The expansion of contract farming has taken place in all regions of the world and in subsaharan africa. Ethiopia s comparative advantage in the international market by commodity 4. There were 400 household heads from different wealth rank and farming practices considered for indepth interview. For instance, in mozambique almost 12% of the rural population is involved in contract farming mainly in growing cotton 18. Contract farming handbook a practical guide for linking smallscale producers and buyers through business model innovation volume ii selected tools and case examples. Dec 01, 2019 inclusive agribusiness by means of a variety of contract farming approaches is often reported to yield positive income effects for participating smallholders. Like many farmers in ethiopia, gadisa gobena grew mostly food crops on his farm in ambo, oromia region, in the centre of the country. Agriculture in ethiopia is projected to grow at a cagr of 5. Impact of contract farming on income of smallholder malt barley.
Pdf on jun 1, 2010, ayelech tiruwha melese published contract farming in ethi opia an overview with focus on sesame find, read and cite all the research you need on researchgate. Size of export import substitution and domestic market opportunity 3. Contract farming cf is an institutional arrangement by which agribusinesses replace or supplement primary agricultural production with supply from. Era has also begun a program of rural road network expansion. Hence, economic policies that require shifting producers. Economic efficiency and marketing performance of vegetable. Farming as a business faab assist companies developimprove contract farming models for engaging small scale farmers support producer group formation and capacitybuilding on contract farming support small scale farmers access to high value markets through certi. Potential tradeoffs for farmers in contract farming 14 3. Ethiopian commodity exchange and contract farming arrangements. Agricultural commercialization clusters acc initiative. Particularly in ethiopia, smallholder farmers cultivate approximate to 95 percent of the total area. One of ethiopias policy commitments in its cooperation framework. Although women are less active in commercial farming and are largely excluded from contract farming, they often provide the bulk of wage labor in the nontraditional export sector.
Malt barley commercialization through contract farming scheme. Contract farming and outgrower schemes investors could also consider participating in production through contract farming or an outgrower scheme. It specifically examines the potential and capacity of the domestic market and actors farmers, institutions, and enterprises to engage in market linkage with tncs. Production potential and smallholder farmer coverage by commodity 2. Malt barley commercialization through contract farming. Smallholder farmers and contract farming in developing. In kenya, over 50% of tea and sugar are produced under contracts, in.
The total land used for malt barley was about 7,937 hectare where the production was about 317,480 quintal with 1,097 ethiopian birr etb average price. Pulses, mainly haricot bean, have recently become significant export crops, diversifying sources of foreign income from the agricultural sector. Likewise, farmers and enterprises potential for production for market andor processing tncs produce. More than 230,000 households in kenya were involved in the contract production of tea, sugar, oilseeds. May 29, 2019 ethiopia cotton production annual report categories. The new release singitan is resistant to shoot fly, a major pest in ethiopia which can cause yield losses of up to 100 percent during shorter rainy seasons. Conflicts of indigenous farming practices and modern. Pdf on jun 1, 2010, ayelech tiruwha melese published contract farming. The increase in production is due to an increase in area harvested. Contract farming and outgrower schemes actionaid international. Impact of contract farming on income of smallholder malt.
In general, gender gaps do not appear to fall systematically with growth, and they appear to rise with gdp per capita and with greater access to resources and inputs. Foreign investors took up the beer companies and upgraded their working. Paul, mn 55108 edited by arun agrawal, university of michigan, ann arbor, mi, and approved november 12, 2019 received for. The impact of contract farming on technical efficiency in.
Feinstein international center friedman school of nutrition science and policy tufts university africa regional office po box 1078 addis ababa ethiopia tel. It is an agreement in which farm production is bought in. Pdf value chain analysis of malt barley hordeumvulgarel. The latter will be critical to further development of contract farming in rural areas and out grower schemes. Nov 09, 2016 this means that production can only meet 35 percent of domestic demand. Production input costs and sales output prices were used to determine. There are promising and untapped crosscutting market opportunities notably in the areas of packaging facilities, testing and certification facilities, recycling, cold chain innovation, dryer innovation, traceability, and logistics. The farm was located in south lebanon, in the marjoyoun valley and was rented on a lump sum basis. Impact of contract farming on smallholders in ethiopia. Outgrower schemes often referred to as contract farming in academic and other literature. Now contract farming is evolving in ethiopia, while the motives for promoting contract farming may vary by actor, this study focuses on the role of contract farming scheme in malt barley commercialization. Cotton production for my201920 is forecast at 262,000 bales 57,000 metric tons, eight percent higher than the previous year. Measures to mitigate opportunistic behaviour by processors 25 7. Contract farming has risks such as terminating the contract, side selling, and utilizing input for other purposes due to information asymmetry, lack of legal enforcement, and natural hazards.
An assessment of the potential profitability of poultry. Top pdf what is contract farming in poultry 1library. Contract farming in ethi opia content foreword iii acknowledgements iv abbreviations v 1. Majority of the production takes place through contract farming with different business organizations like malt factory and beer factories in the country. Semantic scholar extracted view of contract farming in ethiopia an overview with focus on sesame by a. Sep 04, 2018 the ministry of agriculture and natural resources is going to develop a contract farming law to allow farmers and investors to transact agricultural products via a contract agreement. Contract farming, the practice of growing agricultural products under forward.
