The beauty of contract farming lies in the fact that it encourages demand-driven farm production. African farmers need guaranteed markets for their farm produce.

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CONTRACT FARMING IN
AFRICA: critical elements
and success factors May 2000
sotonye anga 05/13/2000
BY
SOTONYE ANGA
AGRIBUSINESS EXPERT AND STRATEGIST
EMAIL: anga4000@yahoo.com

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sotonye anga 05/13/2000
PREFERRED FARM BUSINESS MODEL
• Let us approach contract farming as the
preferred and alternative farm business model
that delivers solid linkage between FARM AND
MARKET.
• It is a ‘win win’ for parties to the contract.
• Encourages specialization.
• Viable for both parties when structured
properly.
• A platform for team work.

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sotonye anga 05/13/2000
THE PLACE OF FARMING IN AFRICA
• Farming is a means of livelihood for over a
hundred million people in Africa.
• Over 80% of African farmers just farm or grow
crops without guaranteed market.
• Whenever there is an upset in the commodity
market there means of livelihood becomes
threatened.

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sotonye anga 05/13/2000
WHAT IS CONTRACT FARMING
• Contract farming is an agribusiness system that
is focussed on the production and marketing of
agricultural commodities based on forward
contracts between farmers(producers) and
Buyer.

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sotonye anga 05/13/2000
ESSENCE OF CONTRACT FARMING
• Contract farming is meant to promote firm
commitment between parties to the contract
(farmers and buyers).
• That the farmer will grow or produce
agricultural commodity of a specific type,
quality, quantity, price and at a time such as is
required by the buyer.

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sotonye anga 05/13/2000
CONTRACT FARMING AND PRE-
ARRANGEMENTS
In contract farming to a great extent every aspect
of the business is PRE-AGREED.
PRE-AGREED PRICE.
PRE-AGREED QUALITY.
PRE-AGREED QUANTITY (as in what makes
for minimum or maximum).
PRE-AGREED TIME.

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sotonye anga 05/13/2000
DEFINING ROLES (FARMER)
• Provides land ( not in all cases).
• manpower (farm hands).
• Knowledge and expertise in farming.
• Security for farm.
• Follows good agricultural practice (GAP).

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sotonye anga 05/13/2000
DEFINING ROLES (BUYER)
Successful farming requires high quality input.
• Provides Seed.
• Provides Agro chemicals.
• Provides Technical assistance/advice(through
experts).
• Financial support/soft loans(optional but can be
arranged through banks).
• Buys the commodity at harvest.

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sotonye anga 05/13/2000
BENEFITS OF CONTRACT FARMING
(FARMER)
• Guaranteed a fixed income as agreed.
• Farmer can concentrate on his area of core
competence.
• Farmer need not bother about
marketing(commodity sold in advance).
• Enjoys safeguard from price fluctuations.
• Can plan and make profit.

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sotonye anga 05/13/2000
BENEFITS OF CONTRACT FARMING
(BUYER)
• Timely supply of raw materials.
• Control over seed origin.
• Uniformity of commodity.
• Can effectively plan operations and logistics.
• Can plan and make profit.

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sotonye anga 05/13/2000
CONTRACT FARMING OPPORTUNITIES
IT CAN WORK FOR:
• ROOT CROPS: ginger, cassava, potato, turmeric,
yam etc.
• GRAINS: sorghum, maize, rice, beans etc.
• FRUITS & VEGETABLES: tomato, peppe, onion,
garlic, banana, sugarcane etc.
• TREE CROPS: cashew, cocoa, shea, rubber, oil
palm. Etc.
• The list goes on and on.

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sotonye anga 05/13/2000
THE BEAUTY OF CONTRACT FARMING
• Lies in the fact that it encourages demand-
driven farm production.
• African farmers need guaranteed markets for
there farm produce.

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sotonye anga 05/13/2000
THANK YOU FOR LISTENING!!!