Evaluating the Effectiveness of Out-grower Projects in Reducing Poverty in Rural Zambia. A Case of the Eastern Province


Doctoral Thesis / Dissertation, 2020

287 Pages


Excerpt

TABLE OF CONTENTS

DECLARATION

DEDICATION

ACKNOWLEDGEMENT

MOTIVATION

TABLE OF CONTENTS

LIST OF FIGURES

LIST OF TABLES

ACRONYMS AND ABBREVIATIONS

DEFINITION OF OPERATIONAL TERMS

ABSTRACT

CHAPTER ONE – INTRODUCTION AND BACKGROUND
1.1 Introduction
1.2 Background of the Study
1.2.1 Revised Zambia National Agriculture Policy 2012 -2030
1.2.2 Out-grower Schemes in Zambia
1.2.2.1 Out-grower Companies in the Eastern Province
1.2.3 Types of Out-grower Models
1.2.3.1 The Centralized Model
1.2.3.2 The Nucleus Model
1.2.3.3 The Tripartite Model
1.2.3.4 The Informal Model
1.2.3.5 The Intermediary Model
1.2.4 Poverty Profile in Zambia5
1.2.4.1 Poverty Trends
1.2.4.2 Shared Prosperity Trends
1.2.4.3 Inequality Trends
1.2.4.4 Population and Poverty by Province
1.3 Statement of the Problem
1.4 Objectives of the Study
1.4.1 General Objective
1.4.1.1 Specific Objectives
1.5 Research Questions of the Study
1.5.1 General Research Question
1.5.1.1 Sub Research Questions
1.6 Significance of the Study
1.7 Scope of the Study
1.7.1 Profile of the Eastern Province
1.8 Thesis Structure
1.9 Conclusion

CHAPTER TWO – LITERATURE REVIEW
2.1 Introduction
2.2 History and Extent of Out-grower Schemes
2.3 Literature Review at World Level
2.3.1 The United States of America
2.3.1.1 Agriculture Sector Overview
2.3.1.2 Poverty Trends in the USA
2.3.1.3 Poverty Reduction Strategy
2.3.1.4 Effect of Out-grower Scheme on Reducing Rural Poverty
2.3.1.5 Out-grower Scheme Support to the Community at Large
2.3.2. Brazil
2.3.2.1 Agriculture Sector Overview
2.3.2.2 Poverty Trends in Brazil
2.3.2.3 Poverty Reduction Strategy
2.3.2.4 Effect of Out-grower Scheme on Reducing Rural Poverty
2.3.2.5 Out-grower Scheme Support to the Community at Large
2.3.3 China
2.3.3.1 Agriculture Sector Overview
2.3.3.2 Poverty Trends in China
2.3.3.3 Poverty Reduction Strategy
2.3.3.4 Effect of Out-grower Schemes on Reducing Rural Poverty
2.3.3.5Out-grower Scheme Support to the Community at Large
2.4 Literature Review at Africa Level
2.4.1 Nigeria
2.4.1.1 Agriculture Sector Overview
2.4.1.2 Poverty Trends in Nigeria
2.4.1.3 Poverty Reduction Strategy
2.4.1.4 Effect of Out-grower Scheme on Reducing Rural Poverty
2.4.1.5 Out-grower Scheme Support to the Community at Large
2.4.2 Kenya
2.4.2.1 Agriculture Sector Overview
2.4.2.2 Poverty Trends in Kenya
2.4.2.3 Poverty Reduction Strategy
2.4.2.4 Effect of Out-grower Scheme on Reducing Rural Poverty
2.4.2.5 Out-grower Scheme Support to the Community at Large
2.5 Literature Review at Southern Africa Development Community - SADC Level
2.5.1 Malawi
2.5.1.1 Agriculture Sector Overview
2.5.1.2 Poverty Trends in Malawi
2.5.1.3 Poverty Reduction Strategy
2.5.1.4 Effect of Out-grower Schemes on Reducing Rural Poverty
2.5.1.5 Out-grower Scheme Support to the Community at Large
2.5.2 South Africa
2.5.2.1 Agriculture Sector Overview
2.5.2.2 Poverty Trends in South Africa
2.5.2.3 Poverty Reduction Strategy
2.5.2.4 Effect of Out-grower Schemes on Reducing Poverty Rural Poverty
2.5.2.5 Out-grower Scheme Support to the Community at Large
2.5.3 Zambia
2.5.3.1 Agriculture Sector Overview
2.5.3.2 Poverty Trends in Zambia
2.5.3.3 Poverty Reduction Strategy
2.5.3.4 Effect of Out-grower Schemes on Reducing Rural Poverty
2.5.3.5 Out-grower Scheme Support to the Community at Large
2.6 Knowledge Gap
2.7 Conclusion

CHAPTER THREE – THEORETICAL AND CONCEPTUAL FRAMEWORK
3.1 Introduction
3.2 Contract Enforcement Theory
3.2.1 Theoretical Framework of the Contract Enforcement Theory
3.3 Geographical Disparities Poverty Theory
3.3.1 Theoretical Framework of the Geographical Disparities Poverty Theory
3.4 Failure Theory
3.4.1 Theoretical Framework of the Failure Theory
3.5 Critical Review of the Theories51
3.5.1 Contract Enforcement Theory
3.5.2 Geographical Disparities Poverty Theory
3.5.3 Failure Theory
3.6 Conceptual Framework
3.6.1 Conceptual Framework through which the Study aims at explaining the Problem
3.7 Operationalization of Variables
3.7.1 Independent Variables
3.7.1.1 Market Price
3.7.1.2 Extension Services
3.7.1.3 Loan Default
3.7.1.4 Unequal Power Relation
3.7.1.5 Exclusion of Marginal Groups
3.7.1.6 Indebtedness
3.7.1.7 Land Availability and Tenure
3.7.1.8 Income
3.7.2 Intervening Variables
3.7.2.1 Risk Sharing Mechanism
3.7.2.2 Contextual Factors
3.7.2.3 Institution Innovation
3.7.2.4 Political and Legal
3.7.2.5 Contract
3.7.2.6 Social Services
3.7.3. Dependent Variables
3.7.3.1 Poverty Reduction
3.7.3.2 Economic Growth
3.7.3.3 Employment Creation
3.7.3.4 Improved Food Security
3.8 Hypotheses and Operationalization
3.9 Conclusion

CHAPTER FOUR – RESEARCH METHODOLOGY
4.1 Introduction
4.2 Philosophical Assumptions
4.2.1 Epistemology
4.2.2 Ontology
4.2.3 Axiology
4.2.4 Phenomenology
4.2.5 Methodology
4.3 Research Design
4.4 Target Population
4.4.1 Description of the Sample and Sampling Procedure
4.4.1.1 Selection of Smallholder Out-grower Farmers
4.4.1.2 Selection of Smallholder Independent Farmers
4.4.1.3 Selection of Key Informants
4.5 Data Collection Techniques
4.5.1 Personal Interviews
4.5.2 Document Review
4.5.3 Questionnaire
4.6 Data Analysis Techniques
4.7 Pilot Study
4.7.1 Pilot Study Data
4.7.2 Pilot Study Data Analysis
4.7.3 Pilot Study Conclusion
4.8 Validity of the Study
4.8.1 Criterion Validity
4.8.2 Content Validity
4.8.3 Construct Validity
4.9 Credibility/trustworthiness
4.10 Reliability of the Study
4.10.1 Stability Reliability
4.10.2 Representative Reliability
4.10.3 Equivalence Reliability
4.11 Ethical Considerations
4.11.1 Veracity
4.11.2 Privacy
4.11.3 Confidentiality
4.11.4 Fidelity
4.12 Conclusion

CHAPTER FIVE – DATA ANALYSIS, INTERPRETATION AND RESULTS
5.1 Introduction
5.2 Demographic Data
5.2.1 Sex
5.2.2. Type of Respondent
5.2.2.1 Cross tabulation on Sex by Type of Respondent
5.2.3 Age
5.2.3.1 Cross tabulation on Age by Type of Respondent
5.2.4 Level of Education
5.2.4.1 Cross tabulation on the Education Level of Respondents
5.2.5 Marital Status
5.2.6 Number of Children
5.2.6.1 Cross tabulation on the Number of Children by Type of the Respondent
5.2.7 Household Size
5.2.8 Children Going to School
5.2.8.1 Cross tabulation on Children Going to School
5.2.9 Children Completed Secondary School
5.2.9.1 Cross tabulation on Children Completed Secondary School by Type of Respondent
5.2.10 Children up to Tertiary Level of Education
5.2.10.1 Cross tabulation on Children reached Tertiary education Level by Type of Respondent
5.3 Changes in Poverty Reduction to the Smallholder Out-Grower Farmers
5.3.1 Meals taken per Day
5.3.2 Type of House Owned
5.3.3 Main Source of Income
5.3.4 Income per Year
5.3.4.1 Cross tabulation on Income by Type of Respondent
5.3.5 Source of Energy for Lighting
5.3.6 Household Income and Assets
5.3.6.1 Change in Income in the Last Five Years
5.3.6.2 Assets Owned such as Cash at the Bank by Type of Respondent
5.3.6.2.1 Cross tabulation on the Change in the Assets Owned such as Cash at the Bank by Type of Respondent
5.3.6.3 Assets Owned such as Cattle by Type of Respondent
5.3.6.3.1 Cross tabulation on the Change in the Assets Owned such as Cattle by Type of Respondent
5.3.6.4 Cross tabulation on change in the number of Goats by Type of Respondent
5.3.6.5 Cross tabulation on Asset Owned such as the Bicycle by Type of Respondent
5.3.6.6 Cross tabulation on Asset Owned such as the Motor bike by Type of Respondent
5.3.6.7 Cross tabulation on Asset Owned such as Car by Type of Respondent
5.3.6.8 Asset Owned such as Phone Set
5.3.6.9 Asset Owned such as Television Set
5.3.6.10 Asset Owned such as Radio Set
5.3.6.11 Cross tabulation on Asset Owned such as Ox-cart by Type of Respondent
5.3.7 Sourcing of Farming Inputs
5.3.8 Description of the Process to Source Inputs
5.3.9 Crop Marketing
5.3.9.1 Cross tabulation on the Accessibility of Crop Market by Respondent Type
5.4 Knowledge by Out-grower Farmers on the Operation of the Out-grower Schemes
5.4.1 Years as an Out-grower Farmer
5.4.2 Out-grower Farmers benefit in Comparison to Independent Farmers
5.4.3 Out-grower Farmers’ Knowledge on the operation of out-grower schemes
5.4.4 Information Dissemination by the Out-grower Scheme on its Operations
5.4.5 Contracting with the Out-grower Schemes
5.4.6 Understanding the Contents of the Contract
5.4.7 Understanding the Language in which the Contract is written
5.4.8 Preference of the Language for the Contract to be written in
5.4.9 Announcement of Crop Price by the Out-grower Company
5.4.10 Effect of Price Announcement on decision to do farming with the out-grower scheme
5.4.11 Opinion of the Out-grower Farmers on the Agricultural Commodity Pricing system by the Out-grower Scheme
5.4.12 Participation in the Pricing of Agricultural Commodities
5.4.13 Stakeholders Participating in the Agricultural Commodity Pricing
5.4.14 Control on negotiations of setting Commodity Prices
5.4.15 Effect of the Current Pricing Mechanism on Profit
5.4.16 Opportunity for the Out-grower Farmers to sell the Commodity Elsewhere
5.4.17 Loan Repayment Management by the Out-grower Firms
5.4.18 Disclosure of the Loan Amount by the Out-grower Firm at the time of Collecting Inputs
5.4.19 Equivalence of the Loan Amount to the prevailing value of Inputs on the Market
5.4.20 Loan Insurance
5.4.21 Loan Repayment
5.4.22 Factors Making Loan Repayment difficulty
5.4.23 Management of Loan Repayment Failure by the Out-grower firms
5.4.24 Adequacy of Information dissemination by the Out-grower firms to assist the Out-grower Farmers in Decision Making
5.5 Benefits of the Out-grower Scheme to the Community
5.5.1 Extension Services provided by the Out-grower Firms
5.5.2 Community Development by the Out-grower Schemes
5.5.3 Attributing Change in Community Development to the Out-grower Schemes
5.5.4 Rating Performance of the Out-grower Schemes
5.6 Findings from Key Informants
5.6.1 Out-grower schemes operating in Eastern Province
5.6.2 Success Recorded by Out-grower Schemes in Zambia
5.6.3 Challenges faced by the Out-grower Farmers and Out-grower Firms
5.7 Proposed changes that would result in both the out-grower farmers and out-grower firms to benefit from the out-grower schemes
5.8 Conclusion

