In essence bioafrica is the link between market and production. All cotton and tobacco in mozambique is produced through contract farming, and almost 12% of mozambiques rural population is involved in this type of farming. This case stresses the importance of contract farming with agriprocessing companies and the barriers to entry for small. In ghana, government and donors use cf as a strategy for increasing adoption of new agricultural technologies and developing value chains. Smallholder contract farming in subsaharan africa and.
How can the contract farming concept be extended to further agricultural and rural development in africa. Participation in contract farming generated desirable causal effects on transaction costs, productivity, tomato income. In practice, it is logical to argue that contract farming works if its advantages outweigh the disadvantages for both agribusiness firms and farmers. It aims at analyzing contract farming from the smallscale farmer perspective and. It says he will sell at least two tonnes of potatoes to food processors each harvesting season for the next two years. Over the last 10 years, largescale investment contracts in africa. Agriculture thus, constitutes the back bone of the tanzanian economy, and the advancement of the agricultural sector can contribute to the economic developmentofthecountry. Land and agricultural commercialisation in africa laca project working paper. Outgrower schemes why big multinationals link up with. Smallholder contract farming in subsaharan africa and south asia jonathan armah, kate schneider, professor robert plotnick. Contract farming involves agricultural production being carried out on the basis of an agreement between the buyer and farm producers. A farm contract form is a document that is used to state the terms and the conditions of a general agreement associated with farming and farm matters. This paper examines the tian ze tobacco company tztc contract farming scheme in zimbabwe as a vehicle to promote a new breed of emerging black commercial farmers in southern africa. These papers are part of the research project, research to practice strengthening contributions to evidencebased policymakinggenerously, funded by the canadian international development agency cida.
Contract farming will increase in number and in complexity as processors demand more raw products from growers to. Little and watts define contract farming as forms of vertical coordination between growers and buyersprocessors that. Plantations, contract farming and commercial farming areas in africa. Mar 18, 2015 in addition, farming incomes can rise and such schemes often open up new markets and provide new technology. We work in partnership with a kenyan contract farming company, one of the largest agribusinesses in east africa, which contracts around 80,000 smallholder farm ers to grow sugarcane. Charles dhewa is a proactive knowledge management specialist and chief executive officer of knowledge transfer africa pvt. All the paprika, tobacco and cotton in zambia and 60% of kenyas tea and sugar. Dec, 2011 the paper provides a selective survey of the most significant literature on the rise of contract farming in developing countries, with a focus on sub. This looks at the influence of tobacco farming both contracted and independently grown on patterns of social differentiation and class formation within a1 resettlement areas. Tobacco farming has many negative consequences for the health and wellbeing of farmers, as well as for the environment and the longterm wellbeing of the country concerned. Youth in agribusiness within an african agricultural transformation agenda youth in agribusiness prepared by.
The other two components of the strategy dealing with livestock and cropping are directly linked to. Africa development and resources research institute journal, ghana. Contract farming and access to formal credit in south africa. Contract farming has existed in tanzania for decades, but it has largely con. Contract farming can be defined as a firm providing farmers with particular input such as seed, fertilizer, credit, extension in exchange for exclusive purchasing rights over. Likulunga university of zambia school of agricultural sciences department of agricultural economics a report prepared for farnpan 7 december 2005. Agriprocessing and contract farming in a national supply perspective. Contract farming in south africa has been analyzed for smallscale farmers in traditional value chains such as tea, sugarcane, timber, tobacco, flowers and beverages kirsten and sartorius, 2002b. Analysis of the organization and challenges of contract. Opportunities and challenges nicholas minot international food policy research institute. However, neither is contract farming a panacea for rural development nor does a blueprint exist for the design and operation of successful and sustainable contract farming arrangements. Contract farming in subsaharan africa generates employment in the rural economy, reduces risk for firms, and provides incomes for farmers. Contract farming has a long history in developed countries and is.
Contract farming is intended to provide farmers with the assured sale of their crops and agrobusiness commercial firms with a steady supply of agricultural output required by the market. University of kabianga, kenya school of arts and social sciences p. The south african brewery sabmiller initiated contract farming schemes in india and south africa when yields turned out to be unsatisfactory. Introduction the development of agriculture is pivotal to the transformation of most african economies. The study may give detailed information on how contract and non contract tomato production is currently functioning in northern nigeria. Contract farming can be defined as a firm providing farmers with particular input such as seed, fertilizer, credit, extension in exchange for exclusive purchasing rights over a specified crop.
