IFPRI recently organized a five day study tour on contract farming and value chain analysis in India for a delegation from Nepal. The program was designed to analyse the conditions for success of contract farming and to assess the business environment for contract farming. The study tour aimed to demonstrate the benefits of contract farming under what would be a similar environment in Nepal. The objective of the tour was to show the participants the prevailing best practices in contract farming for pomegranates, grapes, and poultry, as well as onions and other vegetables, and teach them state of the art techniques.
The study tour began with the team visiting the Dr. B.V. Rao Institute of Poultry Management and Technology at Uruli Kanchan in Pune district on August 19, 2015. This was followed by a meeting with a grape farmers association called Mahagrape organization and other farmers in the district, to understand the opportunities for and challenges of contract farming.
The delegates also visited the Krishi Vigyan Kendra (KVK) at Baramati to understand the promotion of modern agricultural technologies and good agricultural practices among farmers, such as bio-fertilizers and bio-pesticides, certification of farmers’ seeds, custom-hiring facility for agricultural equipment, soil testing, poly-house techniques, water conservation, and water harvesting techniques.
Later in the week, the team visited the Baramati Farmers’ Producer Company and the Jain Research Institute located in Wakad village of Aurangabad district. The delegates interacted with the scientists to learn more about technologies like drip irrigation, solar power, tissue culture techniques, and water harvesting. This study tour concluded with a week-long training in New Delhi on contract farming and value chain analysis. This study tour is part of the ongoing USAID-funded Policy Reform Initiative in Nepal.
Konark Sikka is an intern with IFPRI- South Asia office
Agriculture being major source of livelihood and employment in Nepal, and is effected by low productivity, traditional farming practice and lack of connectivity with markets. Fragmented landholding with limited access to market and knowledge to sell its produce results in slow progress. Promotion of contract farming would lead to improved access to technology, markets and credit, reducing transaction costs and increasing efficiency in production and marketing. This would enable small scale enterprises to mitigate risks while creating a climate for entrepreneurship. Contract farming in fact has the potential to reduce poverty by raising farmers’ incomes.
The workshop uncovered that scaling up contract farming was necessary but it would pose challenges which would need to be overcome through collective action to ensure smallholders’ participation. This might even require intervention from the government, relevant NGOs and lead firms in value chains, thus posing a need for solid communication and cooperation between the three sectors. Mutual trust would be needed for fortifying any relation between contractors and contracted farmers. With that in mind, risk sharing between the two would facilitate the fortification of this relationship. Integrating research institutions into the process would be fruitful as well, as it would help in a faster and smooth spread of technologies.
Sharing country experience at the workshop – Few of the policy way forward that were discussed are-
1. There is a need to be a convergences of policies, institutions, technologies and infrastructure
2. Policies and an impermeable legal framework pertaining to contract farming is needed to be developed and there should be reduction in policy lag, between announcements and actual implementation
3. Leveling the playing field for private sector participation in the form of regulations, taxes and solid incentives for the agri-business industry is needed
4. Involving smallholders into growers associations and providing them with credit and insurance would be step forward
5. Improving public infrastructure along with a proper technology transfer mechanism as solutions needs to be initiated