D.C.: World Bank.

Zhang, Q. F. (2012). The political economy of contract farming in China's agrarian transition. Journal of Agrarian Change, 12(4), 460-483.

How to Cite
Yohannes Workeaferahu Elifneh. (2019). Exploratory Analysis of Contract Farming: Evidence from Ethiopia’s Barley Contract Farming. International Journal of Engineering and Management Research, 9(3), 197-210. https://doi.org/10.31033/ijemr.9.3.21