Contract farming is an arrangement between farmers and buyers, which can involve an agreed price, quantity or delivery date for a certain product. This type of contract can provide benefits for both the farmer and supplier, with farmers receiving access to an assured market, guaranteed income and support with equipment. However, as has been demonstrated through the impacts of the supermarket price wars in the UK, farmers often find themselves on the losing side of the deal.
Jointly developed by the International Institute for the Unification of Private Law, the Food and Agriculture Organization and the International Fund for Agricultural Development (IFAD), the Legal Guide on Contract Farming (2015) aims to help growers and buyers establish sound contracts and put in place procedures for conflict resolution.
Speaking at the launch event for the guide in Rome, Gerard Sanders of IFAD said, “The legal guide promises to improve contract farming arrangements by narrowing the information gap between the parties and promoting best practices.” For everyone to benefit fairly, it’s important to have transparent contracts in place. The guide is addressed to producers and buyers, and it provides a description of common terms and a discussion of legal issues that could potentially arise, along with how they might be solved within different legal systems. As smallholder farmers in the developing world can be particularly vulnerable, the guide is designed to be used in countries across the globe.
Beginning with a detailed overview of contract farming, the guide gives a comprehensive explanation of:
- the legal framework;
- the formation of an agricultural production contract and the different parties involved;
- the obligations of the parties within an agricultural production contract;
- what to do if these obligations cannot be met for any reason;
- and the importance of deciding when a contractual relationship begins and ends, and if a contract may be terminated before its expiration date or renewed when it comes to an end.
Although aimed at those directly within contract farming, it could also prove to be a useful resource for policymakers considering the adoption of regulatory or legislative provisions dealing directly or indirectly with agricultural contracts.
Photograph: World Bank
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