CHAPTER SIX – DISCUSSION OF RESULTS
6.1 Introduction
6.2 Change in Poverty Reduction to Smallholder Farmers Participating in Out-grower Schemes
6.3 Smallholder Out-grower Farmers Understanding of the Operations of the Out-grower Schemes
6.4 Benefits to the Communities where the Out-grower Schemes are implemented
6.5 Results Relating to Tested Hypotheses
6.6 Conclusion

CHAPTER SEVEN – FINDINGS
7.1 Introduction
7.2 Discussion of the Main Findings
7.2.1 Answering the Research Questions
7.2.2 Gaps Identified in the Centralized Model Type of the Out-grower Scheme
7.2.2.1 Bias in the Selection and Recruitment of the Out-grower Farmers
7.2.2.2 Unequal Power Sharing
7.2.2.3 Lack of Transparency in the Pricing Mechanism
7.2.2.4 Exclusion of the Third Parties
7.2.2.5 Unfair Contracts
7.2.2.6 Lack of Insurance on the Loans
7.2.3 Knowledge Advancement on Out-grower Schemes to Reduce Poverty
7.2.3.1 The Framework of the Out-grower Scheme Management Model by the Author
7.2.4 Operationalization of the Out-grower Scheme Management Model
7.2.4.1 Partnership
7.2.4.1.1 Establishing Partnerships
7.2.4.1.2 The Out-grower Firm
7.2.4.1.3 The Smallholder Farmer
7.2.4.1.4 External Facilitators
7.2.4.2 Contract
7.2.4.3 Risk Sharing
7.2.4.4 The Enforcement
7.2.4.5 Equal Power Sharing Relationship
7.2.4.6 Sustainable Out-grower Performance
7.2.4.7 Household Income
7.2.4.7.1 Household Food Security
7.2.4.7.2 Improved Wellbeing
7.2.4.7.3 Consumption Expenditure
7.2.4.8 Poverty Reduction
7.2.5 Outcome Areas that Result from the Out-grower Scheme Management Model
7.2.5.1 Framework of the Concepts in the Outcome Areas
7.2.6 Operationalization of the Concepts in the Outcome Areas
7.2.6.1 Immediate Outcomes
7.2.6.2 Intermediate Outcomes
7.2.6.3 Ultimate Outcomes and Development Impact
7.3 Conclusion

CHAPTER EIGHT – CONCLUSION AND RECOMMENDETIONS
8.1 Introduction
8.2 Conclusions
8.3 Recommendations
8.4 Areas for Further Research
8.5 Limitations of the Study

REFERENCES

DECLARATION

I, Sunday Silungwe, do hereby declare that this Thesis is my original work and has not been submitted for a Doctor of Philosophy (Ph.D.) degree to the University of Lusaka or any other University. All that is borrowed from other scholars have been acknowledged and well cited in the place where they appear.

Full Name

Signature

Date

SUPERVISORS’ RECOMMENDATION

I have read and checked the Thesis written by Mr. Sunday Silungwe and do hereby confirm that it meets the minimum set standards of the University of Lusaka. I, therefore, recommend for the purpose of award of Ph.D.

Full Name Bernadette Mungai

Signature

Date 17.09.2019

I have read and checked the Thesis written by Mr. Sunday Silungwe and do hereby confirm that it meets the minimum set standards of the University of Lusaka. I, therefore, recommend for the purpose of award of Ph.D.

Full Name

Signature

Date

UNIVERSITY APPROVAL

I.and on behalf of the University of Lusaka do hereby confirm that I have read and examined the Thesis written by Mr. Sunday Silungwe, co-supervised by Dr. Bernadette Mungai and Eng. Dr. Kasongo Mwale Richard. I, therefore, approve/not approve this research work.

Full Name

Signature

Date

DEDICATION

A special dedication to my beloved wife Florence and my sons Sunday (junior), Daniel, and Alfred

ACKNOWLEDGEMENTS

There were days when I was sad, thinking whether I would be able to complete the Thesis. Then, my supervisors, friends, family members, faculty at the University of Lusaka, and colleagues encouraged me to tread on the path. I am sure; I have forgotten many people who would have helped me. Overly, I express my gratitude to all those who encouraged and helped me directly or indirectly in this journey.

Most sincerely, I wish to thank my Supervisors Dr. Bernadette Mungai and Eng. Dr. Kasongo Mwale Richard for guiding me conscientiously in the writing of the Thesis. I will remain greatly indebted to them for their commitment and dedication to the academic work.

My sincere gratitude goes to the University of Lusaka management team and support staff for their tireless support. I, also thank my employer U.S Peace Corps Zambia for allowing me to take leave to attend residential school at the University of Lusaka.

The time I spent at the University of Lusaka would not have been so cheerful without my fellow students most of whom have now become also my friends, especially Mr. Dyson Galatia. I thank them all.

Special thanks go to my wife Florence, my sons Sunday Jr., Daniel, and Alfred for the support they gave me and indeed all my friends too numerous to mention who helped me with little things that I could not have done without in my studies.

MOTIVATION

The motivation for me to study for a Doctor of Philosophy (PhD) degree program is the desire to attain education at the highest level in order to support research and consultancy services and to create a reservoir through publications emanating from such activities. We are living in an environment where change is inevitable. To keep up with change, it is morally right to continuously seek knowledge and be more fully engaged in finding solutions to societal problems. Further, the motivation is drawn from understanding the ontological positioning of the reality surrounding both the internal and external worlds of the out-grower scheme arrangements with regards to poverty reduction in rural Zambia.

Subsequently, it is motivating to draw on the epistemological perspectives to understand the source, limitations, and nature of knowledge regarding the operations of the out-growers projects in reducing poverty in rural Zambia. Similar, it is a motivation to conduct a study on ‘Evaluating the Effectiveness of the Out-grower Schemes in Reducing Poverty in Rural Zambia’. In this regard, the main objective of the out-grower schemes is poverty reduction. This is mainly aimed at improving the well-being of the people living in the rural area of Zambia. Overly, the motivation is coming from the Holy Bible, Luke 12:2-3 which says, “But there is nothing covered up that will not be revealed, and hidden that will not be known”. To this effect, it is only through conducting research that the truth can be known and adding knowledge.

APPENDICES

Appendix A: Questionnaire for the Smallholder Out-grower Farmers

Appendix B: Questionnaire for the Smallholder Independent Farmers

Appendix C: Interview Guide for the Key Informants

Appendix D: Map of the Eastern Province and the Districts

Appendix E: Map of Zambia and the Provinces

Appendix F: Similarities and Differences of Past Out-grower Schemes Studies between Zambia and Other Regions

LIST OF FIGURES

Figure 1.1: Centralized Model Framework

Figure 3.1: Contract Enforcement Theory Framework

Figure 3.2: Geographical Disparities Poverty Theory Framework

Figure 3.3: Failure Theory Framework

Figure 3.4 Conceptual Framework

Figure 7.1 Author’s Out-grower Scheme Management Model

Figure 7.2 Relationships of the Concepts in the Outcome Areas

LIST OF TABLES

Table 4.1: Distribution of Respondents

Table 5.1: Sex of Respondents

Table 5.2: Type of Respondent

Table 5.3: Cross tabulation on Sex by Type of Respondent

Table 5.4: Age of the Respondents

Table 5.5: Cross tabulation on Age by Type of Respondent

Table 5.6: Level of Education

Table 5.7: Cross tabulation on the Education Level by Type of Respondent

Table 5.8: Marital Status

Table 5.9: Number of Children of the Respondents

Table 5.10: Cross tabulation on the Number of Children by Type of Respondent

Table 5.11: Household Size

Table 5.12: Children Going to School

Table 5:13 Cross tabulation of Children Going to School by Type of Respondent

Table 5.14: Children Completed Secondary School

Table 5.15: Cross tabulation on Children Completed Secondary School by Type of Respondent

Table 5.16: Children up to Tertiary level of Education

Table 5.17: Cross tabulation on Children reached Tertiary education Level by Type of Respondent

Table 5.18: Cross tabulation on Meals taken per day by Type of Respondent

Table 5.19: Cross tabulation on House Owned by Type of Respondent

Table 5.20: Main Source of Income

Table 5.21: Income per Year

Table 5.22: Cross tabulation on Income by Type of Respondent

Table 5.23: Cross tabulation on the Source of Lighting by Type of Respondent

Table 5.24: Change in Income in the Last Five Years

Table 5.25: Asset Owned such as Cash at Bank by Type of Respondent

Table 5.26: Cross tabulation on the Change in the Assets Owned such as Cash at the Bank by Type of Respondent

Table 5.27: Asset Owned such as Cattle by Type of Respondent

Table 5.28 Cross tabulation on the Change in the Assets Owned such as cattle by Type of Respondent

Table 5.29: Cross tabulation on change in the number of Goats by Type of Respondent

Table 5.30: Cross tabulation on Asset Owned such as the Bicycle by Type of Respondent

Table 5.31: Cross tabulation on Asset Owned such as the Motor bike by Type of Respondent

Table 5.32: Cross tabulation on Asset Owned such as Car by Type of Respondent

Table 5.33: Asset Owned such the Phone Set

Table 5.34: Asset Owned such as Television Set

Table 5.35: Asset Owned such as Radio Set

Table 5.36: Cross tabulation on Asset Owned such as Ox-cart by Type of Respondent

Table 5.37: Source of Farming Inputs

Table 5.38: Description of the Process to Source Inputs

Table 5:39: Interpretation of the Coefficient of Variation and Coefficient of Consensus on the Source of Farming Inputs by Type of Respondents

Table 5.40: Crop Marketing

Table 5.41: Cross tabulation on the Accessibility of Crop Market by Respondent Type

Table 5:42: Interpretation of the Coefficient of Variation and Coefficient Consensus on Access to Market for Agricultural Produce by Type of Respondents

Table 5.43: Years as an Out-grower Farmer

Table 5.44: Out-grower Farmers benefit in Comparison to Independent Farmers

Table 5.45: Interpretation of the Coefficient of Variation and Coefficient of Consensus on benefits of being an Out-grower Farmer

Table 5.46: Out-grower Farmers’ Knowledge on the operation of out-grower schemes

Table 5.47: Interpretation of the Coefficient of Variation and Coefficient of Consensus on Understanding Out-grower Operations by Out-grower Farmers

Table 5.48: Information Dissemination on its Operations by the Out-grower Scheme

Table 5.49: Interpretation of the Coefficient of Variation and Coefficient of Consensus on Dissemination of Information by the out-grower Scheme

Table 5.50: Contracting with the Out-grower Schemes

Table 5.51 Interpretation of the Coefficient of Variation and Coefficient of Consensus on Signing a Contract by the Out-grower Farmers with the Out-grower Scheme

Table 5.52: Understanding the Contents of the Contract

Table 5.53: Interpretation of the Coefficient of Variation and Coefficient of Consensus on Understanding the Contents of the Contract by the Out-grower Farmers

Table 5.54: Understanding the Language in which Contract is written

Table 5.55: Interpretation of the Coefficient of Variation and Coefficient Consensus on the Language of the Contract

Table 5.56: Preference of the Language for the Contract to be written in

Table 5.57: Announcement of Agricultural Commodities Price by Out-grower Firm

Table 5.58: Effect of Agricultural Commodities Price Announcement on decision to do farming with the out-grower scheme

Table 5.59: Interpretation of the Coefficient of Variation and Coefficient of Consensus on the Effect of Price announcement on Farming Activities

Table 5.60: Out-grower Farmers’ Opinion on the Agricultural Commodities Pricing System

Table 5.61: Interpretation of the Coefficient of Variation and Coefficient of Consensus on the Out-grower farmers’ opinion on the Agricultural Commodity Pricing System

Table 5.62: Participation in Determining the Price of Agricultural Commodities

Table 5.63: Interpretation of the Coefficient of Variation and Coefficient of Consensus on Out-grower Farmers Participation in Determining the Price of Agricultural Commodities

Table 5.64: Stakeholders participating in Determining Price of Agricultural Commodities

Table 5.65: Control on Negotiations for Determining Price of Agricultural Commodities

Table 5.66: Effect of the Current Pricing Mechanism on the Out-grower Framers’ Profit

Table 5.67: Interpretation of the Coefficient of Variation and Coefficient of Consensus on the Effect of the Pricing mechanism on the Out-growers Farmers’ Profit

Table 5.68: Opportunity to sell the Agricultural Commodities Elsewhere by the Out-grower Farmers

Table 5.69: Interpretation of the Coefficient of Variation and Coefficient of Consensus on Selling the Agricultural Commodities elsewhere by the Out-grower Farmers

Table 5.70: Loan Repayment Management by the Out-grower Firms

Table 5.71: Disclosure of Loan Amount by the Out-grower Firms at the time of Collecting Inputs

Table 5.72: Interpretation of the Coefficient of Variation and Coefficient of Consensus on the Disclosure of Loan Amount

Table 5.73: Equivalence of the Loan Amount to the Prevailing Value of Inputs on the Market

