Promoting indigenous entrepreneurship through small-scale contract farming: The poultry sector in Sarawak, Malaysia

Studies have consistently shown that in the relatively unregulated environments of the global economic periphery contract farming has led to highly regressive socioeconomic outcomes. Contract farming is not inherently regressive for the small farm sector however. In the state of Sarawak, Malaysia, contract farming is used as part of an affirmative action programme that trains indigenous smallholders in commercial poultry production. The public sector quasi-market constructed by state purchasers and subsidiary suppliers is one that recognizes the smallholders' limited access to collateral and technical skills and their need to supplement rather than totally replace the incomes already derived from diverse agricultural and off-farm sources. The state-administered contract scheme is part of a broader national goal to eradicate poverty, raise rural incomes and ultimately, develop indigenous entrepreneurship. In the shorter and medium term, as the paper shows, the small-scale public contract scheme, which itself operates within the protected domestic poultry sector in Sarawak, is more likely to support disadvantaged 'bumiputra minorities' than produce a pool of competitive entrepreneurs.