Contract farming through cooperatives and smallholder satisfaction

Evidence from Malawi

Bibliographic Data

ID19489302
AuthorsInnocent Mugwagwa (Wageningen University & Research, corresponding author), Jos Bijman (0000-0001-9143-7870, Wageningen University & Research), Jacques Trienekens (Wageningen University & Research)
Year2026
Volume43
Pages100799
Publication date2026-09-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueWorld Development Perspectives (JOURNAL)
Journal identifiersISSN: 2452-2929 • E-ISSN: 2468-0532
PublisherElsevier BV (PUBLISHER)
DOI10.1016/j.wdp.2026.100799
OpenAlexW7163559566
LanguageEN
References cited71

Contract farming (CF) through cooperatives represents a distinct hybrid governance structure that can strengthen smallholders' bargaining power while simultaneously resolving market failures in developing countries. This paper estimates the impact of CF through cooperatives on multiple dimensions of smallholders' satisfaction with production and marketing arrangements in Malawi's soybean sector. Using data collected from 504 farmers across five contracted and six non-contracted cooperatives, we apply a cluster-robust ordered logit model, correcting for potential endogeneity via a Two-Stage Residual Inclusion (2SRI) approach with an instrumental variable, and addressing ex-post rationalization bias through placebo regressions. Results show that CF through cooperatives has a statistically significant negative effect on satisfaction with payment terms, transportation, and pricing. Effects on market access, grading, negotiation, credit, technical assistance, and input provision are statistically insignificant, though some show positive trends. These findings suggest that although CF through cooperatives has the potential to address market failures, its ability to improve smallholder satisfaction with production and marketing arrangements is highly context dependent. To unlock the potential of CF through cooperatives, the study recommends strengthening market-oriented cooperatives, enforcing the provisions of the national contract farming strategy, and prioritizing sectors where crop characteristics and market structures support stable, mutually beneficial CF

Agriculture · Bargaining power · Contract farming · Corporate governance · Endogeneity · Logit · Payment · Agricultural Innovations and Practices · Cooperative Studies and Economics · Microfinance and Financial Inclusion

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Open DOIOpen Access