Between the slippery lines of contract farming

By Gabriel Onyango

Farming without being assured of a market, is gambling, but contract farming is one of the few options available that can guarantee ready market for your produce. However, one should be aware of the risks before signing the dotted line.

Understanding contract farming

Contract farming is simply a type of arrangement between farmers and a buyer, whereby a farmer agrees to sell whole or part of their produce to one particular buyer. The buyer on the other hand agrees to purchase all or part of the farmers’ produce at an agreed price and time.

In addition, some contractors provide support in form of farm inputs, agronomic guidance and services such as produce collection and transport.

Why companies contract farmers

The companies involved in this type of farming are mainly interested in consistency in supply and maintaining a certain quality to their produce that local marketplaces cannot meet.

For those exporting to European countries, one basic requirement is that all products should be traceable to their source – the major reason why these companies can’t just take vegetables and fruits from local markets.

Some of the companies locally involved in contract farming include Bidco (sunflower), East African Breweries (sorghum), Mace Foods (hot pepper,vegetables and herbs) among others.

Mace Foods

They have offices both in Kenya and Germany, contracting farmers for chilies (Long Cayenne and African Birds Eye), herbs (Rosemary), African vegetables (Managu, Sukuma Wiki, Amaranth/Terere).

Mace foods provide transport for farmers contracted in groups, while solo farmers will have to cater for their own transport. They also sell certified Birds Eye Chili seeds-a variety hard to get in local agro vet stores.

Bidco

Bidco contracts farmers to farm, sunflower seeds and Soybeans. Those interested in working with them have to first fill an Expression of Interest Form (EIF) downloadable form their website and then send it to Elianto Nakuru.

Once approved, you will be advised on the right varieties for your growing region. You are encouraged to do a soil test and thereafter sign a contract.

The contract will contain the farm size, location, varieties of crops grown and the quality of expected standards. You will receive visits from extension officers to offer agronomic guidance.

The catch with Bidco Oil is that they don’t provide any inputs and you will have to  transport the produce  to Elianto Nakuru by yourself.

So before signing up, make sure you have done your math well and are assured of profit after all the expenses.

Advantages of Contract Farming

  • It assures the farmer a ready market from the moment of planting.
  • Farm inputs such as rare seeds (African Birds Eye) are provided.
  • Agronomy support and guidance from the contracting company. This really helps especially when you are inexperienced or unsure of your farming capability.
  • Some contractors collect produce from farms, in the process saving you time, cost and the energy it takes to transport them yourself.
  • Contractors often offer free training to improve the skills of their farmers to help them achieve the high produce quality required.
  • With contract farming you are assured of consistency and price stability in your agribusiness.

It is worth noting that with every dawn,comes dusk,every birth there  is death. Thus contract farming also has its challenges.

Challenges of Contract Farming

  • Compared to selling your own products, contractors sometimes offer low prices.
  • Delayed payment; especially from export companies who only get paid themselves after produce is processed, transported, inspected and approved overseas.
  • Produce that doesn’t meet quality standards have been known to get rejected and because of the existence of violation of quality clauses in contracts, farmers are not compensated in any way.

When it comes down to it, each company is different with different priorities placed on their farmers. It is thus the duty of a smart farmer to explore several options to find the one that fits him/her well.

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