Does Contract Farming Arrangement Improve Smallholder Tobacco Productivity? Evidence from Zimbabwe

Farmers face both lack of reliable markets, on one hand, and skyrocketing input prices, on the other hand, suggesting the need of Contract Farming Arrangement (CFA) in enhancing tobacco productivity and technical efficiency. Thus, in this study, the paper interrogates the effect of CFA on tobacco productivity in Hurungwe district in Zimbabwe. The study controls for both observable and unobservable factors explaining farmers decision to participate in CFA using endogenous switching regression model. The study finds CFA improving tobacco productivity by 39 percent. Nonetheless, CFA is labour-intensive, hence, less preferred arrangement among women and elderly, suggesting the need to develop gender inclusive labour-saving technologies. Furthermore, social networking improves CFA participation. These results are relevant for informing CFA related policies that improves smallholder tobacco productivity in Southern Africa