Market Structure, Outgrower Contracs and Farm Output. Evidence from Cotton Reforms in Zambia

38 Pages Posted: 22 Jan 2006 Last revised: 31 Aug 2009

See all articles by Irene Brambilla

Irene Brambilla

Universidad Nacional de La Plata

Guido G. Porto

World Bank; National Bureau of Economic Research (NBER)

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Date Written: November 2005

Abstract

This paper investigates the dynamic impacts of cotton marketing reforms on farm output in rural Zambia. Following liberalization and the elimination of the Zambian cotton marketing board, the sector developed an outgrower scheme whereby cotton firms provided credit, access to inputs and output markets, and technical assistance to the farmers. There are two distinctive phases of the reforms: a failure of the outgrower contracts, due to farmers' debt renegation, firm hold up, and lack of coordination among firms and farms, and a subsequent period of success of the scheme, due to enhanced contract enforcement and commitment. We find interesting dynamics in the sector. During the phase of failure, farmers were pushed back into subsistence and cotton yields per hectare declined. With the improvement of the outgrower scheme, farmers devoted larger shares of land to cash crops, and farm output significantly increased.

Suggested Citation

Brambilla, Irene and Porto, Guido, Market Structure, Outgrower Contracs and Farm Output. Evidence from Cotton Reforms in Zambia (November 2005). NBER Working Paper No. w11804, Available at SSRN: https://ssrn.com/abstract=851713

Irene Brambilla (Contact Author)

Universidad Nacional de La Plata ( email )

La Plata, Buenos Aires 1900
Argentina

Guido Porto

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/gporto

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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