The literature suffers from publication and survivor bias. These biases result in too optimistic average income effect. The meta-analysis was based on data from 22 studies, covering 26 empirical instances of contract farming, covering 13 countries, and resulted in an overall effect size of 38% (CI=23-55). Contracted farmers had significantly larger holdings or more assets than the average farmers in the studies. The findings point to the need for substantial income effects for contract farming arrangements to survive over time. Research should take care to cover the performance and dynamics of contract farming over time, to capture variations in income effects and drop-out rates, and also publish non-significant results.
Contract farming is considered by most authors to be a positive development for agricultural innovation in developing countries. There is serious concern whether smaller farmers can benefit from these arrangements. This systematic review analysed the evidence in the literature on income effects for smallholders.
The objective of the review was to understand the effect of contract farming on income, and under which enabling or limiting conditions contractual arrangements are more effective.
The review included all studies in developing countries that had an econometric design to reduce selection bias in effect estimates. Contract farming was defined as a sales arrangement between a farmer and a firm, agreed before production begins, which provides the farmer with resources or services. The search (1 October 2015) covered all relevant electronic libraries and yielded 8,529 hits, 195 of these were related to contract farming, 75 studied effectiveness and 23 had a proper econometric design to be included in the meta-analysis.