Impact Of Agricultural Market Reforms On Smallholder Farmers In ...

department. The farms with very little marketed surplus showed the same approval ratings as those
marketing a large share of their output.
Farm size is only weakly related to household well-being. Several factors help explain this
surprising result. First, small farmers depend more on non-farm income, diluting the effect of farm size.
Second, small farmers are more likely to grow crops with high revenue per hectare, such as vegetables or
piment. Third, small farmers in Benin are more likely to have two seasons of production, so that
differences in sown area across farms are smaller than differences in farm size. And finally, household
size is correlated with farm size, so that large farms generally have more “mouths to feed”.
Farmers in Benin, even small farmers, produce largely for the market. Almost two-thirds of
the value of crop production is marketed. Even small farms and poor household sell, on average, over
half of their output. This means that agricultural prices matter to all farm households, and trends in
agricultural prices should be closely monitored by the government and any other organization concerned
about rural poverty.
6.3 Policy implications for Benin
Continue efforts to expand competition and private-sector participation in agriculture.
National statistics indicate that economic reforms undertaken over the last decade have restored fiscal
balance, low inflation, solid economic growth, and expansion in agricultural production, but questions
have been raised about their impact on poor and vulnerable households. The results of the IFPRI-LARES
Small Farmer Survey reveal that agricultural households, who make up the bulk of the population and the
overwhelming majority of the poor, have a positive assessment of the changes in their well-being. Just 12
percent of the rural households feel worse off than in 1992 for reasons related to the economy.
Increase competition in cotton marketing. Competition could be increased at three levels:
export marketing, cotton ginning, and farm-level collection. At the first level, SONAPRA could allow
cotton gins and trading companies to export cotton lint directly. At the second level, SONAPRA could
allocate seed cotton to gins by auction. This may result in the closure of the least efficient cotton gins,
but the current system keeps all the gins only by “subsidizing” them through lower seed cotton prices for
farmers. The third level is the most difficult because the SONAPRA monopoly on cotton collection
facilitates recovery of input credit. Farm-level collection should only be liberalized if institutions are
created to ensure recovery of input credit and thus the sustainability of the credit system.
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