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Friday, July 31, 2015

Farmers, buyers’ partnerships guide in the offing


A legal guide to ensure harmonious relationship between farmers and buyers for sustainable agribusiness is being worked out by the International Institute for the Unification of Private Law (UNIDROIT) in collaboration with the Food and Agriculture Organization (FAO) and the International Fund for Agricultural Development (IFAD), NaijaAgroNet reports.

The arrangement would take the form of an expanding practice in which farmers produce agricultural goods for specific buyers in set quantities at prearranged prices and at the same time getting a new tool to guide growers and buyers in establishing sound contracts and conflict resolution procedures.

Contract farming in principle can improve farmers' access to markets and boost their incomes while ensuring that agribusinesses have a stable supply of produce that meets their quality standards, NaijaAgroNet was informed in a press release by FAO.

But as with any contractual relationship, there are potential pitfalls, and farmers can sometimes find themselves on the losing side of the deal. For example, a company might not pay the agreed price for the produce delivered, asserting that its quality was substandard, while the contract does not include any dispute resolution mechanism.

Changes in the world's agrifood systems and consumer preferences, NaijaAgroNet, have been a key driver of this trend. As food demand has risen both in developed and developing countries, processors and marketers need a steady and high volume stream of supplies, which they are not always able to meet buying on open commodities markets.

In contract farming arrangements help buyers gain a stronger hand in production, quality control and pricing, while farmers benefit from guaranteed income and market access. They may also acquire new productive assets – under some contract types, buyers commit to supporting growers by providing farm inputs, equipment, and technical advice.

Cyriacus Nnaji/GEE

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