Abstract:
Institutional innovations such as contract farming are essential for facilitating agricultural
transformation with smallholder farmers being key players. While contract farming (CF) provides
smallholder farmers with access to production and marketing opportunities, the role of farmer
organizations (FOs) that are entrusted to manage CF arrangement remains less understood. In this
paper, the potentials and limitations of FOs in managing institutional innovations are assessed based
on a qualitative study involving farmer organizations, Kilombero Sugarcane Company Limited and
government institutions between June and October 2021. The study used thematic analysis to analyze
the collected data in order to generate new insights and concepts. The findings suggest that proper
management of CF enables smallholder farmers to access credit and improved agricultural inputs as
well as extension services and improved infrastructure from the sugarcane companies. While access
to output markets at reasonable prices remains a major incentive mechanism for improving technical
efficiency and productivity, FOs strengthen social cohesion and hence, the social capital for
smallholder farmers. The study indicates that, insufficient market facilities and information,
inadequate extension services as well as bureaucracy in the distribution of input credit through FOs
are some of the limitations facing smallholder farmers in CF. Based on the foregoing, it is pertinent to
recommend that concerted efforts are needed from diverse stakeholders to strengthen FOs thus
enabling them to effectively deliver services to the members. Limitations and avenues for further
research are also discussed in the text.
