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I can see interesting discussion is going on on contract farming. I would like to comment on it based on Bangladesh experience. A number of private sector companies have started contract farming with vegetables, poultry, milk and recently flowers. The basic factors that contribute to this practice are many but some of the prominent ones are as follows: i. Small holders face diseconomy of scale due to declining farm size and increasing subdivision and fragmentation of holdings . Average farmsize is very small at about 0.7 ha. , 50% of all farms cultivating on an average 0.4 ha. scattered in 3-5 fragments. Rice production continues somehow in a suboptimal fashion because it is the main staple and can be stored. But organizing production of high value vegetables and fruits on an individual basis and disposal of output in small quanties at profitable prices is often a great constraint due to poor marketing outlets. Contract farming facilitates integration of production and marketing of produce by numerous small holders and thus overcomes many of these problems. ii. Where small farmers face cash constraints the local contracting company i.e BRAC and PRAN provides quality input supplies, technical advise, and a guaranteed buy back price at harvest. PROSHIKA, an NGO also produces organic vegetables mostly for urban consumers. Some super markets in Dhaka sell fresh vegetables but what extent of these are linked with contract farming is to be seen. iii. The vegetables grown under contract farming are mainly for export to Bangladeshi ethnic market abroad. The company, BRAC, established at the local level vegetables processing, grading and packaging facilities, which also creates opportunities for women employment. The inadequate provision of cool chain storage and transportation system limits expansion. For further expansion of high value crops two possible actions are talked about- investment by MNCs linked to international super market chains and fulfilment of SPS standards. iv. In the backdrop of limited success of crop diversification programme of the Ministry of Agriculture, contract farming in the private sector has contributed to the promotion of agricultural diversification i.e. crop to non-crop agriculture, encompassing poultry and small-scale dairy. An agro-business farm, ABFL imports day-old parent stock chicks and grow them for day-old chicks to be reared by small poultry farmers who are provided with quality feeds, vaccines, and training. The broilers are sold as live birds or as dressed meat through urban sale centres. However, the risk management due to disease or the insurance payment against mortality remains a problem. v. In a land scarce country like Bangladesh where distributivist land reform is not implementable, contract farming can be seen as a step towards dynamic agrarian reform. There are prerequisites. Firstly, in a particular locality there has to be a good number of farmers agreeing to operate under contract farming system, otherwise the private sector may not be interested to invest. As a matter of fact PRAN company investing a fruit processing palnt in one northern district location faced serious registance and hostility from the local farmers. Secondly, there has to be good infrastructure, roads, suitable transports, electricity supplies, etc. Thirdly, there is a need for legal system to protect the rights and bargain power of the small producers (there are allegations that if there is fall in market prices the guaranteed prices of produce are not paid or paid with hassels). Fourthly, for linking contract growing of high value crops with international supply chain management adequate provision for air freight and acrgo handling facilities have to be in place. This seems to me an unexplored option in many LDCs. I agree with Dick Tinsley that contract farming through private companies (and NGOs) deserves more careful attention. In Bangladesh, there is a need for initiatives to bring the issue in the agricultural planning process as well as in the donors future agenda for supports to commercial agriculture. M.A.Sattar Mandal ============================================================= To send a reply to this message that goes to all list members, make sure that you send your reply to <address removed> To unsubscribe from this list, send an email to "<address removed>", with the message body: unsubscribe science-and-technology <your-email-address>
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