Plantations, contract farming and commercial farming areas in. Evidence from rural south africa abstract this paper intends to contribute to the ongoing debate about whether and how restructured agrifood markets can provide viable market opportunities for smallscale farmers in south africa. Broad sharing and dissemination of information and knowledge are known to be key drivers of impact in development cooperation. Boadu, in agricultural law and economics in subsaharan africa, 2016. However, contract farming has been widely practiced in many countries as its benefits outweigh the negative effects. As a way of organizing agricultural production, contract farming has been in existence for decades and in recent years its use appears to have been expanding quite rapidly, including in much of africa. Moreover, contract farming has been claimed to have a positive impact on local economies by improving the welfare of rural households 5,7,8, 9, 10,11. These schemes appear however to be more the result of specific initiatives of large estate actors during apartheid and the preliberalization period. Pdf plantations, contract farming and commercial farming. Why do chicken farmers partner with chicken companies. Introduction1 contract farming cf is defined as an agreement between farmers and processing andor. Ponte 2000 examines the economic and social impacts on african agriculture of liberalisation and associated microeconomic reform with less government credit. The reemergence of contract farming in subsaharan africa.
The export promotion of organic products from africa program, funded by sida. We examine our own experience of contract farming in nigeria and south africa in the context of earlier research, and draw attention to important issues which have received little attention in the literature, notably staffing of schemes, farmers previous experience with multinational national companies mncs, water control and labor issues. State in northern nigeria, a total of 116 tomato contract farmers and 84 non contract farmers were selected. The concept of contract farming or outsourcing creates an infrastructure through which farmers can concentrate on their production by relieving them of the pressure to find suitable markets. In such schemes, farmers sell their crops under contract to private or public enterprises for processing or export in return for various price guarantees, inputs and services. In africa, contract farming is significant and on the increase.
Contract farming and access to formal credit in south. More than 90% of all chickens raised for meat in the us broiler. The new wave of contract farming in ghana the role of contract design in facilitating sustainable outgrower schemes policy brief no. This document can also be used in varying formats such as in word document format or in a portable document file format.
Smallholder contract farming in subsaharan africa and south asia jonathan armah, kate schneider, professor robert plotnick, and associate professor mary kay gugerty prepared for the farmer productivity team. Contract farming is characterized by a contract between a farmer and a firm that will process andor market the farmers crop. Pdf the contribution of contract farming to agricultural. Outgrower schemes and contract farming often exclude precisely the groups that actionaid works with most. Overview of smallholder contract farming in developing. The paper, based on empirical research conducted in the limpopo province of south africa using a combination of qualitative and econometric.
Outgrowers deutsches institut fur entwicklungspolitik. In production agriculture, the trend in india is towards fragmentation rather than consolidation. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. Overview of smallholder contract farming in developing countries. In contract farming, an agribusiness firm lends inputs such as fertilizer, seeds and pesticides to a farmer in return for the crop grown. It analyses contract farming from the smallscale farmer perspective to better understand the implications for smallscale farmers of contractual arrangements with processing andor marketing firms. Contracting in agriculture contracts in agriculture could take on many forms. Giz views contract farming, in particular, as an important opportunity to raise incomes of smallholders and entrepreneurs along the rural value. An open access paper is just out in the journal of agrarian change tobacco, contract farming and agrarian change in zimbabwe. Analysis of multilateral institutions discourse from 1980 to. Sometimes it refers to cases where the buyer specifies. This horizontal and vertical integration helps to disintermediate and decrease the price spread.
There is a long history of attempts to encourage commercial agriculture across much of subsaharan africa. Smallholder contract farming in subsaharan africa and south asia. Contract farming cf arrangements have the potential to address market failures and improve technology adoption, productivity, and welfare. The most well known, with a long history of implementation in colonial africa, is various outgrower schemes or contract farming. African agriculture, contract farming cf, or contracting, got increasing attention by policymakers, particularly as a smallholderinclusive1 business model for agricultural production. A study of the impact of tobacco cultivation on employment trends in rural sirisia, bungoma west district, kenya, 19752005 ndalilah joseph w. Contracting farmers have the advantage of receiving extensive support and mentoring. There is, however, a new wave of contract farming in ghana involving staple crops. Youth in agribusiness within an african agricultural transformation agenda. In an effort to assess the extent that contract farming has evolved in malawi, strength, weaknesses, opportunities and threats swot analysis in chapter 3, is developed to give the implications of operationalizing contract farming. Heres how this guide can benefit you to move your agribusiness forward.
