Contracts may be subject to strategic default, particularly if public enforcement institutions are weak. In a lab experiment, we study behavior in a contract farming game without third-party enforcement but with an external spot market as outside option. Two players, farmer and company, may...

We study the effect of alleviating information asymmetry regarding product quality that is widespread in developing-country agricultural markets. Opportunistic buyers may underreport quality levels back to farmers to reduce the price they have to pay. In response, farmers may curb investment,...

In emerging markets for high-value food products in developing countries, processing companies search for efficient ways to source raw material of consistent quality. One widely embraced approach is contract farming. But relatively little is known about the appropriate design of contracts,...

Smallholder farmers in developing countries often suffer from high risk and limited market access. Contract farming may improve the situation under certain conditions. Several studies analyzed effects of contracts on smallholder productivity and income with mixed results. Most existing studies...

The food retail sector in many developing countries is transforming with a rapid growth of modern supermarkets. Supermarkets are not only influencing how food is sold to consumers, but also how agricultural products are sourced from farmers. Especially for the procurement of fresh fruits and...

In the existing literature, the effects of contract farming on household welfare were examined with mixed results. Most studies looked at single contract types. This paper contributes to the literature by comparing two types of contracts - simple marketing contracts and resource-providing...

Contract farming is typically seen as a useful mechanism to help smallholders. However, despite economic benefits, high dropout rates from contract schemes are commonplace. We use data from Ghana to show that smallholders benefit from a resource-providing contract in terms of higher yields and...

In the last decades global food value chains have seen the need for increasing vertical coordination in order to secure quality standards. A prominent way to govern the relationships between farmers and agri-business firms are farming contracts. We study the role of trust, risk and time...