Working Paper: NBER ID: w11804
Authors: Irene Brambilla; Guido Porto
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.
Keywords: Cotton Reforms; Outgrower Contracts; Farm Output; Zambia; Agricultural Liberalization
JEL Codes: O12; O13; Q12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| failure of contract enforcement (D86) | decrease in cotton adoption (O14) |
| decrease in cotton adoption (O14) | decline in farm yields (Q11) |
| success of outgrower schemes (Q13) | increase in land allocations to cotton (Q15) |
| increase in land allocations to cotton (Q15) | increase in yields per hectare (Q16) |
| failure of contract enforcement (D86) | push farmers back into subsistence farming (Q12) |
| well-functioning contracts and market interlinkages (L14) | enhance agricultural productivity (Q16) |