Table 5.74: Interpretation of the Coefficient of Variation and Coefficient of Consensus on the Equivalence of Farming Inputs to the market value

Table 5.75: Loan Insurance

Table 5.76: Interpretation of the Coefficient of Variation and Coefficient of Consensus on Loan Insurance

Table 5.77: Loan Repayment

Table 5.78: Interpretation of Coefficient of Variation and Coefficient of Consensus on the difficulty of Loan repayment

Table 5.79: Factors making Loan Repayment difficulty

Table 5.80: Management of Loan Repayment Failure by the Out-grower firms

Table 5.81: Interpretation of the Coefficient of Variation and Coefficient of Consensus on Loan Default Management by the Out-grower firm

Table 5.82: Adequacy of Information by the Out-grower firms in Farmer’s decision making

Table 5.83: Interpretation of the Coefficient of Variation and Coefficient of Consensus on Information by the Out-grower Firms to help Out-grower Farmers in Decision making

Table 5.84: Benefits of the Out-grower Schemes to the Community

Table 5.85: Extension Services provided by Out-grower firms

Table 5.86: Community Development by the Out-grower Schemes

Table 5.87: Interpretation of the Coefficient of Variation and Coefficient of Consensus on Community Development by Out-grower Schemes

Table 5.88: Attributing Change in Community Development to Out-grower Schemes

Table 5.89: Interpretation of the Coefficient of Variation and Coefficient of Consensus on Attributing Community Development to Out-grower Schemes

Table 5.90: Rating Performance of the Out-grower Schemes

Table 5.91: Interpretation of the Coefficient of Variation and Coefficient of Consensus on Rating the Performance of the Out-grower Scheme

ACRONYMS AND ABBREVATIONS

ADMARC – Agricultural Development and Marketing Corporation

ADP – Agricultural Development Program

AGOA – African Growth and Opportunity Act

AGRA – Alliance for a Green Revolution in Africa

APP – Agricultural Promotion Policy

ARC – Agriculture Risk Coverage

ARISE – Achieving Reduction of child labor in Supporting Education

ASWAp – Agriculture Sector Wide Approach

ATA – Agricultural Transformational Agenda

AU – African Union

BLP – Better Life Program

CAADP – Comprehensive African Agricultural Development Program

CAZ – Cotton Association of Zambia

CB – Community Banks

CC – Coefficient of Consensus

CmiA – Cotton made in Africa

COMACO – Community Market for Agricultural Commodities

CPF – Country Partnership Framework

CPRC – Chronic Poverty Research Centre

CSO – Central Statistics Office

CSR – Cargill Social Responsibility

CV – Coefficient of Variation

DAS – Department of Agriculture Statistics

DFID – Department for International Development

DFRRI – Directorate for Food, Roads, and Rural Infrastructure

ERP – Economic Recovery Program

ERS – Economic Research Survey

FAO – Food and Agriculture Organization

FCPE – Free Compulsory Education

FEAP – Family Economic Advancement Program

FELDA – Federal Land Development Agency

FISP – Farm Input Subsidy Program

FSP – Family Support Program

GBI – Green Belt Initiative

GDP – Gross Domestic Product

GTA – Global Trade Atlas

IAPRI – Indaba Agricultural Policy Research Institute

IFAD – International Fund for Agricultural Development

IFC – International Finance Corporation

IIRR – International Institution for Rural Reconstruction

ILO – International Labor Organization

JTI – Japan Tobacco International

KIT – Royal International Institute

K-LEAP – Kutch Livelihood and Education Enhancement Program

LCMS – Living Conditions Monitoring Survey

MACO – Ministry of Agriculture and Cooperatives

MDG – Millennium Development Goal

MGGS – Malawi Growth and Development Strategy

NAP – National Agriculture Policy

NBS – National Bureau of Statistics

NDE – National Directorate of Employment

NGO – Non Governmental Organization

NS – National Survey

NWK – North-West Kooperatives

OECD – Organization for Economic Development and Cooperation

OFN – Operation Feed the Nation

PACRA – Patents and Companies Registration Agency

PBN – Peoples Bank of Nigeria

PFS – Partners in Food Solutions

PLC – Price Loss Coverage

PMBOK – Project Management Body of Knowledge

PPP – Purchasing Power Parity

RBDA – River Basin Development Program

RBP – Rural Banking Program

SADC – Southern Africa Development Community

SAP – Structural Adjustment Program

SCD – Systemic Country Diagnostic

SNDP – Sixth National Development Plan

SNDP – Seventh National Development Plan

SOE – State Owned Enterprise

SPSS – Statistical Package for Social Sciences

STEM – Science, Technology, Engineering, and Math

TNC – The Nature Conservancy

TVET – Technical Vocational Education and Training

UBPL – Upper Bound Poverty Line

UK – United Kingdom

UN Contrade – United Nations Commodity Trade

UNCTAD – United Nations Conference on Trade and Development

UNDP – United Nations Development Program

UNIDROTI – Institute for the Unification of Private Law

U.S.A – United Sates of America

USAID – United State Agency for International Development

USDA – United States Department of Agriculture

DEFINITION OF OPERATIONAL TERMS

For the purpose of this study, the following terms are used.

- Evaluation

The United Nations Development Program – UNDP (2017) defines evaluation as a rigorous and independent assessment of either completed or ongoing activities to determine the extent to which they are achieving stated objectives and contributing to decision making. Evaluations, like monitoring, can apply to many things, including an activity, project, program, strategy, policy, topic, theme, sector or organization (Svensson et al., 2018; Alkin & King, 2017). In this study, it entails to evaluating the effectiveness of out-grower schemes in reducing poverty in rural Zambia.

- Out-grower Scheme

An out-grower scheme is defined as a business organization or a model that provides production and marketing services to farmers on their own land (Poku et al., 2018). In this study, an out-grower scheme is a project that is managed on contract farming arrangement between the out-grower smallholder farmers and the out-grower firms.

- Project

A project is a temporary endeavor undertaken to create a unique product, service, or result (Huemann & Silvius, 2017; Williams, 2016; Project Management Body of Knowledge – PMBOK Guide, 2013). In this study, the project is known as the out-grower scheme.

- Smallholder Farmer

In Zambia, a smallholder is defined as a farmer that cultivates less than 5 hectares of crop farming (Ministry of Agriculture and Cooperatives – MACO, 2017). In this study, smallholder farmers are both out-grower farmers and independent farmers.

- Income

- is money that an individual or business receives in exchange for providing a good or service or through investing capital (Sambuo, 2018; Dube & Mugwagwa, 2017; Nishikawa, et al., 2016). In this study, income is money realized from the sale of products and services by both the out-grower farmers and independent farmers

- Consumption Expenditure

- expenditure is the purchase of goods and services for use by households (Bonsu, 2017). In this study, consumption expenditure is the total expenditure on the purchase of goods and services for use by the out-grower and independent households

- Assets

An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise (Mawih, 2014). For this study, assets entail money, infrastructure, livestock, and other household equipment and machinery owned by both the out-grower and independent farmers.

- Poverty

Poverty is multidimensional and complex in nature and manifests itself in various forms making its definition difficult. No single definition can exhaustively capture all aspects of poverty. Poverty is perceived differently by different people, some limiting the term to mean a lack of material wellbeing (Gallardo, 2018; World Bank, 2018; Watkins & Quattri, 2016; Central Statistics Office and Living Conditions Monitoring Survey – CSO & LCMS, 2015). In this study poverty is not being able to afford minimum basic human needs, comprising of food and non-food items.

- Poverty Reduction

It is the comprehensive transformational change needed to address the root causes of poverty through public policy interventions (Fosu, 2018; Aluko, 2017; Cruz et al., 2015; Edward & Summer, 2015; Jollies & Prydz, 2015; Kakwan & Son, 2015). In this study, poverty reduction entails the measures and/or strategies that the Governments put in place to reduce poverty.

- Poverty Line

The poverty line for a given individual can be defined as the money the individual needs to achieve the minimum level of welfare to not be deemed poor (World Bank, 2018; CSO & LCMS, 2015; Afrose, 2012; Duvendac et al., 2011; Stewart et al., 2010; Hermes & Lensink, 2009). In this study, the poverty line entails the sum of food and non-food poverty lines.

- Gini coefficient

The Gini coefficient is the measure of inequality (Davydov & Creseli, 2018; Fellman, 2018; World Bank, 2018; CSO & LCMS, 2015). In this study, the Gini coefficient entails the measure of consumption expenditure and income inequality trends in Zambia.

- Household

A household is defined as a group of persons who live and eat together (United Nations, 2017; CSO & LCMS, 2015). In this study, a household is referred to as family members of the smallholder out-grower and independent farmers.

- Household Well-Being

- is defined as the balance point between an individual's resource pool and the challenges faced (Mogilner, et al., 2018; Oskrochi et al., 2018; CSO & LCMS, 2015). In this study, the household well-being is the status brought about by change in the income, assets, and consumption expenditure of the out-grower farmers and independent farmers.

- Rural Area

According to the CSO and LCMS (2015) a rural area is a geographic area that is located outside towns and cities. This study defines a rural area as a settlement consisting of villages that are sparsely located with a low population and that agriculture is the main economic activity.

- Rural Development

It is sustained improvement of the population’s standards of living or welfare (Anriquez & Stamoulis, 2017; Ellis, 2000; ). In this study, rural development entails wealth creation for the rural community.

- Urban Area

It is an area that comprises cities, towns or conurbations (Moreno, 2017; Glaser & Henderson, 2017). In this study,

ABSTRACT

In 1991, the Zambian economy was liberalized and the agricultural sector was not spared. The out-grower private sector interest in outgrowing grew and has been on an increase ever since. In 1991, rural poverty stood at 88 percent and 46.8 percent for urban poverty respectively. The Living Conditions Monitoring Survey (LCMS) conducted in 2015 revealed that rural poverty stood at 76.6 percent and 23.4 percent for urban poverty respectively. To this effect, rural poverty still remains high and predominantly a rural phenomenon. This study, therefore, sought to evaluate the effectiveness of the out-grower schemes on reducing poverty and answer the general research question on how effective were the out-grower schemes in reducing poverty in rural Zambia.

Pragmatism was the philosophical view that underpinned the study and it applied to the mixed research method approach for this study. The convergent parallel strategy of the mixed research method approach was used. The target population was 50,000 smallholder farmers and a questionnaire with open ended questions (qualitative) and closed questions (quantitative) was administered to a sample size of 396 smallholders farmers, broken down as 196 out-grower farmers that were selected from the out-grower firms’ registers and 200 independent farmers that were selected from the village registers. The registers were used as the sampling frame. Simple random sampling was used to select smallholder farmers. An interview guide was used for 20 key informants that were chosen through purposive sampling method. A total of 416 respondents participated in this study. Qualitative data was analyzed by using the inductive process of building from the data to broad themes and then to a generalized model or theory. Quantitative data was analysed by using the Chi-square tests to ascertain association between critical variables measured by categories of out-grower farmers and independent farmers. The T-tests compared the treatment and control groups on variables of interest. The coefficient of variation (CV) was used to gauge the level of respondents’ disagreement (dissention) in responses while coefficient of consensus (CC) was used to gauge the level of respondents’ agreement (consensus) in responses, applied to the Likert scale and any other ordinal responses.

The findings from the study revealed that the out-grower schemes implementation has contributed to a positive change in poverty reduction to smallholder farmers participating in the out-grower scheme. Further, out-grower farmers have improved their knowledge in understanding the operation of the out-grower scheme. Subsequently, the out-grower schemes have benefited the communities. In this regard, the study concluded that the out-grower schemes have been effective in reducing poverty in the rural areas of Zambia. The study recommended that there was need to address the issue of power imbalance between the out-grower farmers and the out-grower firms. The out-grower firm has more power in terms of controlling out-grower schemes arrangements. Further, the high illiteracy levels among the rural farmers require that all documents, including contracts should be translated in the local language for ease of understanding. Subsequently, both the out-grower farmers and out-grower firms must adhere to their contractual obligations for the purpose of transparency and honesty. Finally, the out-grower farmers should be working towards an exit strategy of self-reliance to avoid perpetual dependence on the out-grower scheme on long-term.

KEYWORDS: Out-grower scheme, Out-grower firm, Out-grower farmer, Independent farmer

CHAPTER ONE

INTRODUCTION AND BACKGROUND

1.1 Introduction

“Out-grower schemes” and “contract farming” are often interchanged. In this study, however, the term “out-grower schemes” is used. Further, in this study, out-grower projects are known as out-grower schemes. The Government of the Republic of Zambia has in the past tried many development models in order to improve the standard of living of the rural populace. One of the rural development approaches adopted by the Government of Zambia has been the out-grower scheme. As such, this study sought to evaluate the effectiveness of the out-grower schemes in reducing poverty in rural Zambia. Chapter one presents the introduction and background of the study and related subtopics thereof. Further, it outlines the statement of the problem, the objectives, and research questions. Subsequently, it discusses the significance of the study, scope and delimitations, and structure of the thesis. Chapter One ends in a conclusion and precedes Chapter Two.

