Contract Farming and Food Security

Abstract

Contract farming has often been associated with an increase in the income of participating households. It is unclear, however, whether contract farming increases other aspects of household welfare. We use data from six regions of Madagascar and a selection‐on‐observables design in which we control for a household's marginal utility of participating in contract farming, which we elicited via a contingent valuation experiment, to show that participating in contract farming reduces the duration of a household's hungry season by about eight days on average. Moreover, participation in contract farming makes participating households about 18% more likely to see their hungry season end at any time. Further, we find that these effects are more pronounced for households with more children, and for households with more girls. This is an important result as children—especially girls—often bear the burden of food insecurity.