ABSTRACT

Global population growth and increasing incomes across the world are resulting in consumers’ rising demand for quality and diverse foods. Trade liberalisation and modernisation of production, processing and distribution systems enable agro-food companies to quickly access raw materials from farmers. Thus, efficient supply chains have a key role to play in the global marketing of foods. They also significantly contribute to satisfying consumers’ needs and responding to emerging food trends. The organisation of the product flow among farmers, buyers, processors and customers through contracts represents an increasingly important marketing channel in modern food supply chains due to its potential to decrease costs and increase profits for the participants in the chain. However, vulnerable small-scale farmers in developing countries such as Malawi are often excluded from the benefits of the transformed food industry. Contract farming is recognised as one of the tools linking farmers with modern agro-food supply chains, which enables Malawian small-scale farmers to improve their livelihoods. This study explored, examined and addressed the key challenges in contract farming arrangements in the paprika supply chain in Central Malawi. A mixed methods approach was used to collect qualitative and quantitative data. A total of 428 household questionnaires were administered to contracted small-scale paprika farmers in two Malawian districts. These were supplemented with ten focus group interviews with small-scale farmers, 21 semi-structured stakeholder interviews, ten expert semi-structured interviews and two focus group discussions with stakeholders. The study found that the quality of communication among the key participants in the paprika supply chain was low. Furthermore, the enabling environment provided limited access to input and services for small-scale farmers. The paprika contract secured quality seeds and extension services to contracted small-scale farmers. Nevertheless, the provision of fertilisers, pesticides, chemicals, storage and transportation services was not part of the Malawian contract. Poor contract design and side-selling practices posed a threat to the chain’s efficiency and sustainability. Small-scale farmers gained benefits from the contracted production but contracting itself was not a sufficient strategy to sustain their livelihoods throughout the year. More dedicated involvement of farmers’ organisations and NGOs in empowering small-scale farmers, and the Government’s presence through the national Contract Farming Strategy could contribute to better efficiency and sustainability of the chain. The study’s main contribution include: adding new evidence on contract farming performance in developing countries; highlighting the importance of contract design and the issue of side-selling for improved contracting conditions, and demonstrating how dissemination of the study’s finding scan be incorporated into study design to increase the validity, rigour and impact of the research.