I have read and understood the content of this agreement and I sign it of my own free will. Contract farming has been used for agricultural production for decades, but its popularity seems to have increased in recent years. The use of contracts has become attractive to many farmers, as the agreement can offer both a secure market and access to production support. Contract farming is also interesting for buyers who are looking for products for sale along the value chain or processing. Processors are the main users of contracts, as the guaranteed supply allows them to maximize their processing capacity. [2] Contracts with farmers can also reduce the risk of disease or bad weather and facilitate certification, which is increasingly in demand by advanced markets. There are also potential benefits to economies, as contract farming leads to economies of scale that, as Collier and Dercon argue, “inevitably ensure a more dynamic agricultural sector. [3] Ilvento, Tom and Watson, Angela. Poultry farmers speak out — a survey of poultry farmers in Delmarva. (1998) Department of Food and Resource Economics, University of Delaware. This independent contractual structure for farmers is attributed not only to rescuing farms, but also to supporting these farms in a sector that was once in trouble. In fact, the credit default rates of chicken farmers are among the lowest of any segment of agriculture. Prowse (2012) provides an accessible and comprehensive overview of current contract farming issues in developing countries.
[17] Several studies offer a positive message about the inclusion of smallholder farmers and the benefits they derive from participation. For example, in a study published in 2014, Wang, Wang and Delgado examine a large number of empirical studies on contract farming. They conclude that contract farming has had a significant impact on improving farm efficiency and productivity as well as farmers` incomes. [18] In a summary review of econotic studies, Minot and Ronchi (2015) propose that participants` incomes increase by 25-75%. [19] A more measured approach is taken in the systematic review of contract farming by Ton et al. (2017). Although their study finds that contract farming can significantly increase farmers` incomes, Ton et al. argue that such figures must take into account the publication and bias of survivors. In other words, such estimates need to be scaled down to accept that studies that show negative or non-negative “effects” are less likely to be published and that calculating the impact of contract farming may overlook systems that do not improve and collapse the incomes of smallholder farmers and are therefore not available for evaluation. [20] The existence of an appropriate legal framework is therefore essential for the successful implementation and long-term sustainability of contract farming.
A legal system is essential to help farmers and their buyers negotiate and design contracts. It is also important to protect them from risks that may arise during the performance of the contract, such as. B abuse of power by a larger party to the negotiations or violation of the treaty. Strengthening farmers` organizations to improve their contract negotiation capacity can help avoid future misunderstandings. [7] Several countries have adopted guidelines and legislation to ensure fair contracting practices and to provide remedies for dispute resolution. [8] A “Legal Guide on Contract Farming” was developed in 2013/2015 by the International Institute for the Unification of Private Law (UNIDROIT) in collaboration with FAO. T92 [10] To download a PDF of this Contract Breeder FAQ, click here. Eaton and Shepherd[2] identify five different models of contract farming.
Under the centralized model, a company supports small-scale production, buys the crop, and then processes it, tightly controlling quality. . . .