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These annexes are referred to in the main body of the text. The reader's attention is drawn to the fact that the inclusion of the contracts in Annexes 3 and 5 does not represent endorsement by the authors and that they are included here, in part, as examples of contracts with some weaknessses.

Annex 1

Sponsor-farmer advance policies

An example of material
and cash advance conditions

The advance policy is designed to assist farmers to attain the required standards of crop production, as stated in the annual registration.

The cash advance incorporated in the policy is a form of incentive to complete recommended tasks in the interest of the crop and within the specified period. The school fees advance is not in the interest of the well-being of the crop and is therefore payable only when the Company is satisfied that the sum advanced is recoverable from the standing crop and within the crop year.

1. Material advances

  1. The Company will advance from stock all chemicals, fertilizer, insecticides, etc., required to produce the crop from the allocated land area. The issues must not exceed the recommended rate for each quota.
  2. The Company will advance from stock: hoes, handles, watering cans, seed-bed plastics and all established crop material requirements.

2. Land preparation

  1. The Company will pay the official ploughing/scarifying/ridging contractors on behalf of the farmers at prevailing rates.
  2. Farmers who own tractors and wish to plough their own land will be advanced a total of 30 litres of diesel per 20 acres for three ploughings. If the fuel issued is abused this privilege will be forfeited.

3. Irrigation

  1. In the event that farmers require irrigation, their accounts will be debited with the cost of the operation at prevailing Company rates.
  2. Similarly, if irrigation contractors are engaged, the Company undertakes to pay the contractors at agreed rates and debit farmers' accounts for the service.

4. Water pumps

  1. Should a farmer's request for a water pump for irrigation be approved, cash and school fee advances will be forfeited until the advance for the pump is fully repaid or deducted from proceeds. If the capital purchase exceeds US$250.00, the debt may be repaid over two crops (cash/school fee advances forfeited for two seasons). Farmers with 40 acres or more will be eligible to acquire water pumps.
  2. If two or more farmers share the cost of the pump, the debt must be repaid the same year. Cash/school fee advances will be suspended until the sum advanced is fully recovered. In this case the individual quota could be below 40 acres.
  3. Letters will be sent to the farmers regarding Company ownership until the debt is fully repaid.

5. Water pump repairs

  1. Water pumps that require servicing or repairs must be sent no later than 28 February of each year to the stations with the farmer's full name, farm number, etc., and a brief note describing the fault or repairs to be carried out. The Company will either repair the pump at its own workshop or have it repaired outside. Farmers will be debited the cost of spare parts, workshop material and labour.
  2. Pumps delivered after the specified date will not be accepted and no arrangements will be made by the Company for repair or servicing.

6. Cash advance

  1. As an added incentive for improved crop quality, the Company will advance to farmers cash sums at the rate of US$l.00 per acre payable after four weeks of transplanting, provided the farmer has cultivated his/her field according to Company policy on field management.
  2. Farmers who already have crop assignments to either the development bank or commercial banks or have previous debts with the Company or have purchased water pumps and still owe money to the Company will not receive any cash advance.

7. Second cash advance

  1. Farmers will be entitled to second cash advances at US$l.00 per acre when their fields have been effectively treated with chemicals according to the field officer's instructions. Farmers with a capital advance will not qualify.

8. Land rent

  1. The Company will recognize land rent advances of up to US$2.00 per acre. Landlords will be paid 50 percent of the total rent two weeks after planting and the balance at the end of the harvest.

9. Seed-bed rents* 

  1. Seed-bed rent will also be paid at the rate of US$1.10 per seed bed.

10. School fees

  1. The Company will advance school fees up to a maximum of US$50.00 per farmer per term for second and third terms only if, in the opinion of area managers, the sum will be fully recoverable from the crop proceeds (within the crop year).
  2. The area manager, before approving the advance, will take into account the state of crop, performance, expected yields, debts and other commitments officially known to the Company. The beneficiaries of the school fees must in all cases be sons and daughters only, and will not extend to cousins, nephews, etc. The Company will not consider advances for boarding schools, university fees, examination fees, uniforms, or books or sports equipment.

Source: Adapted from Eaton, C.S., 1988: 116-118.

 * Seed-bed rents are paid by the farmer to the landowners where groups of seed beds are situated. Many sponsors require, for supervision purposes, that farmers' seed beds are grouped together.

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