This article examines a new role for contract farming in developing countries in the light of the industrialisation of agriculture and the globalisation of world markets. A theoretical rationale for contracting in developing countries is developed on the basis of adopting new institutional economic theory for the purpose of matching governance forms to market failure problems and transaction characteristics. The history of contract farming is reviewed, together with the advantages and disadvantages to the various players, for the purpose of developing a list of key success factors, problems and some possible solutions.

This paper summarizes the potential contributions of the new institutional economics to agricultural policy research, with particular emphasis to developing countries. The paper starts by providing an overview of the new institutional economics and its several branches of thought. It then describes the future challenges facing world agriculture and shows the potential applications of new institutional and transaction costs economics to agricultural policy analysis in this new world environment. The paper concludes by providing specific agricultural market research issues that can be analysed using the new institutional economics. As a dynamic school of thought, the new institutional economics offers exciting opportunities to answer some of the economic problems that neo-classical economics has found difficult to address.

The Republic of South Africa (RSA) is the first developing country to plant genetically modified staple food ? Bt white maize. The following paper describes the development and spread of Bt maize in RSA that started in 1998. After that, based on surveys of 33 large commercial Bt maize farmers and 368 smallholders in 2001/2, it shows that Bt maize gives higher yields for both groups and reduces pesticide use particularly for the large commercial farmers. The paper concludes with a discussion of policy options which would make the Bt maize more accessible to more small holders.

South African agriculture is comprised of mainly two categories of farmers—the subsistence farmers in the former homeland areas and the large-scale commercial (mainly white) farmers. This is in contrast with the situation in many other countries in the world where one would find a whole range of farm sizes, ranging from the very small or subsistence farmer to the very large farmer/agribusiness. The paper highlights the situation of small-scale farmers in an international context and compares it with the South African situation that is totally different. Within this context, this paper has as basic premise that in South Africa the concept of “small-scale farmer” is usually value-laden, creates wrong impressions and is often viewed in a negative light. “Small-scale” is often equated with a backward, nonproductive, non-commercial, subsistence agriculture that we find in parts of the former homeland areas. This paper endeavours to correct the negative perceptions towards small-scale farms by redefining the small-scale farmer and laying to rest the fallacy that small relates to land size only.

“The enduring competitive advantages in a global economy lie increasingly in local things—knowledge, relationships, motivation—that distant rivals cannot match” (Porter, 1998) The misappropriation of the names of geographical regions such as Parma, Roquefort and Champagne is protected in the European Union by a system of Geographical Indications, and is acknowledged by the World Trade Organization as an important intellectual property right. This article addresses whether there is a case for similar protection in South Africa. The article explores the economic rationale for implementing a system of Geographical Indications by addressing issues such as information asymmetry and the role of reputation; formation of niche markets; monopoly formation, value added and rural development. The economic rationale for protecting Geographical Indications derives mainly from the fact that place of origin may be used as a quality signal, or alternatively, that the resources of the region may be captured as quality attributes. In the first instance the meaning of the geographical name is emphasized in order to reduce information asymmetries. Where place of origin is used as an attribute, resources of the region are used to increase the value of the product. This includes specific resources such as production techniques, varieties and species, but also resources that are general to the region such as landscape, environment and culture. Economic arguments present a strong justification for the introduction of geographical indications in South Africa. At the same time it will afford greater protection to indigenous resources and geographical names which could, through the collective and inclusive nature of the system, directly contribute to rural development.