1.2 Background of the Study

Globally, agriculture plays an important role in supporting economic development. However, this requires the right policies and supportive investments in projects such as the out-grower scheme arrangement. Out-grower schemes offer opportunities to the rural populace to move out of poverty. Out-grower schemes have the potential to help reduce poverty in the rural area by creating employment, increased food security, and rural development (World Bank, 2018; Christiaensen & Martin, 2018; Manda et al., 2018). Alliance for a Green Revolution in Africa – AGRA (2018), indicates that using the out-grower scheme arrangement as the basis to grow the economy, requires a productivity revolution. In Zambia, agriculture is vital to economic development.

The population in Zambia was mainly concentrated in rural areas at 58.2 percent as compared to 41.8 percent in urban areas and about 1,700,000 households were in rural areas while about 1,300,000 were in urban areas (CSO & LCMS, 2015). Therefore, improving the lives of people in the rural areas can enhance national development. The Seventh National development plan (SNDP, 2017, p. 25) states that the enhancement of the out-grower scheme arrangements can improve the standard of living of the rural populace in Zambia. The study done by the World Bank on the general economic performance for Zambia indicated that smart agriculture policies that support out-grower schemes arrangement could have a wide spread positive impact (World Bank, 2017, p. 17)

In general, successful out-grower projects require good governance with accountability, effective and efficient government policies, and the rule of law. Governments need to build confidence and trust, which demand transparency. In this regard, the success of the out-grower scheme arrangements requires mutual trust, which in turn depends on accountability, transparency and contract enforcement. To be sustainable, the out-grower scheme must be economically viable, socially acceptable and environmentally neutral. To reduce the risks to smallholder farmers, the out-grower scheme should provide technical assistance and markets. This requires due diligence on the part of all partners and stakeholders.

1.2.1 Revised Zambia National Agriculture Policy 2012 - 2030

With the view of improving the agricultural sector, the National Agriculture Policy - NAP (2012, p. 14) has been revised. The implementation period was from 2012 up to 2030. During the implementation period, the Ministry of Agriculture intends to maximize the effort to meet macro targets indicated in the national vision. The vision of the agriculture sector is “A competing and diverse agricultural sector, propelled by equally and sustained development in agriculture” (2012, p. v). Subsequently, its mission is “To facilitate the development of a competing, diverse, equally and sustained agriculture sector”. The objectives of NAP that frontier support to the out-grower schemes are: to enhance acquisition of productive resources and services for smallholder farmers, especially marginalized groups such as the women and youth; and, to improve on public and private partnerships to enhance implementation of the agricultural policy, acquisition of resources, research and development, regulatory services, market development, and technology transfer.

1.2.2 Out-grower Schemes in Zambia

There were about thirty (30) out-grower schemes operators, operating Fifty-three (53) out-grower schemes in Zambia (MACO 2017). However, despite the liberalization of the economy and implementation of the out-grower schemes, the poverty level in the rural areas has remained high and poverty is still a rural phenomenon. Out-growers private sector interest in outgrowing has been on an increase since 1991. This was due to liberalization of the economy. Many out-grower schemes are involved in traditional agricultural commodities and on the top of the list are tobacco and cotton. Other crops are soybeans, cowpeas, groundnuts and sorghum. Out-grower farmers are driven by the comparative advantage that accrue to smallholder farmers and out-grower firms. Studies by Ton et al., (2018), Hichaambwa and Matenga (2016), and FAO, (2012a, 2012b, 2011, 2010a) have revealed that both the smallholder farmers and out-grower firms benefited from the out-grower schemes. For both parties, the ultimate goal is to reduce market uncertainty and realize profit.

The smallholder out-grower farmers, however, must have the knowledge on the operations of the out-grower schemes because out-grower schemes are in various forms and it is important to understand what is at stake for both the out-grower farmers and out-grower firm to reap the benefits, and the challenges of the partnership that arise thereof (Bellemare, 2018; Mishira et al., 2018; Poku et al., 2018; Ton et al., 2018; Schupback, 2014).

1.2.2.1 Out-grower Companies in the Eastern Province.

The out-grower companies that support the out-grower schemes in the Eastern Province are: North-western Kooperatives (NWK), China Africa Cotton, Japan Tobacco International (JTI), Good Nature Agro, Alliance Ginneries, Continental Ginneries, and Community Markets for Conservation Ltd (COMACO). The agricultural commodities financed by the out-grower companies are: cotton, maize, soybeans, groundnuts, pigeon peas, green grams, tobacco, sunflower, rice, and honey production as indicated by the Patents and Companies Registration Agency – PACRA (2018).

1.2.3 Types of Out-grower Models

Out-grower schemes can be classified into five basic models namely Centralized, Nucleus, Tripartite, Informal, and Intermediary (Ton et al, 2018; Bruntrup et al., 2018; Ahungwa et al., 2017; Torvikey et al., 2017; Razak et al., 2015; Bijman, 2008; Da Silva, 2005; Eaton & Shepherd, 2001). To this effect, the out-grower schemes in the Eastern Province have adopted and use the Centralized Model. However, the study outlines and discusses other models that are applicable in the out-grower scheme arrangements.

1.2.3.1 The Centralized Model

The centralized model entails a firm contracting with farmers, to produce agricultural commodities and sell to the contractor (Torvikey et al., 2017; Eaton & Shepherd, 2001). The study focused on the centralized model because the out-grower firms, supporting out-grower farmers in the Eastern Province, used the centralized model concept shown in Figure 1.1. Critics of the centralized model were of the view that out-grower firms often offered unattractive packages to farmers (Ramprasad, 2018; Navarra, 2018; Kaur & Kaur, 2018; Ton et al, 2018; Kunte et al., 2017; Vicol, 2017; Actionaid, 2015). In this situation, farmers were often seen as laborers on their own farms for the out-grower firms.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1.1 showing the Framework of the Centralized Model

Abbildung in dieser Leseprobe nicht enthalten

Figure 1.1: The Centralized Model Source: based on Eaton (1998)

1.2.3.2 The Nucleus Model

The nucleus-estate model is where the out-grower firm contracts out-grower farmers for farming on its land but also contract with independent farmers that farm on their own land. This model is suitable for perennial crops such sugar cane and tea production (Bruntrup et al., 2018; Ton et al., 2018; Eaton & Shepherd, 2001).

1.2.3.3 The Tripartite Model

The tripartite model is where a partnership of a public entity and a private firm, contracts with smallholder farmers (Ton et al., 2018; Ahungwa et al., 2017; Bijman, 2008; Eaton & Shepherd, 2001.

1.2.3.4 The Informal Model

The informal model is an arrangement between traders and farmers, often on a verbal basis (Ton et al., 2018; Eaton & Shepherd, 2001).

1.2.3.5 The Intermediary Model

The intermediary model is where the firm contracts with a middle person or organization who, then, deals with the farmers (Ton et al., 2018; Razak et al., 2015; Eaton & Shepherd, 2001).

1.2.4 Poverty Profile in Zambia

All estimates of poverty, shared prosperity and inequalities were based on the 2010 and 2015 Living Conditions Monitoring Surveys conducted by Zambia’s Central Statistics Office. The poverty line was the sum of food and non-food poverty lines. The food poverty line was obtained by updating the cost of the food basket. Non-food poverty line was the average nonfood expenditures of households whose total expenditure was close to the food poverty line. The national poverty line for 2015 was estimated to be Zambian Kwacha 214.26 per adult equivalent per month. This was slightly lower than the value of $1.9 (2011 Purchasing Power Parity - PPP), in 2015. Hence the $1.9 (2011 PPP) at 57.5 percent, was slightly higher than the national poverty level, 54.4 percent (World Bank Group, 2018; Mphuka et al., 2017)

1.2.4.1 Poverty Trends

The country-wide poverty rate, using the nation poverty line per adult of K214 (214 Kwacha – Zambian currency) per adult equivalent per month, remained largely unchanged over the 2010 – 2015 period. However, there was a marked difference between rural and urban areas. The poverty rate increased in rural areas from 73.6 percent in 2010 to 76.7 percent in 2015, and rural areas accounted for 82 percent of the poor. In urban areas, by contrast, poverty fell marginally from 25.7 percent in 2010 to 23.4 percent in 2015. While the increase in poverty in rural areas stemmed largely from low and deteriorating levels of agricultural productivity, the slight decline in poverty in urban was driven mostly by improvements in the mining, construction, and financial sectors all of which favorably impacted informal trade and self-employment (World Bank Group, 2018; Mphuka et al., 2017)

1.2.4.2 Shared Prosperity Trends

Over the 2010 – 2015 periods, consumption growth of the bottom 40 percent of the population was negative, at -0.6 percent. The shared prosperity premium was negative, at -3.5, implying that in contrast to the bottom 40 percent, the top 60 percent made some consumption gains. The contrast was mainly due to the divergence of consumption growth rates between urban and rural areas. Poor market access, increasingly erratic weather, and poorly developed rural institution were primarily responsible for the observed negative growth in the rural sector (World Bank Group, 2018; Mphuka et al., 2017).

1.2.4.3 Inequality Trends

Inequality increased in Zambia over 2010 – 2015 periods, largely because of a larger rural-urban divide in consumption levels. The Gini index increased from 55.6 to 57.1 in 2015. Consumption per person dropped for the bottom 40 percent in rural areas whereas it increased in the urban areas. The top deciles experienced gains throughout the country (ibid)

1.2.4.4 Population and Poverty Percentage by Province

Lusaka Province had the highest population at 2,777,439 and its poverty rate was the lowest at 20.2 percent while the Copper-belt Province was second in ranking with a population of 2,362,207 and its poverty rate stood at 30.8 percent. The Western Province had a population of 991,500 and its poverty rate was the highest at 82.2 percent. Luapula Province had a population of 1,127,453 and its poverty rate was 81.1 percent while the Northern Province had a population of 1,304,435 and its poverty rate was 79.7 percent. The Eastern Province had a population of 1,813,445 and its poverty rate was 70 percent while Muchinga Province had a population of 895,058 and its poverty rate was 69.3 percent. The North-Western Province population stood at 833,818 and its poverty rate was 66.4 percent while the Southern Province population stood at 1,853,464 and its poverty rate was 57.6 percent. The Central Province population was 1,515,086 and the poverty rate was 56.2 percent (CSO & LCMS, 2015)

1.3 Statement of the Problem

The main objective of the out-grower schemes was poverty reduction. This was mainly aimed at improving the well-being of the people living in the rural area of Zambia. However, the trend shows that the poverty level still remains high in the rural area of Zambia and predominantly a rural phenomenon. In 1991, rural poverty stood at 88 percent and 46.8 percent for urban poverty respectively (NS, 1991). The results of a survey conducted by CSO and LCMS (2015) show that the poverty level increased in the rural areas from 73.6 in 2010 to 76.7 percent in 2015. In urban areas, by contrast, the poverty level reduced marginally from 25.7 percent in 2010 to 23.4 percent in 2015. It is not clear whether the out-grower scheme has been effective as a model in contributing to reducing poverty in rural Zambia. It is against this background that the study sought to evaluate the effectiveness of out-grower schemes in reducing poverty in rural Zambia

1.4 Objectives of the Study

According to Creswell (2014) objectives do not provide answers to research but help to select the ontology, epistemology, human nature assumptions and methodology. However, the use of objectives in research are: to guide decisions about the kind of research design to apply; guide decisions about the kind of data to collect and from whom; guide decisions about the kind of method to use in the data analysis; guide decisions about the way to write the report; and objectives stop the researcher from going off in unnecessary directions and tangents. It is argued that the best objectives in a research report are those assertions that detail what steps need to be taken and at what stage and in what sequence in order to meet the research aim(s) (Rahi, 2017; Cohen et al., 2013; Collis & Hussen, 2013; Easterby et al., 2012; Saunders, 2011). It is research prudence that objectives need not to describe in broad terms what is to be done. They must state only one thought containing only one action (ibid). For the purpose of this study, the general and specific objectives are outlined as follows:

1.4.1 General Objective

The general objective of the study is evaluating the effectiveness of out-grower schemes in reducing poverty in rural Zambia.

1.4.1.1 Specific Objectives

In order to achieve the general objective, the study seeks to concentrate on the following specific objectives.

i. To establish changes in poverty reduction to smallholder farmers participating in out-grower schemes in Eastern Province.
ii. To determine smallholder out-grower farmers understanding of the operations of out-grower schemes Eastern Province.
iii. To establish the benefits to the communities where the out-grower schemes are implemented in Eastern Province.

