The impact of export-driven cash crops on smallholder households

Abstract

Market-oriented agricultural production can be a mechanism to increase smallholder farmer welfare, rural market performance, and contribute to overall economic growth. Cash crop production can allow households to increase their income by producing output with higher returns to land and labor and using the income generated from sales to purchase goods for consumption. However, in the face of missing and underperforming markets, African smallholder households are often unable to produce efficiently or obtain staple foods reliably and cheaply.1,2,3 Firms face similar constraints that limit the ability and incentive to invest in smallholder-based production systems.4 Expanding commercial production therefore requires an understanding of the potential welfare impacts for smallholders and rural economies, as well as the economic and institutional constraints to such expansion.