Contract farming in Indonesia: smallholders and agribusiness working together

As developing countries continue on the path of economic liberalisation, there is an urgent need to bring the benefits of new trade and market opportunities to rural areas.While producers with larger landholdings may have access to capital, marketing information and institutional support, smallholders often miss out and are more likely to be marginalised. One possible mechanism for improving the livelihood of rural smallholders and providing them with the benefits of economic liberalisation is contract farming. For smallholders, contract farming is potentially a way of overcoming market imperfections, minimising transaction costs and gaining market access.