Contract linkages and resource use in grain production: the Argentine Pradera pampeana.

Three reasons account for the increased interest in contractual arrangements in agriculture. The first is related to understanding topics such as changes in farm size, risk-bearing and risk-transfer mechanisms, agricultural technology inflows and labor markets in rural areas. All these are affected by different types of contractual arrangements made at the farm level. Of particular importance is the fact that factorand product-market contracts are not independent of one another: the choice of (for example) a land tenure contract affects and in turn is affected by contracts made with input suppliers and output demanders. Contracts are tools for managing risk and providing incentives, and as such have effects that cannot be studied in isolation. The second is the need to explain “structural change” occurring in the food sector of many countries. Rural-urban migration, in particular, is resulting in changes in the nature of food chains: rapid urbanization increases the demand for transport, storage, processing and wholesale and retail distribution. Consider Brazil, where rural population as a fraction of total population fell from 32 percent in the 1981 to 14 percent in 2009. In Bolivia and Paraguay relevant figures are respectively 54 and 58 percent in 1981, falling to 34 and 29 percent thirty years later (World Development