Contract farming is arguably a pro-poor strategy to promote rural development and minimize the social impacts of large-scale agricultural expansion. Yet, little attention has been paid to its environmental impacts, particularly in tropical landscapes. This article fills this gap by linking social and environmental analysis of oil palm contract farming in the Brazilian Amazon. The analysis presented used a mix of quantitative and qualitative methods, including household surveys, remote sensing techniques, and in-depth interviews, to assess whether the scheme managed to avoid deforestation and to contribute to livelihood improvements. The results show that the Brazilian model managed to prevent the deforestation of primary forests, but achieved limited and differentiated livelihood results. The analysis suggests that the Brazilian model is more likely to work for households with an agricultural vocation and a commercial spirit in areas with an abundant availability of degraded lands, but can hardly be a solution in frontier areas or for subsistence or more dependent households. The chapter concludes with some reflections on how contract farming schemes should be designed in order to maximize livelihood gains and minimize negative environmental impacts.

This research was conducted with the financial support of the DfID-funded KnowFOR (Forestry Knowledge) program. This work is part of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA). This research is supported by CGIAR Fund Donors. For a list of Fund donors, please see: www.cgiar.org/ about-us/our-funders/.