This study determines the extent to which contract farming schemes enable smallholder livestock producers to gain market access, and explores variants of this market institution for more effectively integrating smallholders into the growth and development of the livestock sector in developing countries. Apart from the theoretical and empirical literature on contracts, particular attention is given to case studies on contract farming in livestock in selected countries of India, Thailand, Vietnam and the Philippines. The livestock products discussed include milk, poultry and pigs. The literature on the applications of contract farming in agriculture and in livestock production have dominantly concentrated on one form of coordination mechanism - the formal contract between integrators and contract farmers - that also tended to select the larger-scale producers. The richness of analyses on formal contracts involving high-value products and high-end markets also mirrors a gap in knowledge and understanding on the capacity of informal forms of vertical coordination to lower transaction costs, efficiently link rural smallholder producers to markets that are vital to their livelihoods, and increase their incomes. The area of high-value livestock products for exports and for supermarkets has traditionally not been the realm of the vast majority of smallholders. This is not expected to radically change in the near future gauging from the great distance between sophisticated capacities needed to meet formal product quality and food safety standards and those that rural smallholder livestock producers possess as they rely on informal market institutions to engage in trade with their products. It is suggested that this glaring gap in the context of developing countries be addressed by refocusing the field of investigation on two inter-related areas where smallholder livestock producers predominate as stakeholders. These are: (1) contracts outside the boundaries of formal contract growing schemes; and (2) differentiated local livestock products in demand outside the narrow confines of high-value industrial-type products for export markets and supermarkets.
