Linking agribusiness and small-scale farmers in developing countries: Is there a new role for contract farming?

This article examines a new role for contract farming in developing countries in the light of the industrialisation of agriculture and the globalisation of world markets. A theoretical rationale for contracting in developing countries is developed on the basis of adopting new institutional economic theory for the purpose of matching governance forms to market failure problems and transaction characteristics. The history of contract farming is reviewed, together with the advantages and disadvantages to the various players, for the purpose of developing a list of key success factors, problems and some possible solutions.