[Ruml, A., Ragasa, C., & Qaim, M. (2020). Heterogeneous effects of marketing contracts and resource-providing contracts on household income (No. 858-2020-032).]Two types of contract structures utilized in contract farming – marketing contracts and resource-providing contracts – are examined and compared in their application within the Ghanaian palm oil sector. The effects of both contract types on farm income and spillovers on other household income sources are investigated. It is found that both contract types lead to roughly the same large positive effects on total household income despite their inherently different mechanisms. Additionally, farmers employed through the marketing contract used their increased palm oil profits to shift out of agricultural production into off-farm employment while farmers under the resource-providing contract became more strongly dependent on palm oil income due to the considerable profitability under this type of contract. Consequently, the nature and conditions of contracts used in contract farming play a significant role in the economic outcomes for contract farmers. Finally, use of a disaggregated analysis of different income sources is central in elucidating the underlying mechanisms contracts have on the economic livelihoods of contract farmers.