Pulses account about % of total crop production and are the principal source of dietary protein. The report includes production analysis volume, consumption analysis value and volume, export analysis value and volume, import analysis value and volume, and price trend analysis. The advent of multinational brewing companies to the ethiopian brewery sector has contributed to the introduction of contract farming. Farmer participatory research in southern ethiopia 1. Pdf contract farming in ethiopia an overview with focus on. Two years ago, indigenous communities in gambella, ethiopia, celebrated the departure of the indian company karuturi global, after its contract for a 300,000 hectares agribusiness project was finally cancelled. The price paid for ethiopian sesame seed is below world average because ethiopia exports to countries that pay rather low prices wijnands et al. Pdf contract farming handbook a practical guide for linking. Production input costs and sales output prices were used to determine the feasibility of growing broilers in the region. Impact of contract farming on household income of smallholder. Critics, however, see it as a strategy for agribusiness firms to pass production risk to farmers, taking advantage of an unequal bargaining relationship. Especially for farm contracts, commitment problems arise after the contract is made. An assessment of the potential profitability of poultry farms. From table 5 experience is parameter estimate in production of cocoa between farmers within contract and non contract farmers.
The market for agriculture in ethiopia is segmented by type into food crops, fruits, and vegetables. Contract farming may soon become reality capital newspaper. A random sample of 95 growers was drawn from a list of cf participants. Contract farming in sesame is, at the moment, almost nonexistent in ethiopia. Contract farming is seen by proponents as a way to raise small farm income by delivering technology and market information to small farmers, incorporating them into remunerative new markets. Smallholder farmers and contract farming in developing countries evamarie meemkena,b,1 and marc f. The diversity of farm production, enabled by the tremendous diversity of agroecological zones in ethiopia. Last year, ethiopia was forced to import over 63,000 tons of malt, at a cost of 38 million usd. Effectiveness of contract farming for improving income of. Although diversified schemes of contract farming are growing and with further growth potentials in ethiopia, only. The role of contract farming, philippine institute. Opportunistic behavior can occur before and after the contract.
Bellemareb ach dyson school of applied economics and management, cornell university, ithaca, ny 14850. Strategic drivers by commodity at regional or national level 1. An overview with focus on sesame, wageningen university 2010. Pdf contract farming handbook a practical guide for. Potential tradeoffs for processors in contract farming 15 4. Ethiopia has been struggling in the international sesame market due to low productivity. The main export markets for ethiopian sesame seed in 2008 were china, israel, turkey, and other countries in the middle east.
Special thanks go to ato kassahun, general manager of acos ethiopia, and to ato. Theoretical concepts, opportunities and challenges in mid and high altitude areas of northwestern ethiopia. Smallholder farmers and contract farming in developing countries. Ethiopia is the sixth world producer in sesame seed. The effectiveness of contract farming in improving smallholder 3ie. Aid663c1400002 agriculture knowledge, learning, documentation and policy akldp project implemented by. Agriculture in ethiopia growth, trends, covid19 impact. In contract farming, a specific product is cultivated after an. It is the largest agricultural export crop after sesame and coffee. In contract farming, an agreement is made between farmers and agribusiness firms processors, exporters, and traders in advance for a specific quantity, quality. Yet, some farmers participate in contract farming while others are not. Impact of contract farming on smal lholders in ethiopia.
Contract farming is a commercial relationship between a firm and a group of farmers. Monitor gender data and establish targets for contract farming, training, cooperative membership, extension and agriculture services provided, and supply of farm inputs. Accordingly, in this study, the following objectives were pursued to. Volume 16, issue 05, may, 2020 the role of trust and.
Grain karuturi globals new land deal in ethiopia must. Woredas with high production potential and production. Crops ranked according to their suitability for contract farming 16 5. In addition, a representative sample of 114 households was drawn from seven counties where the cfa was active. Assuming it gets 23 approval in parliament it should be approved just after the ethiopian new year. The experienced producers within contract are expected to be technically efficiency. The study attempted to understand indigenous small farming systems and its challenges with the framework of agricultural modernisation in konso community, southern ethiopia. Pdf contract farming in ethiopia an overview with focus on sesame. Pdf contract farming in ethiopia an overview with focus.
In crop production, contract farming is common in the horticultural subsector and also in the field crops subsector, such as for sugarcane, tobacco, tea, and cotton production. A farm and its facilities were rented to grow and finish the flock for market delivery. In addition, the study examines structure and functioning of contract farming as it is practiced in the study area. This finding appears relatively robust in spite of the difficulty to control for intervening variables 32, 27, 4, 37, , 38, and the fact that some studies show less. This study examined factors that influence farmers participation in malt barley contract farming and west arsi zones of oromia region, ethiopia. In ethiopia, the actual share of resources allocated to semisubsistence food production is much higher than the share of resources allocated to cash crops jaleta, 2007. Contract farming, concept and practices in ethiopia fair. The purpose of this paper is to investigate the impact of cf on smallholders technical efficiency te using crosssectional data from 122 cf and 261 noncf sesame farmers in ethiopia. Nov 21, 2018 this publication from 2017 will provide you with insight on the concept and practice of contract farming in ethiopia. There are about five million smallholder farmers already involved in spice production, and some companies, such as nati coffee and spices plc and bebeka coffee estate s. The objective of the publication is bring forward eight contract farming case studies made in ethiopia on different agricultural value chains malt barely, chickpea, seed potatoes, sesame, bamboo, green beans, passion fruit, and sugar cane. Therefore, contract farming cf has been introduced as a new institutional arrangement to improve productivity. Ifprisouth asia regional office, nasc complex, pusa. Grain karuturi globals new land deal in ethiopia must be.
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