go along with land market reforms and rural infrastructure development. In addition, improvements in technology and capacity building to satisfy food quality and safety standards must be in place to drive agricultural development. At this stage, the development of value chains is hindered by several barriers, such as lack of skilled workers and infrastructure, uninsured risk, limited access to credit and other resources, and burdensome regulation.

The example of the Green Revolution in Asia is particularly instructive for understanding how investments can have positive impacts on poverty reduction and agricultural growth. For instance, in India, the largest impact was estimated from investments in infrastructure and education as well as research and development, leading to improvements in access to fertilizers, seeds, and irrigation.<sup>19</sup> In contrast, agricultural productivity growth has not been successful in reducing rural poverty in Bolivia, Brazil, and Peru, where growth has benefited mostly large, capital intensive firms. Hence, national policies need to include the poorest households to make a change (Byerlee, de Janvry, and Sadoulet 2009).

For cassava, maize, and sorghum, most of the qualitative and quantitative literature evaluates the potential of and constraints to higher value chain integration. Few studies look at the linkages between value chain integration and economic performance. For instance, the Foundation for Partnership Initiatives in the Niger Delta discusses the upgrading potential for cassava in Nigeria (PIND 2011). The report finds that, in order to produce HQCF the harvesting and transportation costs are high that would increase overall production costs and might even lower profits when stepping into this value chain.<sup>20</sup> Similarly, Fawole, Thomas, and Okoruwa (2011) argue that despite large production of cassava in Nigeria, most farmers did not get much return from their produce because of the high costs of weeding, bush clearing, cassava cuttings, and poor use of fertilizer.

To benefit from value chain upgrading and overcome these constraints, all the studies point to the need for higher market linkages between producers and processors, and simultaneous improvements in marketing, improved technologies, and fertilizer use. Furthermore, it is important to apply a package of appropriate agricultural practices instead of a one-sided practice improvement, which may increase costs and reduce total profitability (Kenya USAID 2015; IFPRI 2010). Contract farming can play a crucial role in overcoming these leakages.

# **_Making Value Chains Work for Development through Contract Farming and Aggregators_**

Regional and global value chains are different from traditional trade and production, as they require sequential production decisions along a full range of activities ranging from design, production, and marketing to logistics and distribution. The customization of goods and services entails intensive contracting between parties (Taglioni and Winkler 2016). For agricultural activities, contract farming can be a useful way to integrate farmers in developing countries into value chains to help them increase productivity through various channels. First, the buyer may provide farmers with inputs, production services, and new technology. Second, as some contracts also specify the price in advance, the price risk is often reduced. And third, the contract can open new markets and provide higher income (Minot 2007; ActionAid International 2015). In addition, economies of scale may arise from the buyer’s logistical network.

> 19 Jayne et al. (2010) use case studies from Kenya, Malawi, Mozambique, and Zambia to identify current patterns in smallholder farmer behavior and challenges to agricultural productivity growth.

> 20 For HQCF, cassava needs to be processed within 24 hours.

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