Contract farming can help improve farmers' income and reduce poverty by providing them with a guaranteed price for their high-value agricultural products. The type of contract farming used can either widen or reduce income inequality among farmers, depending on the production cost of the high-value product. Lowering the production cost of the high-value product can benefit the buyer but may harm both contract and non-contract farmers. Additionally, reducing the production cost can lead to an increase in the supply of a similar traditional product.