Contract Farming: A Safer Alternative for Risk Averse Farmers
Many people would wish to venture into one type of farming or the other, they however grow cold feet because of the challenges and uncertainties faced by other farmers. Key among them is the lack of knowhow of conducting the particular type of farming, lack of funding, fear that they will not get market for their produce, lack of marketing skills, fear of price fluctuations, among others.
For this reason, farmers are adapting contract farming as a model of conducting business in Kenya’s agricultural sector.
Though contract farming may not always give the highest price for a farmer’s produce, it provides links to ready local and global markets from companies and investors with assured access to market for their produce, stable and predictable returns.
Through contract farming, farmers are guided by contracting companies and investors on the best farm practices that ensure delivery of desired quality and quantity produce. This eliminates constraints such as limited information about production methods, market risks, lack of resources such as fertilizers and lack of enough land as some of these investors provide land.
Mr Ricardo Ouma a sorghum farmer from Siaya is a beneficiary of contract farming with EABL through its subsidiary supply chain East Africa Malting Limited. He is part of the initiative launched by the brewery ‘Mtama ni Mali’ (sorghum is wealth) which aims to increase its number of contracted farmers ahead of the opening of the Kisumu plant.
“I harvest about 4,000kgs per season on a three-acre piece of land. With EABL buying my yields at Ksh 32 per kg, I end up making an assured approximate of Ksh 510,000 annually. I highly recommend other farmers to engage in the practice as it is extremely rewarding.” Said Mr Ouma.
Contracting firms benefit from this practice by having a consistent quality of produce as compared to what may have been attained from open markets. Some of the companies that contract farmers include Jaick Agricultural Farming for strawberries, Bidco Oil Refineries for oil seeds, Jade Fresh Limited for vegetables and fruits, among others.
Skeptics have however referred to the practice as a scam due to the tales of farmers on social media who have been duped after the contract went south. This is often brought about by contracting partners that fail to honour their part of the bargain, by either failing to pay, paying poorly, or changing the terms of engagements procedurally.
How a farmer benefits
- Farmers are protected from middlemen who offer low prices
- Incorporation of modern agricultural technologies and skills
- Safeguards farmers from market risks as contracts quote prices in advance
- Contracting partners offer guidance to farmers from inception to production
- Contracts allow farmers to participate in decision making through shared agreements