Evaluating the income effects of contract farming among cattle farmers in northern communal areas of Namibia

Abstract

Globalisation and liberalisation have significantly transformed agricultural food systems through technological advancements, evolving consumer preferences, and stringent food safety regulations. These changes have resulted in the exclusion of numerous smallholder farmers, particularly in developing countries, from high-value markets, including Namibia, which is the focus of this study. To address the exclusion of smallholders from formal markets, contract farming initiatives were introduced in Namibia as a strategy to enhance market access, input access and income stability among communal cattle farmers. This study investigates the impact of contract farming in Namibia’s northern communal areas using data from 107 smallholder cattle farmers analysed using ordinary least squares regression and propensity score matching. The findings revealed significant differences (p < 0.05) between contract participants and non-participants in demographic and socioeconomic attributes, including education, experience, income, and cattle sales. Despite the observed differences, contract farming did not have a statistically significant effect on farmers’ income. The study recommends improving market incentives through competitive pricing, enhanced access to market information, and flexible contract arrangements to increase participation and income benefits among smallholder farmers. These findings contribute to understanding the limitations of contract farming in the livestock sector and inform policies promoting inclusive market systems in developing economies.