1.5 Research Questions

A research question is a statement that seeks an answer within the phenomenon to be studied. In a study, there may be one overarching research question and subsidiary questions. The best way to ground research is to have a few questions. It is important that research is organized around a set of questions that provide guidance to achieve the desired research outcomes (Skovdal & Cornish, 2015; Green et al., 2015; Flick, 2014; Kilburn et al., 2014; Early, 2014). Further, the significance of the research questions lies in their ability to bring direction and specificity to research work (Creswell, 2014; Markussen et al., 2012; Sevaldson, 2010; Zimmerman et al., 2010; Tashakkori & Creswell, 2007; Ethridge, 2004). For this study, the general research question and sub research questions are outlined as follows:

1.5.1 General Research Question

The general research question provided the focus and direction of the research. The question is: How effective were the out-grower schemes in reducing poverty in rural Zambia?

1.5.1.1 Sub Research Questions

The following sub research questions seek to disaggregate the main research question by providing a holistic approach and an in-depth evaluation on relevant variables in order to realize research outcomes and draw relevant conclusions of the study.

i. What changes have out-grower schemes brought to poverty reduction to the smallholder out-grower farmers in Eastern Province?
ii. What is smallholder out-grower farmers understanding of the operations of the out-grower schemes in Eastern Province?
iii. How have the out-grower schemes benefitted the communities in Eastern Province?

1.6 Significance of the Study

The knowledge gained from the study may also help in enhancing the development of the out-grower schemes as a poverty intervention tool in Zambia. Further, the findings could be used in poverty reduction interventions to improve the standard of living of the rural populace. Subsequently, it is envisaged that the study may bring out economic theories that may be helpful in analyzing the impact of out-grower schemes on farmers, agribusiness firms and host Government. According to Actionaid (2015), little attempt has so far been made to consider the basic economic theories relevant to contract farming and out-grower schemes that can provide insight in controversies surrounding such programs. Additionally, the results of the study could contribute towards filling the information gap on the title of the study. Finally, the study may provide an opportunity for areas for further research.

1.7 Scope of the Study

The study was conducted in the Eastern Province of Zambia. The Eastern Province has nine districts namely Chipata, Chadiza, Vubwi, Katete, Sinda, Petauke Nyimba, Mambwe, and Lundazi (see appendix D). The study covered eight of the nine districts. Vubwi district was left out due to bad roads that made accessibility difficult. These districts were chosen on the basis that they had out-grower farmers. The units of the study were smallholder out-grower farmers as the treatment group, and smallholder independent farmers as the control group. Success was measured by comparing the groups and the variables measured were income, assets and consumption expenditure.

1.7.1 Profile of the Eastern Province

The Eastern Province covers an area of 69,106 square Kilometers (6.9 million hectares) and is located in the eastern part of the country between longitude 30 and 33 degrees east of the Greenwich Meridian, and latitude 10 and 15 degrees, south of the Equator (see appendices D & E). Malawi in the east and Mozambique in the south are its immediate international neighbors. Internally, the Luangwa Valley makes the boundary in the north-west, sharing the border with Lusaka Province to the west and Northern Province to the north. The major part of the province is located on the Central African plateau, which rises to an altitude of 900 to 1200 meters while a smaller part of it lies in the Luangwa Valley at 300 to 600 meters above sea level (CSO & LCMS, 2015).

Out of the 6.9 million hectares of land, 2 million is suitable for cultivation and 1.1 million for animal grazing. Generally, the climatic conditions in the Province are favorable to most crops under rain fed conditions, with a rainfall of 800 to 1200 mm per year, and crop growing period of 125 to 140 days. The Province has an estimated population of 1,813,445 inhabitants with a growth rate of 2.6 percent per annum, slightly below the national average which is estimated at 3 percent. The average population density is estimated at 18.8 inhabitants per square Kilometer. The Province has approximately 372,298 households and 87.8 percent of these households are rural and the majority of them are engaged in farming while 12.2 percent of household are urban. The female population was the majority with 50.62 percent (917,603), while the male population accounts for the remaining 49.38 percent of the total population (CSO & LCMS, 2015)

1.8 Thesis Structure.

The study is organized in Eight Chapters. Chapter One is the Introduction. It comprises introduction, background of the study, the statement of the problem, the research questions and research objectives. Further, it outlines the significance of the study, scope and delimitations, and the organization of the thesis structure. The conclusion ends chapter one that precedes Chapter Two.

Chapter Two is the Literature Review. It provides an opportunity for the researcher to stand on the shoulders of the “Giants” to review similar and/or related work done by other scholars in order to identify gaps and be able to add knowledge and/or create new knowledge altogether. In this study, the literature review takes the funnel model that reviews literature from the World, Africa, Southern Africa Development Community - SADC and local (Zambia) perspectives. Chapter Two ends with the conclusion and precedes Chapter Three.

Chapter Three is the Theoretical and Conceptual Framework. It provides a related theoretical and conceptual framework by identifying and discussing relevant theories and concepts to the study. Furthermore, it sets the platform for the discussion of the operationalization of the concepts in order to show how the problem at hand may be resolved. Chapter Three ends with the conclusion and precedes Chapter Four.

Chapter Four is the Research Methodology of the study. It sets and rolls out a road map on how the study is conducted. Chapter Four is the core of the study. It comprises the introduction, philosophical assumptions, the philosophical view for the study, the research approach, research strategy, target population, sample size and sampling procedures, data collection techniques, data analysis techniques, pilot study, validity, credibility, reliability, and ethical considerations. Chapter Four ends with the conclusion and precedes Chapter Five.

Chapter Five is the Data analysis, Presentation and Results of the study. It deals with in-depth data analysis interpretation and the results. Chapter Five ends with a conclusion and precedes Chapter Six. Chapter Six presents is the Discussion of Results. It ends with a conclusion and precedes Chapter Seven. Chapter Seven presents the findings. Chapter Seven ends with a conclusion and precedes Chapter eight which outlines the conclusions and recommendations, areas for further research, including limitations to the study

1.9 Conclusion

Chapter one discussed important aspects in project management, specifically focusing on evaluating the effectiveness of the out-grower projects in reducing poverty in rural Zambia. The out-grower model was recommended through authentic research as a viable tool for poverty reduction to the rural populace. It was in this regard that the Zambian government encouraged the private sector to venture in out-grower schemes. The trend showed that rural poverty levels had remained high. The population that was poor in rural areas had almost remained at the 2010 level of about 76 percent. In 2015 rural poverty was estimated at 76.6 percent, which was three times higher than what was obtaining in urban areas, at 23.4 percent. Chapter One established the introductory ground to the study and precedes Chapter Two which is Literature review.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

An attempt has been made to carry out extensive literature review dating from 1967 to 2018, taking into consideration the extent and/or volume of the literature that was relevant to the study. This chapter started by giving a brief history and extent of the out-grower schemes. Further, the chapter looked at some of the literature available that was related and/or similar to this study at three levels namely: the World, Africa, and Southern African Development Community – SADC, including Zambia in particular. In this regard, therefore, the funnel approach of reviewing literature was used. For each specific country selected, the outline of the literature review included: overview of the agriculture sector; poverty trends; poverty reduction strategy; the effect of the out-grower scheme on reducing rural poverty; and out-grower scheme support to the independent farmers and community at large. Chapter two ends with a conclusion.

Studies have revealed that the out-grower scheme diversity was not only with regard to the product grown but also to its structure and management (Ton et al., 2018; Ton et al., 2017; Andersson et al., 2015; Wainaina et al., 2014; Da Silva & Shepherd, 2013; Peltger & Rottger, 2013; Tschirley & Kabwe, 2010). Regardless of its design, the out-grower scheme shared characteristics such as inputs provision, extension services, contracts management, farmer management, production and processing; and marketing (Euler et al., 2016; Kalinda & Bwalya, 2014; Kingu, 2014; Michelson, 2013; Kassie, 2011). The way in which each of these characteristics was addressed, defined the nature of the scheme and its long-term viability (Poku et al., 2018; Institute for the Unification of Private Law - UNIDROIT-FAO, 2016; International Fund for Agricultural Development (IFAD), 2014; Mwansakilwa et al., 2013; Muhammad et al., 2013; International Finance Corporation (IFC), 2012)

2.2 History and Extent of Out-grower Schemes.

The out-grower scheme arrangement has been a feature of agricultural economics for millennia. Eaton and Shepherd (2001) highlight that contract farming appeared to be an innovation of the last 100 years or so. Little and Watt (1994) posit that out-grower schemes have been utilized since the nineteenth century in Asia, Central America, and the United States of America. Further, the out-grower scheme arrangement was used in Europe as well (Rehber, 2007). Since then, the out-grower scheme has been used to organize agricultural value chains.

Within transitional economies, the out-grower scheme also played an important role. The out-grower scheme arrangement has also played a significant role within transition economies of Eastern Europe countries such as Czech Republic, Slovakia, Hungary, Armenia, Georgia, Moldiva, Ukraine and Russia (Swinnen and Maretens, 2007). Similarly, there has been an increase in the out-grower scheme arrangements in South America since the 1950s. Honduras adapted it for bananas while Peru applied it on barley and Mexico incorporated it in growing vegetables and grain. Brazil has taken it to the levels over 70 percent for poultry production and 30 percent for soya production respectively (United Nations on Commerce, Trade and Development - UNCTAD, 2009)

In Sub-Saharan Africa, the out-grower scheme has been on the increase. In the past, the Government had full or partial ownership of the out-grower schemes but now most of projects were in private hands (Bolwig et al., 2009). In the third world, the private sector has dominated in the establishment and management of out-grower schemes.

2.3 Literature Review at World level

With regards to evaluating the effectiveness of out-grower schemes in reducing poverty in rural areas, it was necessary to explore widely by reviewing literature on selected countries at world level. The countries selected were the U.S.A, Brazil and China. The criterion used on the selection of the countries was a representation of North America, South America and Asia.

2.3.1. The United States of America

The United State of America (U.S.A) was one of the countries selected for literature review at the world level. The selection of the countries was done without bias but to triangulate and try to explore and review the literature extensively in North America.

2.3.1.1 Agriculture Sector Overview

According to United States Department of Agriculture – USDA and the Economic Research Service – ERS (2017), the U.S.A. agricultural sector was diverse and varied. It comprised crop production as well as livestock production. Crop production consisted of traditional crops such as maize, soybeans, wheat and cotton. There was also farming for horticultural products such as fruits and vegetables. The contribution to the economy and scale of each of these activities as well as the nature of the market and production parameters varied geographically, depending on the agro ecological zones, prevailing marketing conditions and other determining factors. To this effect, return on investments in agriculture and econometrics of rural economics can differ significantly across the U.S.A (USDA & ERS, 2017)

The annual national net farm income determined the performance of the farm sector because it was a significant indicator to show the whole economic standing among an array of production processes, input cost, and prevailing marketing conditions, at a certain time. When national net farm income is reflected together with a measure of the national farm debt-to-asset ratio, the two summary measurements show a quick and extensively referral indicator of the economic performance of the national farm economy (Schnepf, 2018).

2.3.1.2 Poverty Trends in the USA

Official poverty level reduced in the 1960s. Since the 1960s, it has been in the range of 11 - 15 percent. It increased in difficulty times of the economy and reduced during times of economic boom. In 2015, about 43.1 million individuals (13.5%) were in poverty, as determined by the official poverty line. This was a reduction from the climax of the Great Recession in 2010 at 15.1 percent (Chaudry et al., 2016; Proctor et al., 2016). According to supplementary poverty rate, 45.7 million people were poor in 2015, a rate slightly higher than the official measure by 14.3 percent. This showed that supplementary poverty measure levels were higher in general than the official poverty levels (Christopher et al., 2018; Christopher et al., 2016; Robert, 2015; Lippold, 2015; Ratcliffe & McKernan 2013).

2.3.1.3 Poverty Reduction Strategy

The effect of respective Government policies and programs on the poverty level can be specifically shown using the supplementary poverty statistic available only in latest years (Chaundry et al, 2016). Overly, Social Security had the most significant effect on reducing poverty (Meyer & Wu, 2018). Supplementary poverty level would have been 8.2 percentage points higher, or 23.5 percent, if individuals and families did not get any Social Security benefits in 2016 (Christopher et al., 2018). Refundable tax credits were second ranked in terms of the most significant effect. Poverty would have been 2.1 percentage points higher in the absence of the Earned Income Tax Credit (EITC) alone (Christopher et al., 2016). Excluding EITC and the additional child tax credit would have risen to the poverty level by 3.1 percentage points in 2016. About 9.8 million people would have been poor in 2016 without refundable tax credits. Nutrition assistance to individuals and families ranked third as most significant anti-poverty effect, after tax credits (Indivar et al., 2018; Craig et al., 2018; Pamella, et al., 2018; Maria & Meyer, 2018; Sara, et al., 2018; Mark , et al., 2018; Eckrich et al., 2018; Jenifer & Hill, 2018; Diana et al., 2018; Charles et al., 2017; Chaundry et al, 2016).