This study assesses the historical experience of three farming models that have figured in recent investments in subsaharan africa. Critics, however, argue that cf is likely to pass risks to small scale farmers, thus favouring large scale farmers at the expense of smallholder farmers. Contract farming is a vertical coordination between growers of an agricultural commodity and buyers or processors of that commodity, and plays a. A contract farmer is an independent farmer who chooses to invest and build chicken houses, working under contract with a chicken production and processing company to raise chickens. Is there scope for value chain finance on a contractual. May 16, 2016 contract farming cf is seen as a tool for creating new market opportunities hence increasing incomes for smallholder farmers. However, poor farmers in sub saharan ssa africa face a number of constraints that prevent them from taking advantage of those opportunities. But commercial farming has taken different forms varying in scale as well as in institutional arrangements and labour regimes with. Youth in agribusiness within an african agricultural.
It aims at analyzing contract farming from the smallscale farmer. Caadp comprehensive african agriculture development programme cd capacity development cf contract farming. However, there will be also competition and displacement among. The model agreement for responsible contract farming was developed by iisd and the food and agriculture organization fao, in collaboration with unidroit, drawing from the principles of the unidroitfaoifad legal guide on contract farming.
Overview of smallholder contract farming in developing countries phil simmons graduate school of agricultural and resource economics university of new england, armidale, australia, 2351 abstract an agribusiness firms choice to expand activities through contract farming. A case of smallscale sugarcane growers in the felixton mill area of kwazulunatal by sandile bongani sifundza submitted in partial fulfilment of the requirements for the degree master of science in agriculture agricultural economics in the. Contract farming dates in the united states back to the 19th century and in the recent years has expanded to developing countries in africa and asia. Tobacco and contract farming in zimbabwe the zimbabwean. The international fund for agricultural development ifad and the fao teamed up to prepare a handy legal guide on contract farming. Overview of smallholder contract farming in developing countries phil simmons graduate school of agricultural and resource economics university of new england, armidale, australia, 2351 abstract an agribusiness firms choice to expand activities through contract farming rather than. Contract farming and outgrower schemes actionaid international. A farming contract can provide farmers with access to new and. Limitations of contract farming as a propoor strategy. Encompassing multidimensional issues of economic development, there is far more to it than tobacco control. The paper provides a selective survey of the most significant literature on the rise of contract farming in developing countries, with a focus on sub.
Tobacco control and tobacco farming in african countries. The precious document is a farming contract macharia signed in march with the east african potato consortium. Struggling potato growers in kenya turn to contract farming. Evolution and development of contract farming in zimbabwe. The paper provides a selective survey of the most significant literature on the rise of contract farming in developing countries, with a focus on. Making contract farming arrangements work in africas. Plantations, outgrowers and commercial farming in africa.
A survey of approaches, debates and issues the paper provides a selective survey of the most. Comprehensive african agriculture development programme. Contract farming with over 20,000 ha under cultivation farm africa believes in production systems backed by strong production contracts from multinational companies in order to avoid price risk. Contract farming as a tool for poverty reducation in africa. The econometric result indicated that there was a high level of participation in contract farming. Sometimes it involves the buyer specifying the quality required and the price, with the farmer agreeing to deliver at a future date. Contract farming requirements for broiler contract growing contract growing chickens for irvines zimbabwe izim is when the grower enters into a contract with irvines zimbabwe to grow broiler chickens on behalf of the company. This article examines the experience of seven countries in east and southern africa with contract farming and outgrower schemes. Virtual community of practice on contract farming why a community of practice on contract farming. Tobacco has contract farming schemes to cover 70 per cent of its supply needs.
African contract farmers with the result that the size of the. Jan 14, 2018 the precious document is a farming contract macharia signed in march with the east african potato consortium. The thrust of contract farming has been seen to be broadly consistent to mgds. The main commodities produced by smallscale farmers in zambia under contract farming arrangements are cotton, tobacco, coffee, sugar, paprika and fresh vegetables.
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