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Articles / Articles

Do state-subsidized contractual arrangements improve farmers’ income? Empirical evidence from Algeria

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Pages 62-86 | Received 10 Jun 2022, Accepted 04 Apr 2023, Published online: 31 May 2023
 

ABSTRACT

To modernize agricultural value chains, some governments subsidize contract prices paid to farmers by private firms to encourage them to adopt contract farming. The impact of price-subsidized contracts on farmers’ incomes has not yet been evaluated. To help fill this gap, we evaluated the impact of a contractual arrangement with a subsidized sales price implemented by a tomato cannery in Algeria. Our results showed that the arrangement increased profits by securing outlets and sales prices. The success of the Algerian intervention lies in generating a price premium and in combining public financial capacity and private governance of the contractual scheme.

RÉSUMÉ

Afin de moderniser les chaînes de valeurs agricoles, certains gouvernements subventionnent les prix des contrats offerts aux fermiers par des compagnies privées afin de les encourager à s’engager dans l’agriculture contractuelle. L’impact qu’ont ces contrats subventionnés sur le revenu des fermiers n’a pas encore été calculé. Afin d’adresser ce manque dans la littérature sur le sujet, nous évaluons l’impact d’un arrangement contractuel avec prix de ventes subventionnés, mis en place par une conserverie de tomates en Algérie. Nos résultats démontrent que cet arrangement a permis une augmentation des profits en sécurisant les points de vente et le prix de vente. Cette intervention algérienne a été fructueuse car elle a généré des prix avantageux et combiné la capacité financière publique avec une gouvernance privée du schéma contractuel.

Disclosure statement

No potential conflict of interest was reported by the authors.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Additional information

Funding

This work was supported by International Development Research Centre [grant number 107600].

Notes on contributors

Sami Assassi

Sami Assassi is a teacher-researcher at the Higher National School of Agronomy of Algiers. He has a PhD and an HDR in agricultural economics. He specializes in agricultural economics, with a particular interest in value chain governance, public policy and natural resources.

Guillaume Soullier

Guillaume Soullier is a researcher at CIRAD, specialist on public policies, value chains, territorial development and farmers’ livelihood strategies in West Africa.

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