2.3.1.4 The Effect of Out-grower Schemes on Reducing Rural Poverty

The out-grower scheme arrangement has expanded in the USA. Thirty-one percent (31%) of the total agricultural production derive from the out-grower scheme (Ton et al., 2018; Young & Hobbs, 2002). As far back as 1950, out-grower schemes have become widespread because of improved technology, globalized markets and continuous demand for farm produce. However, smallholder farmers can only benefit from such agricultural enterprises by participating in the out-grower scheme arrangements. Out-grower schemes provided to smallholder farmers an array of benefits such as credit for farming inputs and extension services. It provided training in farming techniques that improved farming practices to increase crop yield and income, and improved the quality of agricultural commodities (William, et al., 2012; Summer, et al., 2012; European Parliament, 2012).

Government must put in place a regulatory frame work that supports the implementation and operations of the out-grower scheme. To this effect, both the out-grower farmers and the out-grower firm must ensure adherence to their contractual obligations. In this regard, smallholder farmers were able to reduce poverty. Despite benefits that came from the out-grower schemes to the smallholder farmers and the out-grower firms, there were challenges faced by both parties such as not honoring contractual obligation, loan default, low prices, mistrust, lack of transparency, and imbalanced power relationship between the out-grower firm and smallholder farmers (Schnepf, 2018; Lorenzo & Leonard, 2010; Vermeulen, 2010).

2.3.1.5 Out-grower Scheme Support to the Community at Large.

The out-grower firms that managed the out-grower schemes did not only support out-grower smallholder farmers but extended the support to the independent smallholder farmers and the community at larger. For example, in the United State, Cargill used its program known as Smart precision agriculture system that utilized satellite pictures and soil sampling to collect data on variables that affected yields for a specific field. Farmers made use of the data to plant seed and apply fertilizer exactly where it was needed in order optimize performance. This in turn increased yields with less waste and reduced effect on the environment (Cargill Corporate Social Responsibility – CSR Report, 2014).

2.3.2 Brazil

Brazil was another country selected for literature review at the world level. The selection of the countries was done without bias but to triangulate, explore and review the literature extensively in South America.

2.3.2.1 Agriculture Sector Overview

The agricultural sector was the anchor of the economic performance of Brazil. Although the agriculture’s share of GDP was not more that expectation, going by the country’s rate of development, at 5.4 percent in 2010-13, Brazilian agriculture has grown strongly and steadily for a period of more than three decades (Food and Agriculture Organization - FAO, 2018). Total agricultural output has increased by fifty percent in volume in comparison to its rate in 1990 and livestock production has almost quadrupled. This was due to enhancement of primarily productivity related to the out-grower scheme arrangements. The sector made a tremendous contribution to the country’s trade balance. Exports by agriculture and agro-food industries realized a total of over 86 billion U.S dollars in 2013, reflecting 36 percent of total exports (FAO, 2018; Instituto Brasileiro de Geografia e Estatistica, (Brazilian Institute of Geography and Statistics - IGBE), 2016; Moreira, 2009; Valdes, 2006).

These exports significantly reduced deficits in other sectors and have been increasing in importance, enhancing the sector’s role as the source of foreign currency. Brazil’s agricultural exports made it a major contributor to international markets. Globally, Brazil ranked second as largest agricultural exporter and the biggest supplier of sugar, orange juice and coffee. In 2013 it over passed the United States as the largest source of soybeans and it was a major exporter of tobacco and poultry. It was also a major producer of maize, rice and beef, the majority of which were supplied to large domestic market (Filho, 2017; Nassar & Ures, 2015; World Bank, 2015; Organization for Economic Cooperation and Development - OECD, 2014). Finally, agriculture in Brazil was a significant supplier to the country’s energy supply. Renewable energy from agriculture consisted of sugarcane biomass (42%), hydraulic energy (28%), firewood (20%) and other sources (10%). These accounted for almost fifty percent of the total energy supply (Ministério de Minas e Energia, Empresa de Pesquisa Energética - MME/EPE, 2013b).

2.3.2.2 Poverty Trends in Brazil.

Contraction of the economy in 2015 led to a sharp increase in poverty, which reached 22.1 percent at $5.5/day (2011 PPP), after ten (10) consecutive years of poverty reduction (World Bank, 2017). The increase in poverty was observed in most regions but was highest in Northwest and in urban non-metropolitan areas. The rise in poverty was due to the decline in labor income.

Given the Gross Domestic Product – GDP contraction in 2016, poverty rates were estimated to have increased further to 23.5 percent at $5.5/day (2011 PPP) in that year (ibid). In 2015, growth in incomes was much lower than in previous years. Mean income annualized growth was 2.2 percent, compared to 4.1 percent between 2009 and 2014 and 4.8 percent between 2009 and 2012. However, incomes among the bottom 40 percent rose more rapidly than the general population (3.9 percent compared to 2 percent). In 2015, mean income decreased by 6.5 percent for the bottom 40 and 6.4 percent for the top 60 (World Bank, 2017). Brazil had accomplished impressive reductions in inequality between 2000 and 2014 as a result of rapid growing formal employment, and high real wages redistributive social assistance programs. The Gini-coeffient decreased by 8.5 points between 2001 and 2014, going down from 59.4 to 51.5. In 2015, it leveled at 51.4 (ibid)

2.3.2.3 Poverty Reduction Strategy

One of the most significant achievements of the economy of Brazilian over the past ten years has been the outstanding reduction in poverty and hunger. A new strategy to finding solutions to these challenges was implemented in 2003 with the launching of the Zero Hunger Program. The model adopted in Brazil instigated a break through; by waging war on poverty and hunger, a central policy priority. The model took into consideration that the multi-sectoral context of the challenges needed concerted efforts in all government departments, and partnership with civil society. This strategy has aroused interest globally, and efforts to implement the Brazilian strategy are being channeled in numerous countries of Latin America and also in certain countries of Africa and Asia (FAO, 2014).

2.3.2.4 The Effect of Out-grower Schemes on Reducing Rural Poverty

In Brazil, out-grower schemes increased in number during the 1960s and through the 1980s, yielding 1.4 percent per year (FAO, 2014). Much of the crops grown, using the out-grower scheme model, rose from 2.3 million hectares in 1960 to almost 3 million hectares during the late 1960s and early 1970s. However, lower prices given by out-grower firms had a negative effect on out-grower scheme (Vorley, et al, 2012; Seville et al. 2011).

Critics have argued that the effect of out-grower scheme on reducing rural poverty has not been significant in Brazil (Actionaid, 2015). Transactional and overhead costs were a colossal amount when dealing with smallholder farmers on contract farming ventures such as the out-grower scheme. To this effect, agribusiness firms preferred to engage with medium or large-scale farmers (De Schutter, 2011). A recent World Bank/UNCTAD analysis of investments in large-scale land acquisitions, noted that out-grower schemes tended only to be accessible to larger, better-off small-holders. A rice contract farming in Cambodia, was found to be not inclusive of the poorest farmers and required public sector support to lower the transaction costs of working with them (World Bank/UNCTAD, 2014; Junning et al, 2008)

2.3.2.5 Out-grower Scheme Support to the Community at Large

As an out-grower firm, Cargill extended its service to independent farmers and community at large in South America. For example, in Brazil, Cargill engaged with The Nature Conservancy - TNC which supported farmers to grow soybeans in order to reap economic benefits in a sustainable manner since 2004. Cargill assisted to put on map 11 million hectares of private Brazilian land in Mato Grosso and Pará by utilizing satellite-based monitoring that enabled for a precise evaluation of producers’ compliance with the Brazilian Forest Code of Conduct, helping to prevent deforestation (Cargill – CSR Report, 2014). This strategy is currently being used as part of the Brazilian government’s rural environmental frame on record keeping. Brazilian Farmers benefited from the program to improve on agricultural practices and increase cocoa yields sponsored by Gargill.

2.3.3 China

China was another country selected for literature review at the world level. The selection of the countries was done without bias but to triangulate, explore and review the literature extensively in Asia.

2.3.3.1 Agriculture Sector Overview

At 1.3 billion, China had the largest population, relating to about twenty-two percent (22%) of the world. Statistics indicated that two thirds (871 million) of the population lives in the rural area (Yu & Wu, 2018). Despite China having the world third largest area of 960 million square kilometers, the arable area was only 107 million hectare, equivalent to seven percent (7%) of the global arable land. Therefore, agriculture was a significant sector that did not only guarantee the supply of food and other agricultural commodities for the largest population but also the source of household income for the rural populace. The long-term objective that guided China’s agriculture development was to meet the increasing demand of food and other agricultural commodities in order to enhance rural development. This could increase income and lift the living standards of the people in the rural area, which overly, translated to sustained and enhanced development of agriculture, rural areas, as well as farmers (ibid).

2.3.3.2. Poverty Trends in China

China experienced a sustainable reduction in poverty rates under all poverty lines considered. This was the result of continued economic growth above 6 percent since 2010. This economic growth had also brought shared prosperity and in turn brought fast welfare gains. This was measured by household consumption, to all members of society and particularly those at the bottom 40 percent of the distribution. In addition, there was evidence of falling income inequality. Official data indicated a decline in income inequality as measured by the Gini coeffienct falling from 0.491 in 2008 to 0.462 in 2015 (a trend also observed by independent researchers using different data and methods). The causes for this decline in income inequality was presumed to be related to a narrowing of the rural-urban income gap (World Bank, 2017)

2.3.3.3 Poverty Reduction Strategy

Relating to post-1978 reform period, China reduced poverty through specific government reform policies and rapid economic growth. According to the official poverty rate, the number of poor people estimated was about 200 million in 1981 to 28 million in 2002. Alternatively, using the World Bank’s $1/day income measure, the number of the poor was estimated to have reduced from about 490 million to 88 million over the same period, a reduction in poverty incidence from 49 percent in 1981 to 6.9 percent in 2002 (Namise & Zhuang, 2018; Li et al., 2016; World Bank, 2003; Zhang et al., 2003; Fan et al., 2002; Gao, 2001; Sangui, 2001).

China’s poverty reduction has been accomplished mainly through quick economic growth . Real GDP progressed at an average of 9.4 percent per year in the period 1979 to 2003. The increment was obtained through continuous reform and structural changes. These included changing from central planning to markets and from agriculture to manufacturing and services. Further, government opened its doors to international trade and knowledge transfer. Poverty in China is a rural phenomenon. At the beginning of the 1980s, absolute poverty in the urban population was 0.3 percent as compared to 28 percent of the rural population (Du & King, 2018; Li et al., 2016; Zhang et al., 2003).

Since the limitation of rural-urban migration, growth in rural areas was significant in reducing poverty. In the early 1980s, when fast rural growth emerged from institutional reforms, including institutional changes in land tenure, production, distribution and procurement prices, the poverty rate in China rapidly reduced by fifty percent (50%) from 49 to 24 percent at the $1/day income rate. The number of rural poor dropped from 250 million in 1978 to 125 million in 1985 as measured by the official poverty line (Li et al., 2016; National Bureau of Statistic – NBS, 2002; Park et al., 2002; World Bank, 2001; Li, 2001a; Wang et al., 1999).

2.3.3.4 The Effect of Out-grower Schemes on Reducing Rural Poverty

Various studies have revealed that the proportion of the out-grower farmers were smallholder in nature but smallholder farmers were less likely to participate in the out-grower schemes than larger farmers (Huang et al., 2018; Cieślik, 2016; Gou et al., 2006). Nonetheless, Little and Watt (1994) indicated that ‘‘incomes from the out-grower scheme increased from a moderate (30–40%) to a high (50–60%) proportion of participants.” In a study on the out-grower scheme in China in the early 1990s, Porter and Phillips-Howard (1997) highlighted that farmers were generally better off as a result of their participation in the out-grower scheme, in spite of a number of social problems that arose in the communities. Singh (2002) identified a series of challenges associated with the out-grower scheme arrangement in China. These included imbalanced power between farmers and companies, violation of the terms of the agreements, social differentiation, and environmental sustainability problems. Nonetheless, other studies revealed that smallholder farmers that participated in the out-grower scheme had seen incomes raise and were satisfied with the out-grower scheme arrangements (Yang et al., 2018; Huang et al., 2018; Bernard et al., 2010; Bolwing et al., 2009).

2.3.3.5 Out-grower Scheme Support to the Community at Large

In partnership with the rural communities, Cargill was implementing a project called Natural Resource Conservation for Profit (NRCP). The project built capacity of the smallholder farmers in conservation and economic utilization of the natural resources in order to increase their household income. The project had picked and concentrated its efforts on three key areas of the natural resources conservation namely land, forestry and water. With regards to land conservation, farmers were receiving training in conservation farming which was an improved farming practice that conserved the soil and provided for efficient and/or economic use of farming inputs in order to realize a higher return on investment. Smallholder farmer were organized in groups and each group was supervised by a lead farmer.

