What Is Contract Farming


    Research teams consider a variety of factors when deciding where to conduct a survey, including the characteristics of the location and the contractual scheme (para. B example, security, accessibility and the willingness of companies, development agencies and agencies to collaborate or allow surveys to be carried out). Therefore, it is unlikely that certain types of contractual systems will be selected by research teams and therefore under-represented in the available data, i.e. smaller, more informal, national or poorly functioning contractual systems; and those located in hard-to-reach areas. These can be systems and very places where farmers benefit less or not at all. As a result, current evidence based on case studies can be “representative” of large formal, export-oriented systems that function well in the most privileged locations. Contract and non-contract farmers are involved in several agricultural activities involving crop production and livestock. On average, farmers grow about 5 different crops. Contract farmers do not necessarily specialize in traditional cash crops such as tobacco, cotton or cocoa. In fact, contract farmers cite a variety of different crops as their most important crop (Appendix SI, fig.

    S1 and S2). We contribute to the literature on contract culture by providing evidence that can be generalized beyond a specific contractual scheme, contract type, harvest, region or country. Our analysis is based on survey data provided by the Consultative Group on Aid to the Poor (CGAP) (34⇓⇓⇓⇓–39). CGAP`s smallholder surveys cover a wide range of livelihood and agriculture issues and were conducted among farmers and their households in 6 countries, namely Bangladesh, Côte d`Ivoire, Mozambique, Nigeria, Tanzania and Uganda. The data are nationally representative of smallholder farmers in the above-mentioned countries (40, 41). The CGAP questionnaires do not contain questions on the specific characteristics of the contract. B for example if the contractor provides services and the contract is oral or written. Likewise, we have no information about the contractually agreed harvest. Therefore, we cannot take into account certain contractual characteristics in our analysis or estimate the effects at the harvest or plot level. Therefore, we focus on outcomes at the individual and household level. The model agreement is a simple and practical legal instrument to address power asymmetries, create fairer and more sustainable trade relations and ensure a transparent trading environment for contract farming systems. It offers a simple and customizable layout template that can be customized by the parties based on the product, context, and specific needs of the parties.

    A high-quality agricultural contractor will be able to provide all the services his clients need, with the best selection of equipment at his disposal. In this way, they will be able to expand their offer beyond their own country and work in several locations across the country. As with any contract, there are a number of risks associated with contract farming. The most common problems include farmers selling to a buyer other than the one with whom they have contracted (known as parallel selling, non-contractual marketing or “pole vaulting” in the Philippines) or the use of inputs provided by the company for purposes other than those intended. On the other hand, it happens that a company does not buy products at the agreed prices or in the agreed quantities or arbitrarily reduces the quality of production. Contracts can potentially bring benefits to manufacturers and contractors. Farmers receive a guaranteed outlet for their production with known compensation, while entrepreneurs receive a secure supply of goods with certain characteristics that are delivered on time. A series of articles on the role of contract culture in promoting inclusive market access, published by FAO in 2013[16], address contractual arrangements in Argentina, Bangladesh, Brazil, China, Honduras, South Africa, Tanzania and Thailand. The drafters conclude that, despite a preference for sourcing large farmers, factors other than farm size contribute to a company`s decision and that contract farming will therefore not necessarily result in the exclusion of smallholder farmers from supply chains. Geographical factors are important, both in terms of impact on production and in terms of factors such as land rights, gender and ethnic relations.