Contract farming is a pervasive institutional arrangement in cash cropping economies in Mozambique. Empirical evidence on its nature and, especially, the extent to which policies can generate broad based income growth and poverty reduction is lacking. This study investigates the rationale for persistence, the determinants of farmer participation and performance in cotton and tobacco schemes (Essay One), and the economy-wide effects of expansion and shocks in cotton and tobacco sectors on poverty reduction in concession areas of the Zambezi valley of Mozambique (Essay Two). In the first essay, we find that in both sectors contract farming is an institutional response to widespread failure in input, credit and output markets and the absence of a functional public and market based service provision network. Two stage econometric procedures (testing for the existence of threshold effects in land holdings and educational attainment) indicate that in both areas participation in the schemes is driven by factor endowments, asset ownership and alternative income opportunities, and very little by demographic factors. Also, there are no returns to education in either sector; this result is consistent with previous research in Mozambique but surprising in an agronomically

two publication series for research on food security and agricultural policy issues. Publications under the Flash series are short (3- 4 pages), carefully focused reports designated to provide timely research results on issues of great interest. Publications under the Research Paper series are designed to provide longer, more in depth treatment of food security issues. The preparation of Flash reports and Research Reports, and their discussion with those who design and influence programs and policies in Mozambique, is an important step in the Directorates’s overall analyses and planning mission. Comments and suggestion from interested users on reports under each of these series help to identify additional questions for consideration in later data analyses and report writing, and in the design of further research activities. Users of these reports are encouraged to submit comments and inform us of on-going information and analysis needs.

maintains two publication series for research on food security issues. Publications under the Flash series are short (3-4 pages), carefully focused reports designated to provide timely research results on issues of great interest. Publications under the Research Paper series are designed to provide longer, more in-depth treatment of food security issues. The preparation of Flash reports and Research Reports, and their discussion with those who design and influence programs and policies in Mozambique, is an important step in the Directorate’s overall analyses and planning mission. Comments and suggestion from interested users on reports under each of these series help identify additional questions for consideration in later data analyses and report writing, and in the design of further research activities. Users of these reports are encouraged to submit comments and inform us of ongoing information and analysis needs.

Objective 1: To assist MINAG in building institutional capacity to raise smallholder productivity and income through improved technology, markets and policies................. 4 Objective 2: To strengthen IIAM’s capacity to identify and disseminate improved

Objective 1: To assist MINAG in building institutional capacity to raise smallholder productivity and income through improved technology, markets and policies................. 2 Objective 2: To strengthen the capacity of IIAM and MINAG to identify and

This study uses household level data collected across different regions of rural Kenya to study household welfare dynamics, engagement in the off-farm labor market and its effects on agricultural intensification for these rural households. The dissertation consists of three separate essays. The first essay estimates a dynamic panel data model of income to determine the pattern of income growth for these rural households. The paper seeks to determine the relationship between educational attainment and the initial economic position of households on their subsequent income growth and mobility. Results show strong evidence of (low) income persistence for the poor and those in the low agricultural potential areas without at least a secondary school education. As expected, higher education seems to reduce income persistence for the very poor and those in the low potential areas, but also enhances convergence for those in the high potential areas. Overall, the results indicates the potential role of education in not only breaking the cycle of poverty for those trapped in it, but also its ability to allow increased recovery from income shocks. Notably, there is no conclusive evidence of the pattern of income growth

under Egerton University with a mandate to undertake empirical research and analysis on

smallholder productivity and income through improved technology, markets and policies........................................................................................................................... 3

This paper analyzes the determinants of participation and earnings from the offfarm labor market for rural households in Kenya. We specifically explore how these rural households respond to risky agricultural production environments and existence of ex post adjustments in off-farm labor supply in response to unexpected rainfall shocks. While controlling for a wide range of educational, demographic, and other locational factors, we look at how long-term weather risks and specific rainfall shocks influence a household’s decision to engage in the off-farm labor market and on the earnings generated from such labor. Results indicate that these rural households engage in offfarm work as a long-term strategy to deal with anticipated weather risks to their farming operations. The study does not however show major short term adjustments in off-farm engagements as a result of specific, unexpected rainfall shocks. We find that these rural households rely on remittance income and petty agricultural wage labor in response to such unexpected short-term rainfall shocks. Holding other factors constant, and conditional on participation, households in areas with a more productive local agriculture tend to earn more from off-farm work especially in self-employment than those living in regions with a less productive agriculture. As expected, a vibrant local economy in form of public investment does increase the probability of participation. Key words: Off-farm labor market; agricultural shocks; rural economy; Kenya