Contract farming: Bringing farmers and buyers together in Fiji
The Fiji Crop and Livestock Council (FCLC) and the FAO are joining forces to promote contract farming as a means to coordinate links between farmers and agribusiness firms.
In simple terms, contract farming is an agreement which establishes conditions between a buyer and farmers for the production and marketing of agricultural produce.
Under contract farming, producers typically commit to supply agricultural produce which satisfies the specified conditions of a contract. These specifications can include a set volume, prices, production technologies, quality characteristics and production delivery dates, among other mutually agreed conditions.
In theory, the agreement should be mutually beneficial to a buyers and farmers. It should promote agricultural production by providing a secure, long-term market for farmers and provide them with a guaranteed revenue stream and collateral which can be used to secure bank loans, thereby encouraging farmers to invest in the adoption of more efficient production technologies and earn increased revenue . Buyers should benefit from a more consistent supply of produce that meets their requirements, at a lower unit price, assisting them to be more competitive in the marketplace.
To raise awareness of contract farming and to promote its adoption in Fiji, FAO and the FCLC offered the first training workshop on planning and implementing contract farming operations in Nadi, from November 17 to November 20.
Farm leaders, agribusiness executives, government officials and development practitioners participated in the event.
The workshop was facilitated by FAO Senior Agribusiness Economist, Carlos da Silva. “Contract farming is one of the proven mechanisms that can be promoted to improve efficiency and inclusiveness in transforming food and agriculture systems. There are many examples of contract farming schemes in the Pacific region in areas such as flowers, oil palm, broilers, vanilla, coconut and tobacco. FAO is advocating for responsible contract farming globally through our technical expertise,” said Mr da Silva.
Contract farming is not a recent innovation. However, interest in it in order to better co-ordinate production and sales in agrifood chains has grown significantly in recent years. However, contract farming is not yet as developed in Fiji or the Pacific as it is in other parts of the world.
FCLC President, Simon Cole said, “Contract farming is already practised in sugar, dairy and tobacco industries. This is an opportunity to see the inner working of contracts, the proper ways of doing it, the ways to improve the return for the farmer and contractor.”