The chapter examines whether contract farming confers benefits primarily to large farmers in practice and how we may be able to make smallholders significantly better off by introducing new profitable crops and livestock products. More often than not, agriculture does not provide ample employment opportunities, largely due to land constraints on production expansion. One solution is to develop nonfarm sectors so as to provide more lucrative employment opportunities, in which working members of farm households increasingly find jobs. The chapter demonstrates the critical importance of increasing nonfarm income to improve the income of rural households and examines the roles of infrastructure and human capital in raising nonfarm income.

This report offers specific policy and investment options articulated around two broad areas: (1) stimulating growth in agriculture and sustainable management of fisheries and (2) providing public infrastructure and services that strengthen the enabling environment. A plan to stimulate growth in agriculture and fisheries, the first broad area, could be centered around the following set of goals: revitalize the rubber sector, develop high-value fresh products, improve rice productivity, modernize land and input markets, expand access to loans for machinery and seasonal input purchases, strengthen agricultural extension services to ensure dynamism in Mon State’s farm sector, improve management of marine capture fisheries, and facilitate expansion of aquaculture. The first part of the report details the challenges and potential solutions presented by each of these points. The second part of the report details options to create a growth-enabling environment through public infrastructure and services, centered around the following goals: improve the budgetary and fiscal process to enable locally driven public investment, improve access to and reliability of infrastructure, expand the formal credit market, promote productive investment by the private sector, strengthen regulatory frameworks for the construction sector, exploit the potential for the development of tourism, and improve the quality of and access to education and health services.