Abstract:
This case study forms an empirical basis against which to assess the effect of collectively held contracts on participation in contract farming in 'developing' countries. One of the central issues in the distribution of returns to contract farming schemes is the selection practices applied. By contracting larger farmers, purchasing parties can reduce the number they must deal with (and thereby their transaction costs) to procure a given quantity of produce. In the rural periphery
this has been associated with income polarisation, raising food prices without
raising the incomes of the poor and cutting marginal families out of incomegenerating
opportunities. One potential way of addressing this problem is having a number of small farmers grouped together under one contract.
This research analyses participation in a State-run outgrower scheme in Sarawak, Malaysia. In Batang Ai, Sarawak, the State has organised a contracting scheme growing fish for urban markets in a hydro-electricity reservoir. With the
intention of spreading the benefits of the scheme as widely as possible, participation has largely been through state-funded community-based collectives. However, participation has been neither as wide nor as equitable as intended.
Shallow and unstable markets have meant low returns. The selection and funding decisions of authorities, community size, levels of intra-community trust, and the quality of community leadership have contributed to the variability of returns. In consequence, the influence of capacity and motivation of individual households on participation have taken second place to these contextual factors.
