Table Of ContentInternational Political Economy Series
General Editor: Timothy M. Shaw, Professor of Political Science and
Director ofInternational Deve\opment Studies, Dalhousie University,
Nova Scotia
The global political economy is in a profound crisis at the levels of
both production and policy. This series provides overviews and case
studies of states and sectors, dasses and companies in the new
international division of labour. These embrace political economy as
both focus and mode of analysis; they advance radical scholarship
and scenarios.
The series treats polity-economy dialectics at global, regional and
national levels and ex amines novel contradictions and coalitions
between and within each. There is a special emphasis on national
bourgeoisies and capitalisms, on newly industrial or influential coun
tries, and on novel strategies and technologies. The concentration
throughout is on uneven patterns of power and production, authority
and distribution, hegemony and reaction. Attention will be paid to
redefinitions of dass and security, basic needs and self-reliance and
the range of critical analysis will indude gender ,population, resources,
environment, militarisation, food and finance. This series constitutes
a timely and distinctive response to the continuing intellectual and
existential worId crisis.
Alfredo Behrens
REGIONAL MANAGEMENT OF ENERGY RESOURCES IN LATIN
AMERICA
Robert Boardman
PESTICIDES IN WORLD AGRICULTURE
Bonnie K. Campbell (editor)
POLITICAL DIMENSIONS OF THE INTERNATIONAL DEBT CRISIS
Bonnie K. Campbell and lohn Loxley (editors)
STRUcrURAL ADJUSTMENT IN AFRICA
lerker Carlsson and Timothy M. Shaw (editors)
NEWLY INDUSTRIALIZING COUNTRIES AND THE POLITICAL ECONOMY
OF SOUTH-SOUTH RELATIONS
Diane Ethier (editor)
DEMOCRATIC TRANSITION AND CONSOLIDATION IN SOUTHERN
EUROPE, LATIN AMERICA AND SOUTHEAST ASIA
David P. Forsythe (editor)
HUMAN RIGHfS AND DEVELOPMENT
THE UNITED NATIONS IN THE WORLD POLITICAL ECONOMY
David Glover and Ken Kusterer
SMALL FARMERS, BIG BUSINESS
Steven Kendall Holloway
THE ALUMINIUM MULTINATIONALS AND THE BAUXITE CARTEL
James H. Mittelman
OUT FROM UNDERDEVELOPMENT
Dennis C. Pirages and Christine Sylvester (editors)
TRANSFORMATIONS IN THE GLOBAL POLmCAL ECONOMY
John Ravenhill (editor)
AFRICA IN ECONOMIC CRISIS
Garry Rodan
THE POLITICAL ECONOMY OF SINGAPORE'S INDUSTRIALIZATION
Patricia Ruffin
CAPITA LISM AND SOCIALISM IN CUBA
Roger Southall (editor)
LABOUR AND UNIONS IN ASIA AND AFRICA
Sharon Stiehter and Jane L. Parpart (editors)
WOMEN, EMPLOYMENT AND THE FAMILY IN THE INTERNATIONAL
DIVISION OF LABOUR
David Wurfel and Broce Burton (editorS)
THE POLITICAL ECONOMY OF FOREIGN POLICY IN SOUTHEAST ASIA
Small Farmers,
Big Business
Contract Farming and Rural
Development
David Glover
Associate Director
International Development Research Centre, Ottawa
and
Ken Kusterer
Associate Professor of Sociology
The American University, Washington, D.C.
© David Glover and Ken Kusterer 1990
Softcover reprint ofthe hardcover 1st edition 1990978-0-333-52407-7
All rights reserved. For information, write:
Seholarly and Referenee Division,
St. Martin's Press, Ine., 175 Fifth Avenue,
New York, N.Y. 10010
First published in the United States of Ameriea in 1990
ISBN 978-1-349-11535-8 ISBN 978-1-349-11533-4 (eBook)
DOI 10.1007/978-1-349-11533-4
This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources. Logging, pulping and manufacturing
processes are expected to conform to the environmental regulations of the
country of origin.
Library of Congress Cataloging-in-Publieation Data
Glover, David, 1953-
Sm all farmers, big business : eontraet farming and rural
development I David Glover and Ken Kusterer.
p. em.-(International politieal eeonomy series)
Includes bibliographieal referenees.
ISBN 978-0-312-04631-6
1. Farms, Small-Developing eountries-Case studies. 2. Big
business-Developing eountries-Case studies. 3. Contraets,
Agricultural-Developing countries-Case studies. 4. Rural
development-Development eountries-Case studies. I. Kusterer,
Kenneth C. 11. Title. III. Series.