The mode of teaching was adult learning through practical work and the learning took place in the Farmer Field Schools (FFS) which were an open air set up as opposed to a closed up classroom arrangement. The learning was enhanced by organizing field day where the project show cased the improved farming practices through conservation farming. Concerning the conservation of water, smallholder farmers were receiving training in water harvesting techniques and economic utilization. To this effect, the project has engage smallholder farmers in gardening, citrus fruits production and fish farming. Further, in the area of forestry, smallholder farmers were engaged in woodlots establishment, bee keeping and carpentry (Cargill – CSR Report, 2014)

2.4 Literature Review at Africa Level

The countries selected for literature review were Nigeria to represent West Africa, Kenya to represent East Africa and Malawi, South Africa and Zambia to represent the Southern Africa Development Community - SADC. Out-grower schemes have become widespread in Africa.

2.4.1 Nigeria

At the African level, Nigeria was one of the countries selected for literature review. The selection was randomly done without bias but to triangulate and cover West Africa evenly. None of countries were chosen from North Africa because much of that region is covered by the desert and unsuitable for agricultural projects such as the out-grower schemes.

2.4.1.1 Agriculture Sector Overview

Agriculture was Nigeria’s single largest economic sector. In 2016, agriculture accounted for 24.4% Gross Domestic Product – GDP. The sector was highly concentrated on crop production, which accounted for 90 percent of output. Fisheries, forestry, and livestock, accounted for the remaining 10 percent. Though agriculture made up a sizeable portion of economic activities in Nigeria, the sector’s impact on Government and export revenues was relatively small, accounting for only 4.8 percent of total foreign earning in 2016. In spite of this, Nigeria’s agricultural potential was high because Nigeria has 82 million hectares of land that could be cultivated but so far, only 34 million hectares were cultivated. With Government’s focus on diversification through import substitution, as well as Nigeria’s large and growing population, agriculture was increasingly becoming important as a source of industrial raw material (Abubakar, et al., 2018; World Bank, 2017; Carana Corporation, 2017; National Bureau of Statistics, 2016; Marin, 2016; Mgbeka & Mbah, 2016; The Federal Ministry of Agriculture and Rural Development, 2016; Verter & Becvarova, 2016; Ajani & Igbokwe, 2014; Chigunta et al., 2007; UNCTAD, 2005; Baffes, 2004). Nigeria’s value chain was characterized by 80 percent of smallholder farmers and a few commercial processors, plagued by inadequate inputs, obsolete technology, and poor financing

2.4.1.2 Poverty Trends in Nigeria

Nigeria’s economy was characterized by a large proportion of rural agriculture-based traditional sector with about two-thirds of the rural populace living in poverty. A small urban, capital-intensive sector has benefited from the country’s resources and the provision of services that the Government has made available (Abubakar, et al., 2018; Ahungwa et al., 2017; Olomola, 2007; Olomola, 2006; World Bank, 2006; Keyser, 2006). As was the trend in many of the African countries, the agricultural sector was characterized by smallholder poor farmers and informal traders who lived in the rural area. The formal, capital-intensive sector was characterized by few multinational firms, a chain of small local industries, and a complex of Government parastatals, propelling largest area of economic activity.

Only a relative narrow stratum of the population has befitted from Government and foreign investment. The majority of the people was yet to benefit from high productivity or increased real wages (Ahungwa et al., 2017; Walkenhost, 2006; Manyong et al., 2005; Yee & Paludetto, 2005; World Bank, 1996a). Ogwumike (2002) indicates that the number of those in poverty increased from twenty-seven percent (27%) in 1980 to forty-six percent (46%) in 1985. It dropped slightly to forty-two percent (42%) in 1992, and increased sharply to sixty-seven (67%) percent in 1996. By 1999, the estimated poverty rate was more than seventy percent, (70%) which prompted the federal government to strategize on the intensification of approach to tackle the increase in the poverty rate (Abubakar, et al., 2018).

2.4.1.3 Poverty Reduction Strategy

It was on record that programs have been implemented to tackle poverty in Nigeria (Ifeoma et al., 2018). A myriad of schemes have been used to reduce rural-urban migration; encouraging agricultural production; increasing human resource to enhance raw material utilization; and increasing real income. Some of the notable schemes were River Basin Development Authorities (RBDA); the Rural Electrification Scheme (RES); the Agricultural Development Programs (ADP); the Rural Banking Program (RBP); Operation Feed the Nation (OFN); and Free Compulsory Education (FCPE) of 1977. Although the schemes were meant for good will, they could not meet the aim to reduce poverty because of incompetence in management. The Government invested a colossal amount of money but all in vain (Abubakar, et al., 2018; Uma & Ebo, 2013; Agwu et al., 2011; Ibeh, 2011; Ebo & Uma, 2010; Igbuzo, 2004).

Nevertheless, from 1986 to 1993, there was tremendous effort towards poverty reduction. This gave rise to the Structural Adjustment Program (SAP) that initiated poverty reduction programs such as Directorate for Food; Development for Roads and Rural Infrastructures (DFRRI); National Directorate of Employment (NDE); Better Life Program (BLP); Community Banks (CB); People’s Bank of Nigeria (PBN); Family Support Program (FSP); and Family Economic Advancement Program (FEAP). These programs meant well, considering the hurry in addressing poverty issues in Nigeria. The programs sprawled directly to various categories of Nigerians affected by poverty. At inception, the programs worked towards the intended aim of poverty reduction. However, sustainability could not hold because of a distortion in macroeconomic tenets, unfavorable policies, nepotism, and corruption (Abubakar, et al., 2018; Ahungwa et al., 2017; Uma et al., 2013; Ozoh, 2012; Ozoh, 2010; Uma, 2009; Obadan, 2002)

2.4.1.4 The Effect of Out-grower Schemes on Reducing Rural Poverty

The out-grower scheme model in Nigeria has spanned its importance over the years, as a tool in the agribusiness that provides a framework to contract farming. To this effect, the out-grower scheme offered an opportunity to the resource poor farmers to engage on contract to get credit for farming inputs and other accessories thereof. In this regard, the institutional linkage between agribusiness firms and smallholder farmers should be beneficial to both the out-grower farmers and out-grower firm (Campbell et al., 2012; Gou & Jolly, 2008; Bijman, et al., 2007; Penrose-Buckley, 2007; Gou et al., 2006; Mercoiret et al., 2006; Coulter et al., 1999).

The out-grower scheme can respond to a myriad challenges faced by smallholder farmers. (Otsuka et al., 2016; Birthal, 2008; Birthal, et al., 2008; Cai et al., 2008; KIT & IIRRA, 2008; MP4, 2005; Warning & Key, 2002). The out-grower scheme operated on the theory of contract farming; therefore, both the out-grower farmers and out-grower firm must respect and adhere to their contractual obligations. Studies have revealed that breach of contractual obligations can cause serious problems that the affect the operations of the out-grower scheme (Ofuoko & Agbamu, 2016; Setboonsarng & Leung, 2014; Reardon, et al., 2009; Shepherd, 2008).

By using appropriate Government frameworks and enhanced strategies to reduce risk, there was a possibility to manage challenges to the agreeable rate (Wendimu et al., 2016; Minot & Loraine, 2015; Bellemare & Novak, 2015; Wang et al., 2014; Barrett et al., 2010; Minten et al., 2009; Hamilton, 2008; WU, 2006; Masakure & Henson, 2005). Studies have revealed that out-grower schemes were multi-task in operation. They can be used for a range of agriculture based value chains that require specific budgets and market orientation. Out-grower schemes can operate in different types such as centralized, formal, tripartite, nucleus, and intermediary. Therefore, their adaptability to application was universal (Bellemare et al, 2017; Ofuoko & Agbamu, 2016; Kolavalli et al., 2015; World Bank, 2014; Delareu & Cochet, 2008).

From the out-grower scheme arrangements, smallholder farmers accrued benefits such as improved farming practices that increase crop yields and improve household income; better markets that were easily accessed; improved quality of agricultural commodities; and access to an array of extension services (Bellemare & Novak, 2017; Yasin, 2014; Kistern & Sartorious, 2002). As for the out-grower firms, benefits were in the form of readily available raw materials when need arises, access to international markets; and risk averse at production level because risk was passed to the out-grower farmers. (Ton et al., 2017; Jones & Gibbon, 2011; .Kudadjie-Freeman et al., 2008; Birthal et al., 2005; Glover & Kusterer, 1990).

Ton et al., (2018) highlight that out-grower schemes faced challenges such as side selling by out-grower farmers who sold the crop to other buyers rather than the out-grower firm; loan default by out-grower farmers; high transactional cost in the value chain; adulteration of agricultural commodities by out-grower farmers; and failure to supply adequate farming inputs and extension services by the out-grower firm. Despite, the challenges that engulfed the out-grower scheme arrangements, out-grower farmers operated profitably and rose profitably over and above the independent farmers who were not participants of the out-grower scheme (Okuofu &Agbamu, 2016). Social and cultural challenges that out-grower schemes face required the intervention of traditional readers. Production and marketing challenges required capacity building for out-grower farmers and out-grower scheme staff. Moreover, the Government should put in place a regulatory framework that must protect both the out-grower farmers and out-grower firm in cases of breaching the contract.

2.4.1.5 Out-grower Scheme Support to the Community at Large.

Cargill’s engagement with CARE assisted children to go to school in their respective communities. This included building new schools, renovating old schools and sinking bores in order to provide clean water. Further, schools received a consignment of supplies and books that benefited more than 30,000 school going children in Nigeria. The partnership put up infrastructure comprising 11 new schools that benefited 1,500 children and 3 clinics to enhance community healthcare for 25,000 people. From CARE’s rural schools project as part of the Kutch Livelihoods and Education Enhancement Program (K-LEAP), more than 73,500 students benefited in Nigeria (Cargill – CSR Report, 2014).

Further, by implementing K-LEAP, there was improvement in the living standard of more than 9,000 households across 225 villages. Subsequently, more benefits were recorded such as fifty percent (50%) increase in agricultural productivity and annual increment of a $134 in household income for 500 farmers; readily available markets for more than 4,000 dairy farmers in 185 villages, thereby increasing income by one hundred eighty-five percent (185%); access to veterinary service thereby reducing livestock mortality; vaccinating livestock in 225 villages; and ten to twenty percent (10% to 20%) increment in productivity for 1,500 farmers by accessing better quality seed (ibid).

2.4.2 Kenya

At the African level, Kenya was another country selected for literature review. The selection was randomly done without bias but to triangulate and try to cover the region of East Africa evenly.

2.4.2.1 Agriculture Sector Overview

Agriculture has continued to play a significant role as the pillar of the economy among the rural populace. At the inception of the County governing system in Kenya, the agriculture sector was the first to be established at County governing level, thereby signifying the importance of ensuring food security and poverty reduction. Further, at national level, agriculture was the engine that drove the economy of Kenya. Its contribution rate to the Gross Domestic Product (GDP) was twenty-six percent (26%). It also contributed twenty-seven percent (27%) to others sectors through indirect linkage (Economic Survey, 2017)

More than forty percent (40%) of the total population of Kenya were employed by the agriculture sector. It also provided employment to more than seventy percent (70%) of the rural populace (Economic Survey, 2017; GTA, 2016, FAO, 2014). In Kenya, agriculture was diverse and huge, comprising a complex array of public, parastatal, non-governmental and private clientele. Agriculture contribution to export earnings stood at the rate of sixty-five percent (65%). Subsequently, it supported eighty percent (80%) of Kenya’s population in terms of livelihoods such employment, income, and food security requirements (ibid).

Further, it was accountable for improving nutrition by contributing to nutritional diversity. Subsequently, the agriculture sector also propelled the non-agriculture economy with a multiplier effect of 1.64. The non-agriculture economy consisted of manufacturing; providing inputs and outputs for non-agricultural operations such as construction; transportation; tourism; education; and other social services. The rule of the thumb is that when the sector performs well, the entire economy is lifted up and the performance is well too. Agricultural value addition was identified as having the potential to act as a catalyst for the take-off of Kenya’s industrial sector. Agribusiness initiatives have received support from Government. The Government was keen on targeting the youth who were increasingly considered as a viable commercial venture (WITS, 2016; UN Comtrade, 2016; FAO, 2014).

