Contract farming (CF) can be an effective model to coordinate linkages between farmers and buyers, improve smallholders' access to market, productive resources, technologies and capacity development, and enhance their competitiveness and livelihood. In close collaboration between FAO and the Ministry of Agriculture, Food Security and Nutrition: Department of Marketing in Lesotho (DoM of MoAFSN), the TCP project "Building capacities and facilitating enabling environment for contract farming in Lesotho (TCP/LES/3801)" had an objective to contribute to developing an enabling legal environment for CF and increased knowledge and capacity of stakeholders for implementation of CF as an innovative business model.

The project team formulated a draft bill for CF in Lesotho; conducted an assessment of the potential, suitability, and feasibility of CF in four value chains; provided capacity development opportunities and developed knowledge products for relevant stakeholders to promote and engage in CF; and proposed and designed a CF pilot in the dry beans value chain.

The general process of implementing CF schemes includes feasibility assessment, getting stakeholders' buy-in, farmers' selection, contract development, negotiations and signature, preparation, CF management, monitoring and evaluation, termination, renewal, or upscaling. As a facilitator, the FAO team supported the process with a participatory approach throughout the project. The team provided training on CF for relevant stakeholders, evaluated opportunities and feasibility of CF, consulted and identified the buyer, promoted linkages between the buyer and farmers, and supported the buyer in selecting farmers, drafting the model contract, and negotiating with farmers.

A technical report, Piloting Contract Farming for Dry Beans in Lesotho, is under development and will be released in the coming months. The report specifies the essential aspects in the preparatory phase and provides relevant recommendations and guidance on the initiation and preparation of pilot CF. It discusses the roles of facilitators, key issues for feasibility assessment, and the selection of a suitable CF model. It introduces the main criteria to consider when selecting farmers and emphasizes the potential of CF to be socially inclusive. It uses the dry beans value chain to showcase the procedure of formation and negotiation of contract agreement, with annotations to the model contract that both the buyer and farmers have mutually agreed.

Although the pilot focuses on the dry beans value chain in Lesotho, the process of preparation and the model agreement can be pertinent to promoting and adopting CF for other value chains. Along with capacity development activities, this pilot can impart experience to other buyers, producer organizations, potential promoters, and facilitators of CF, such as relevant ministries, government agencies, development partners, NGOs, value chain support services, and research institutions. These stakeholders may play future roles in promoting, facilitating, and implementing CF in various value chains and training others on this topic.

A piece of news about contract farming pilot was published by Lesotho times (link). 

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