Contract farming- a safer option?
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CTA. 2002. Contract farming- a safer option?. Rural Radio Resource Pack 02/2. Wageningen, The Netherlands: CTA.
Permanent link to this item: http://hdl.handle.net/10568/57443
For subsistence farmers who want to start growing cash crops, the danger that they will not find a good market may be a strong disincentive. Contract farming may be one solution, as it guarantees that farmers will have a market. This report from Tanzania features a company that makes contracts with farmers to cultivate flower seeds for export to Holland.
Contract farming- a safer option? CUE: For small-scale farmers, increasing their production of cash crops can be a big risk. For while food crops can be eaten, cash crops are only valuable if they can be sold, and sold for a good enough price to repay the costs of production, harvesting, packaging and transport. Millions of farmers remain at a subsistence level of production, because for them the risk of growing a crop that they cannot sell is too great. But some have found a way out of this poverty trap through contract farming. In Tanzania, for example, the Multi-flower company has made contracts with numerous small-scale farmers, who produce flower seeds for export to Holland. Lazarus Laiser spoke to Evaline Swai, a buyer for Multi-flower to find out whether contract farming had proved to be a successful way for their small-scale growers to cultivate and market a cash crop. Evaline begins by explaining what happens when a farmer applies to have a contract with the company. IN: ?The first one is the farmer ? OUT: ? We can?t buy your product? DUR?N 4?27? BACK ANNOUNCEMENT: A secure market - one of the important benefits of contract farming. Transcript Swai The first one is the farmer must have land, half an acre or one acre and so on. After ensuring that the farmer has land for any crops, we explain to them about flower seeds production, price, cultivating flower seeds, is it easy or difficult. All that information we give to our farmers, and later on some they agree to grow flower seeds. Laiser Do you have anywhere to sign? Swai Yes we have a contract, which we sign between the farmer and our company. Laiser What happens if the supplier or the grower fails to supply the products to you? Swai It is not normal to bring the stock seed and plant and not supply to our company. But if the weather problem is the one that can affect the supplier to supply the seeds, we can see ourselves. Because our field officer after delivering the flower seeds to our grower, the job of the field officer is to follow that grower, in order to give him the lesson in how to grow, how to cultivate. So when our field officer visits that farm, he can know what problems are facing that farmer. But if it is farmer negligence, we come back to our contract. We can give him the information about ?What do you do for our production? You will break your contract! So watch out! Do this and this!? But this problem has not occurred in our production contract. Laiser Now is it easy for you to fail to buy the product from the grower? Swai No, never. Because the contract shows everything: the quantity what we can expect from him, the price of that variety, maybe the month of harvesting, and so on. Everything is in our contract. So if we can refuse to purchase the product from our farmer, the contract is what he can use to stop us. Laiser What can you say about the advantages and disadvantages of contract farming? Swai First of all advantages, you cannot lose the market, your market is clear. Secondly you minimise your production costs. The stock seed you can receive without any payment, because we offer the stock seed to our growers free-of-charge. Also they can get how to plant from our field officers free-of-charge. Even if disease occurs on your farm you can call in the field officer from Multi-flower company, and he will come to give you advice. Thirdly, when you make a rotation for flower seeds with other crops, it is very good, because the land will be made fertile when you grow flower seeds. Laiser Disadvantages? Swai Maybe, maize and beans, the people watch the market. They can store the crops until the price is high, but the flower seeds you can?t. You have to harvest and sell it to the company immediately, for the same price. Laiser What do you think about this way of farming? Do you think it is a very good way for the farmers, that they are benefiting too? Swai Contract farming is very good because it is helping all the sides. For the company, to keep the farmer not selling to other companies. For the grower, the standard marketing - not for the price to be higher or lower, it will be standard; if it is 10,000 per kilo it?s 10,000 per kilo. Without a contract, maybe you can harvest 1000 kg of flower seeds, and the company tells you ?We can?t buy your product?. End of track.