Contract Farming: What’s In It for Smallholder Farmers in Developing Countries?

Abstract

As every self-respecting economics major knows by the time he graduates, whether a country benefits from international trade depends in theory on whether that country specializes in its comparative advantage—for example, whether it can specialize in the production of goods or services for which it has a lower opportunity cost. The production of agricultural goods being the comparative advantage of most developing countries, it follows—again, in theory—that those countries should specialize in agriculture.