Science - November 8, 2018

Permanent contracts with producerse can help small farmers

Albert Sikkema

Small-scale farmers in developing countries who produce for the world market often live in poverty. But there are effective ways of making lasting improvements to their incomes. These include long-term relationships with food producers – contract farming – and savings groups.

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Wageningen Centre for Development Innovation (CDI) conducted a review of the effects of various measures on the incomes of small farmers in developing countries. Demonstrably effective interventions include contract farming, climate-smart agriculture, savings groups, access to financing, producer cooperatives and intensive supervision of extremely poor farmers. In order to improve their incomes, farmers need to boost their production by a lot, says project leader Joost Guijt. But they can often only do that, he adds, if the international company that buys their products enters into a long-term relationship with the farmers. Contract farming guarantees the farmer fixed sales for fixed prices, but also means the buyer can build a relationship with the producer in order to work together on improving the quality or dealing with plant diseases more effectively.

It is also important that small farmers link up with each other in suppliers’ cooperatives and savings groups, notes Guijt. In a savings groups 12 farmers might pay in a monthly sum so that they can make a large-scale purchase now and then. This might be a piece of new technology or seeds. In cooperatives, farmers can pool equipment and knowledge. The heart of the matter, says Guijt, is that the relationship between food producers and the supply chain needs to change fundamentally. The companies must connect with the farmers. ‘Long, anonymous supply chains have got to become a thing of the past.’

The CDI did the study for the Farmer Income Lab, a collaborative venture by Mars, development organization Oxfam, Dalberg Advisors and WUR.