An Analytical Toolkit for Support to Contract Farming

Over the past century or so, a wide
assortment of pre-harvest agreements, joint ventures, deals,
and pledges that can be termed contract farming have been
brokered between farmers and buyers. During the 1980s and
1990s, contract farming was frequently criticized as a
potentially exploitative arrangement, which favored the more
powerful buyer and left the small-scale farmer and the
environment vulnerable to abuse. More recently, there is
renewed interest from policy makers and their development
partners in contract farming as a means of leveraging the
recent wave of large-scale investment in land and
agriculture to include small-scale farmers and to link them
to new market opportunities. The establishment of contract
farming becomes a means to link small-scale farmers to
markets, which may otherwise be inaccessible for reasons of
distance, standards, processing, or any of the other
disconnections and impediments that hold them back. However,
there have been few attempts to evaluate donor-supported
contract farming projects, either financially or
economically, or to measure their inclusiveness and their
impact in the community. This document aims to provide a
task team leader with tools for a critical evaluation of
projects promoting contract farming schemes before, during,
and after the life span of the project. This toolkit has
three objectives: provide guidance on what kinds of contract
farming schemes work well, and in what circumstances (the
best practice function); provide guidance on how to analyze
inclusive contract farming schemes in order to identify
those with a good chance of success and sustainability - the
right horse to back (the diagnostic function); and provide a
framework for applying socio-economic and financial analysis
to operations that support such schemes (the cost-benefit function).