2.4.2.2 Poverty Trends in Kenya

In Kenya, the incidence of poverty was regional specific. This meant that there were different factors that frontiered poverty according to the regions. In the 1990 and 2000s, about fifty percent (50%) of the rural population and at the rates of twenty-nine to fifty percent (29% – 50%) of urban population were poor. Rural poverty was characterized by its linkage to agriculture and availability of land while urban poverty had the character of heterogeneity in the way income was generated (Wambungu & Munga, 2009). In general terms, fifty percent (50%) of the Kenyan population struggled to have basic needs, thereby living in poverty. It was on record that the estimates of the Gini coefficient have been on the increase in Kenya. Information from the available household surveys was that Kenya’s Gini coefficient measure was done on household income and it was estimated at 0.419 in 1997, as compared to 0.459 in 2005-06 (World Bank, 2008). The Gini coefficient measures inequality and it is usually based on income and consumption.

2.4.2.3 Poverty Reduction Strategy

Studies have revealed that the Government of Kenya has made tremendous efforts to reduce poverty since independence (World Bank, 2008; Omiti et al., 2002). The Government has recognized impediments to human development such as disease, illiteracy, and poverty. Strategies to fight poverty were outlined in programs such as Poverty Reduction Strategy Papers (1999, 2003, 2005, and 2013); Participatory Poverty Assessment Reports, 1990, 1994, 1996; National Poverty Eradication Plan, 1999; Economic Recovery Strategy, 2003; & Vision 2030). Policies, have spelt out the strategies to fight poverty (ibid). Despite implementing various programs on poverty reduction, poverty rates continued to increase. Nevertheless, Government has not relented in the search for enhanced strategies to reduce poverty. Notable cause of failure to reduce poverty was poor economic performance. It was against this background that many Kenyans are not able to meet the required basic needs such as education, food, shelter, and medical (World Bank, 2008; Omiti et al., 2002)

2.4.2.4 The Effect of Out-grower Schemes on Reducing Rural Poverty

Studies have revealed that smallholder farmers were subjected to many challenges in their farming business (Murekezi et al., 2018; Maertens & Vande-Velde, 2017). The challenges were eminent at production and marketing of the agricultural commodities. They sold their agricultural commodities at a lower price, thereby becoming price takers despite the cost incurred in the production and marketing value chains respectively. To this effect, it was difficult to bargain for a better price because they sold individually. Selling in an organized group built synergy and a strong voice to bargain for economical prices. Further, they struggled to find farming inputs because of the weak financial base and lacked collateral to enable them get loans from financial institutions. Subsequently, they also lacked capacity building in improved farming practices to increase crop yield and household income as well as improving quality of agricultural commodities. In this regard, out-grower schemes have contributed to providing solutions to most of challenges faced by smallholder farmers (Murekezi et al., 2018; Maertens & Vande-Velde, 2017; Bellemare, 2015; Wang et al., 2014; Bellemare, 2012; Miyata et al., 2009; Bijman, 2008). Out-grower smallholder farmers got in a contract with out-grower firms in order to access production and marketing requirements on loan. In return, loan repayment was deducted at marketing time.

Despite, having the contract in place, there were challenges faced by both the smallholder farmers and the out-grower firms (Schrade et al., 2015; Morrison et al., 2006; Vorley & Fox, 2004; Eaton & Shepherd, 2001). The challenges were loan default by smallholder farmers; low market prices; unequal power sharing between smallholder farmers and out-grower firms; and exclusion of marginal group such as women and the youth, from participation in the out-grower schemes arrangements (Awotide et al., 2015; Jain, 2008; Sriboonchitta & Wiboonpoongse, 2008; Singh, 2008; Da Silva, 2005; MP4, 2005; Woodend, 2003). The contractual arrangements are product specific in relation to enforceability (Jia & Bijman, 2013; Setbroonsarng, 2008; Catelo & Costales, 2008; Minot, 2007; Kvaloy, 2006; Young & Hobbs, 2002).

Studies have revealed that there was a variation in the effectiveness of the out-grower schemes in reducing poverty in rural Kenya. Despite the variation, out-grower schemes have contributed positively to reducing poverty of out-grower farmers (Murekezi et al., 2018; Mwambi et al., 2016; Da Silva et al., 2013; Setbroonsarng et al., 2008; Bijman et al 2007; Barrents, 2007; WU, 2006; Simmons, 2002). It was highlighted that out-grower schemes provided inputs, credits, technology, income market and other benefits to out-grower farmers. Even though the above can be true, other studies indicate otherwise. Studies by ActionAid (2015), and Bernard et al., (2006) argue that benefits were in the short term than long term. Other studies by Sokchea and Culas, (2015), DFID, (2014), Saigenji, (2012), and Singh, (2002) reveal that out-grower schemes excluded women from accessing credits. Similar studies such as Lindhom, (2014), Narayanan, (2014), Ito et al., (2012), and Rao and Martin, (2011) argue that well to do farmers tended to benefit more from out-grower schemes than poor farmers.

2.4.2.5 Out-grower Scheme Support to the Community at Large

Cargill was an out-grower firm that supported out-grower schemes in Kenya. It was helping independent farmers and the community at large, by partnering with CARE International to fight malnutrition. The project provided an intervention to reduce malnutrition in children and one million (1,000, 000) benefited. Further, the project trained pregnant women in the importance of nutritional diversity in order to reduce malnutrition in pregnant women and breast feeding mother. Subsequently, the project supported the broadening of outreach areas in order to reach out to as many malnutrition cases as possible (Cargill – CSR Report, 2014)

Cargill employees did an assignment to improve forest cover on a vast bare land by planting three thousand (3000) trees. Further, they dedicated 220hrs to renovating a local garbage separation mill. Subsequently, three thousand (3000) bamboo trees were planted under ten hectares (10ha) as a reforestation program. Cargill also supported education and careers in science, technology, engineering and math (STEM). With an investment of $100,000,000, Cargill opened a Science Center in January 2014, in order to support marginalized children understand the concepts of math and science. To this effect, more than five thousand (5,000) students from more than 35 schools have benefited from STEM activities (ibid)

2.5 Literature Review at Southern African Development Community – SADC Level

The countries selected for literature review were Malawi, Zambia, and South Africa. The selection criterion was based on the representation of the Southern African Development Community – SADC. The SADC comprised fifteen (15) member states namely Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, United Republic of Tanzania, Zambia and Zimbabwe. Therefore, the SADC covered the Southern and Central Africa.

2.5.1 Malawi

Malawi was one of the countries selected for literature review at SADC level. The selection of the countries was done randomly without bias but to triangulate and try to cover the SADC evenly.

2.5.1.1 Agriculture Sector Overview

In Malawi, agriculture was the pillar of the economy. Agriculture contributed one third of the GDP and provided almost Eighty percent (80%) of the employment (Malawi National Statistics Office, 2016). For decades, the growth strategy in the agricultural sector was built upon a dualistic structure with a class of estate owners/leaseholders on one side and the smallholder sub-sector on the other hand. These groups have been differentiated in terms of a variety of socio-economic conditions as well as by regulations concerning production, marketing, pricing and land tenure. Estates were defined as those occupying leasehold or freehold land and the minimum requirement to register as an estate was 10 hectares. On the other hand, smallholders had customary rights to the land they cultivate. An estimated 2.8 million smallholder farm families, farmed under customary tenure cultivating about 4.4 million hectares and producing about 80 per cent of Malawi's total food and 10 per cent of its exports (Ministry of Agriculture and Irrigation, 2017; Ministry of Agriculture and Irrigation, 2015), About 20 per cent of the smallholder households cultivated less than 0.5 hectares, 40 per cent less than 1 hectare; 26 per cent between 1 and 2 hectares and 14 per cent more than 2 hectares. The estate sub-sector has enjoyed preferred access to land, finance and markets. Government's investment in support services for smallholder farmers was overburdened by a set of discriminatory agricultural and labor policies and marketing arrangements. This contributed to a deepening of rural poverty and to a squeezing of a rapidly growing rural population onto a shrinking land base (ibid). This resulted in low income earning opportunities and increased land pressure in smallholder agriculture. It also resulted in availability of cheap labor for estates and little incentive to invest to improve smallholder labor productivity. This also weakened demand for consumer goods, thus restricting the domestic market for manufacturers (ibid).

2.5.1.2 Poverty Trends in Malawi

In Malawi, poverty was considerably a significant problem. It was extensively sprawled and still a phenomenon in rural as well as urban areas. More than fifty percent (50%) of the population lived in poverty. Statistics showed that sixty percent (60%) of the smallholder population were not able to achieve basic needs, thereby living below the poverty line. The inhabitants of the estate area were estate tenants and estate workers and two thirds of their population lived below the poverty line. The female headed households were the most hit by poverty because they were the majority at thirty percent (30%) of the resource poor living in the smallholder sub-sector. In addition to the rural poverty, urban poverty was also a growing phenomenon affecting about sixty-five percent (65%) of the urban dwellers (Malawi National Statistics Office, 2016; IFAD, 2016; Alkire & Santos, 2010). The World Bank’s Economic Monitor Report (2017) estimated the county's GDP at US$523 per capita. Vulnerability was highest in the segments of the population that included smallholder farmers that owned not more than one hectare (1ha) of land; those who worked for the estate; those who occupied the estate as tenants; the poor who lived in the urban area; female headed households; and the children

2.5.1.3 Poverty Reduction Strategy

In 1998, the Government envisioned and implemented the Malawi 2020 vision that provided for the framework to anchor the implementation of sector development plans in the short and medium terms. On top of the agenda were agriculture and food security which were important areas for fostering economic growth and development. Due to its longevity to fruition in terms of results, the Malawi 2020 vision has been operationalized into a medium-term policy framework for social and economic development called the Malawi Growth and Development Strategy (MGDC). The primary objectives of MGDS I (2006 – 2011) and MGDS II (2012 – 2016) were the reduction of poverty by way of sustainable growth in the economy; development of infrastructure; focus on agriculture; and food security. It was envisaged that the strategy pointed to an increment in agricultural productivity and diversity in sustainable development (FAO, 2015).

The implementation of poverty reduction strategies was an ongoing program. Ranking first on the list of strategies being implemented was the Economic Recovery Plan – ERP (2012) that aimed at enhancing economic stability based on improvement of significant sectors such as agriculture, tourism, energy, mining and infrastructure development. Running parallel and in complementation of the ERP, was the National Export Strategy – NES (2013 – 2018) that was rolled out in 2012 with the aim of boosting domestic and international trade. Also, NES focused on enhancing competition of Malawian products as well as building capacity of farmers economically, taking into consideration the poorest and most vulnerable (FAO, 2015). With reference to achieving agricultural development goals and meeting Comprehensive African Agricultural Development Program (CAADP) targets, the Government coined the Agriculture sector Approach, ASWAp (2011 – 2015). The aim of ASWAp was to advocate for and drive strategic investment programs and initiatives namely food security; risk management; commercial agriculture; agro-processing; market development; sustainable agricultural land; and water management (ibid).

ASWAp was managed based on significant development programs namely the Farm Input Subsidy Program (FISP) and the Green Belt Initiative (GBI). These programs gobbled seventy percent (70%) of the total ASWAp budget, channeled to food security and risk management. The GBI worked towards achieving the goal of maximizing the available water resources for irrigation in order to realize increments in production, productivity, income, and food security, at household and national levels respectively (FAO, 2015)

2.5.1.4 The Effect of Out-grower Schemes on Reducing Rural Poverty

Studies have revealed that despite the potential of the out-grower scheme to support different agricultural value chains, it was used only on the value chains for the production of sugar, tea and tobacco in Malawi (Nthara, 2004). Of late, there has been an increase in out-grower schemes arrangement that frontier tobacco production value chain. Similarly, out-grower schemes arrangements were being used for the production of cotton and paprika. Agro processor have used out-grower schemes arrangements to produce soybeans, cassava, and birds eye chilies but on a small scale. The results varied, depending on a range of influencing factors. Recently, Bakhresha Grain and Milling has shown interest to contract farmers to grower wheat (Repar et al., 2018; Malawi Government, 2017)

2.5.1.5 Out-grower Scheme Support to the Community at Large.

The independent farmers and community at large have benefited from the services offered by an out-grower firm known as Japan Tobacco International – JTI that supported out-grower tobacco schemes. In Malawi, JTI has implemented projects as a call to achieving its Corporate Social Responsibility (CRS) goal. JTI has been providing financial support to the communities in order to advance sustainable community development in the spheres of social welfare; arts and culture; environmental management; and disaster relief (JTI Annual Report, 2015)

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Title
Evaluating the Effectiveness of Out-grower Projects in Reducing Poverty in Rural Zambia. A Case of the Eastern Province
College
University of Lusaka
Author
Year
2020
Pages
287
Catalog Number
V742051
ISBN (eBook)
9783346198914
ISBN (Book)
9783346198921
Language
English
Tags
case, rural, reducing, province, projects, poverty, out-grower, evaluating, effectiveness, eastern, zambia
Quote paper
Sunday Silungwe (Author), 2020, Evaluating the Effectiveness of Out-grower Projects in Reducing Poverty in Rural Zambia. A Case of the Eastern Province, Munich, GRIN Verlag, https://www.grin.com/document/742051

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