A comprehensive review by Minot and Ronchi (2014) shows that contract farming can help integrate small-scale farmers into modern agricultural value chains, providing them with inputs, technical assistance, and assured markets. Although contract farming is not a panacea for value chain integration, the probability of entering a value chain is likely to increase when the farmer has a contract with the buyer of the product. Hence, contract farming is discussed as a major channel for increasing productivity through participation in value chains. However, the potential benefits depend on a complex set of factors (Hoeffler 2006). A clear result emerging from an overview of empirical studies is the increased income for contract farmers (see, for example, Nguyen, Dzator, and Nadolny (2015); Bellemare (2012); and Maertens and Swinnen (2009)).<sup>21</sup> Surveying more than a dozen econometric studies, Minot and Ronchi (2014) find that the estimated change in income for contract farming over the average income for noncontract farming ranges from negative 49 percent to an increase of 600 percent, with most studies predicting an increase of between 25 and 75 percent.

However, there are still few empirical studies on contract farming in staple crops (an example is Maertens and Vande Velde (2017)), compared with the large literature on high-value and commodity export sectors, although staple food supply chains can contribute more to poverty reduction and food security. Swinnen, Vandeplas, and Maertens (2010) argue that the need for specific inputs in the production of staple crops is much lower than in high-value fruits and vegetables, which makes contracting less necessary. Nevertheless, Maertens and Vande Velde (2017) find a significantly positive impact of contract farming on rice farmers’ income.

Summing up, the broader view on structural transformation, which emphasizes transformational productivity growth and various forms of upgrading within sectors, provides a useful organizing framework to analyze the impact of value chains on Africa’s agriculture. In creating this framework, we make use of the assumption that GVCs require intensive contracting between parties. There seems to be consensus in the literature on the positive impact on productivity from contract farming as well as value chains, in particular new modes of linking farmers to consumers, promoting modern inputs, innovation, and upgrading.

To evaluate the link between contract farming and participation in value chains in Africa, we provide qualitative and quantitative assessments based on extensive surveys of farmers, buyers, and aggregators. The hypothesis that we test in the following sections is that participation in value chains—which we show is related to contracting of farmers—is important for structural transformation in agriculture, through productivity effects and upgrading decisions of farmers.

# **3. From Well-Established Value Chains in Maize to Emerging Networks in Cassava and Sorghum**

Understanding how value chains are structured will help us understand how farmers participate in those value chains, and the possible impact that participation could have.

# **_Well-Established Value Chains in Maize_**

> 21 Some skepticism regarding contract farming has been raised in the literature (Little and Watts, 1994; Singh, 2002). By taking advantage of the land and paying lower wages, contract farming may lead to income inequality and indebtedness. However, a growing body of evidence suggests that modern agricultural value chains effectively internalize many of the inefficiencies in traditional agriculture in Africa, and the emergence of new ways of linking farmers to consumers especially by promoting uptake of modern inputs, innovation in post-harvest practices and upgrading of quality control have the potential to boost productivity (World Bank, 2017).

13