Agrarian Reform and Agro-Industry in Honduras

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Abstract
In contract farming (CF), agro-industries purchase produce from independent growers through a contract which specifies several terms of sale, including price, quantity and quality. The system can be mutually advantageous, reducing uncertainty for both parties and providing growers with technical assistance, inputs and access to new markets. Some LDC governments have promoted CF through legislation with mixed results. This article examines two cases of CF in Honduras, one in melons for export, the other in sugar for the domestic market. It explores the effects of existing legislation on the behaviour of firms and isolates the factors which led to very different outcomes in terms of grower welfare.

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