Agreement Between Farmer And Company
But as we`ve said on our previous blogs, successfully managing farmers` networks, regardless of their size, can often be hard work, and if they`re not managed properly, the harvesting business can suffer setbacks and financial losses. Looking at the topic of secondary selling, the FAO publication advocates a combination of favourable incentives and explicit sanctions for farmers. It also notes that, in certain circumstances, the cost of full infringement prevention can be much higher than the losses resulting from the lateral sale and that companies can therefore learn to live with side-selling. It depends on the size of the company and the amount invested in farmers. Based on the case studies, the publication reaffirms the importance of an appropriate environment. However, it also concludes that, in some cases, the absence of such an environment is not necessarily a binding restriction for contract farming, in particular where flexibility and non-contractual clauses can be used. While an enabling environment is important, publishers warn against state incentives and subsidies for inclusion, which can give a misleading impression of profitability and jeopardize sustainability. They also note that proponents of the concept rarely consider the costs to the business when pursuing an inclusive strategy. Managing a network of farmers can be an entire handful, but an agricultural software has a perfect solution – Agrivi Farm Management Software. It offers sustainable cultivation practices and better cooperation with farmers, which ultimately improves the benefits for both producers and the purchasing company. Farmers have to sign a contract to sell their crop to the purchasing company in exchange for inputs, technical assistance and financial assistance Today, agriculture is booming and small farmers are finding it increasingly difficult to penetrate the market and achieve full profitability.
At the same time, large companies active in plant supply or food processing need a reliable source of further sale or processing. A number of papers on the role of contract farming in promoting inclusive market access, published by FAO in 2013, include contractual agreements in Argentina, Bangladesh, Brazil, China, Honduras, South Africa, Tanzania and Thailand. The editors conclude that despite a preference for buying large farmers, factors other than farm size contribute to a company`s decision and that, therefore, contract farming does not necessarily result in the exclusion of smallholders from supply chains. Geographical factors are important, both in terms of impact on production and factors such as land rights, gender and ethnic relations. The publishers note a gradual convergence of the terms and conditions used in contracts and note that the two most common contractual provisions, namely technical assistance and pre-financing of inputs, can be essential for the inclusion of small farmers. The publication focuses on the role of third parties, such as. B NGO, in the coordination of farmers. The drafting also identifies possible roles for third parties in providing independent quality certifications and in certifying contracted companies to reduce the risk to farmers..
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