Making contract farming more inclusive for smallholder farmers
Contract farming has been promoted by the Royal Government of Cambodia (RGC), the private sector, and civil society actors as an inclusive agri-business model. It has gained popularity and is seen as a potential model for cooperation between investors and farmers. Under contract farming arrangements, farmers are expected to get better access to higher technologies, quality inputs, technical advice, financial support, and secure markets. In 2011, the government issued a Sub-decree on Contract Farming. Currently, MAFF is drafting a new law on contract farming.
Contract farming has also been adopted by companies managing Economic Land Concession (ELC) to engage smallholder farmers from the local communities. Such cooperation has the potential to increase farmers’ benefits from existing ELC projects as well as to contribute to agro-industrial development. As of 2018, there were 229 ELC projects, covering around 1.2 million hectares, about 35% of which were developed into plantations (MAFF, 2018).
In order to contribute to the development of the draft law on contract farming, the Cambodian Alliance for Responsible Agricultural Investment initiated a research to generate evidence and draw lessons from the implementation of contract farming on the ground. The study was conducted by the Centre for Policy Studies (CPS) in cooperation with the Ministry of Agriculture, Forestry, and Fisheries (MAFF) during 2020-2021. It comprised a household survey of 270 farmers who have engaged in contract farming with five different companies under two business models: outgrower and nucleus-estate.
In this regard, CPS and MRLG would like to convene a dialogue between key relevant stakeholders on 14 March 2022 on the following questions:
1) How to design contracts that are fair and understood by farmers? What mechanisms can protect them effectively and ensure the contracts are enforced?
2) How to ensure that contract negotiations are balanced between farmers and companies? How to strengthen the role of intermediaries such as agriculture cooperatives?
1) To present key findings from the research and some potential solutions to make agricultural investment and contract farming more inclusive and beneficial to smallholder farmers.
2) To facilitate a dialogue among concerned stakeholders on key features and processes necessary to ensure more inclusive and effective contract farming in Cambodia.