Linking farmers to markets - Contracting out of Poverty: small changes can bring big results for smallholders

Contract farming – a set agreement between a farmer and a buyer – is a widely used approach for agricultural processing companies and wholesale
buyers to efficiently source their produce, and for farmers to enter domestic and international markets. The farmer agrees to provide a set quantity
and quality of product at the firm’s delivery and production schedule. In return, the farmer is guaranteed a reliable and regular market and a
reasonable price – and may also receive help with agricultural planning, inputs, and technical or financial support.

However, contracts tend to go to medium-sized and more educated farmers, leaving smallholders out of these lucrative relationships. The reasons
vary. Sometimes, cash-constrained famers sell directly to a middleman instead of waiting for the promised payment from their contracted buyer.
Smallholders may not have the resources to produce the high standard of quality required by contracting companies. Firms report that the cost of monitoring many small farmers is too expensive...Read more