HD1476.D44G56 1990
338.1'6-de20 90-8112
CIP
To Merlie and Erica; and to Faith, Jed, Todd and Elena
Contents
Acknowledgements ix
1 Introduction 1
2 Frozen Vegetables in Guatemala: Tapping the Small
Farmer's Potential 21
3 Asparagus in Peru: Expanding the Agricultural Frontier 45
4 McCain Foods, Canada: The Political Economy
ofMonopoly 73
5 Mumias and KTDA, Kenya: Public Sector Participation 95
6 Commodity Sketches: Mini-cases from Latin America 113
7 Conclusions 127
8 Policy Implications 155
Bibliography 165
Index 169
vii
Acknowledgements
The authors would like to express their appreciation to the many
people whose support and advice made this book possible. These
include the farmers, project managers, policy makers and scholars
who generously contributed their time to the research process and
Pauline Dole and Marleny Tanaka who typed the manuscript with
their customary efficiency. The financial support of the Social Sciences
and Humanities Research Council and the US Agency for International
Development is gratefully acknowledged.
Portions of Chapters 1, 7 and 8 first appeared under David
Glover's name in World Development. The views expressed in the
book are those of the authors and not necessarily those of their
institutions.
David Glover and
Ken Kusterer
June, 1989
ix
1 Introduction
Small farmers in both developed and developing countries share
certain basic goals. For the most part, they wish to increase the
security and income of their families while retaining their independ
ence as owners and operators of a farm enterprise. It has become
increasingly difficult to pursue these goals simultaneously. Farmers
have been pulled by the increasing demands of the market and the
state into a nexus of relationships that extend beyond the farm to the
national and international level.
The interaction between smallholders and more powerful economic
and political agents is not new. What characterizes the contemporary
situation is the variety of forces with which small farmers must deal.
To the tradition al relationships with individuals (landlords, money
lenders, traders) and with the agents of the state (tax collectors, law
enforcers) has been added an array of powerful organizations. The
most significant of these are public enterprises with monopolies over
input and output marketing, authorities of integrated rural develop
ment projects, and large domestic or foreign corporations. The size,
complexity and impersonality of these organizations has resulted in a
qualitative change in the nature of the smallholder's relationships to
the outside world.
One of the relationships which has been least explored is that
between agribusiness and the small farmer. The term 'agribusiness'
has been used to cover such a variety of phenomena that definition is
difficult, but it generally refers to the activities of a private firm, alone
or in joint ventures with public agencies, in the production, proces
sing or marketing of agricultural or agriculture-related goods and
services. This very broad definition includes international commodity
trade (Cargill), farm machinery manufacturers (Massey-Ferguson),
agro-chemical suppliers (CIBA-Geigy), produce canners and packers
(Heinz, DeI Monte) and plantation owners (United Brands). Many
firms, including so me mentioned above, are highly diversified and
operate in several of these fields; Unilever is perhaps the best-known
example.
Among this array of agribusiness activities, the one which entails
the most direct and the most complex relationships between large
corporations and small farmers is contract farming (CF). In this system,
the firm replaces or supplements company production of agricultural
1
2 Small Farmers, Big Business
commodities with purchases from local farmers through contracts.
The contracts specify several conditions of sale and obligate the firm
to provide technical assistance, agro-chemicals and other services.
The system has long been practised in deve\oped countries, where it
accounts for about 15% of agricultural output (Mighell, 1972); its use
in developing countries is also significant and increasing. The system
is used by both domestic firms and transnational corporations
(TNCs).
The logic of contract farming is discussed in detail in a subsequent
section of this chapter. At this point, it is sufficient to note three
general considerations. First, these contracts provide advantages to
both the firm and its growers, particularly with respect to risk and
uncertainty. Prices, quantities and quality standards are often preset,
allowing growers an assured market for their produce and firms an
assured volume of material of consistent quality. The relationship is
one of close interdependence between the firm and its suppliers.
Second, since the operations often include the introduction of new
crops and techniques and generally involve processing or packing in
factory-style operations, the social impact of these schemes can be
wide ranging and often extends beyond the contract farmers to hired
labour, other household members and rural communities in general.
Third, these operations involve companies of substantial size,
sometimes operating in concert with government institutions and
lending agencies. The coalition of interests within such an agri
business venture can be complex and, from the farmer's point of
view, formidable. Within the broad interdependence mentioned
previously, there is considerable room for conflicts of interest,
exploitation and bargaining, with internal dynamics changing signi
ficantly over time.
This book attempts a comprehensive assessment of one particular
form of agribusiness - contract farming - and its social impact in
deve\oped and deve\oping countries. It draws on case studies from
Canada, Latin America and Africa, most of them based on the
authors' fieldwork. It covers private schemes and public-private joint
ventures, domestic and transnational firms and tradition al and non
tradition al commodities. Each case study focuses on the economic
logic of the agribusiness-grower re\ationship, its social impact on
the rural community and the ways in which farmers have responded.
The aim is to identify those elements which have produced viable
schemes beneficial to local communities and to provide policy advice
for firms, farmers' organizations, and governments.
