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ive contract farming models

FAO's guide says that contract farming arrangements fall into one of five general models:
The centralized model. The sponsor purchases crops from farmers for processing, and
markets the product. Quotas are distributed at the beginning of each growing season and quality
is tightly controlled. Generally associated with tobacco, cotton, sugar cane, bananas, coffee, tea,
cocoa and rubber.
Nucleus estate model. The sponsor owns and manages a plantation, usually close to a
processing plant, and introduces technology and management techniques to farmers (sometimes
called "satellite" growers). Mainly used for tree crops, but has also been applied to dairy
production. Multipartite model. Usually involves statutory bodies and private companies
jointly participating with farmers. Common in China, where government departments, township
committees and foreign companies have jointly entered into contracts with villages and
individual farmers.
Informal model. Individual entrepreneurs or small companies make simple, informal
production contracts with farmers on a seasonal basis, particularly for fresh vegetables and
tropical fruits. Supermarkets frequently purchase fresh produce through individual developers.
Intermediary model. Formal subcontracting of crop production to intermediaries is common
in Southeast Asia. In Thailand, large food processing companies purchase crops from individual
"collectors" or farmer committees, who make their own informal arrangements with farmers.

Key Issues: Agriculture to Agri-business

• Policy issues: From absolute control and management of agriculture by Government,

today it is being opened to public-private partnerships.
• Production technology issues: From input/s oriented technology development for
increasing production, today practice based value addition is being promoted.
• Quality and certification issues: Demands from consumer/s for better quality has forced
Government/s to establish regulatory mechanisms for quality certification.
• Logistics and supply chain issues: Modern retail formats requires efficient and dedicated
supply chain management facilities.
• Human resource issues: Lack of appropriately trained human resource is today
considered as the biggest constraint in conversion of agriculture to agri-business.

The world is facing a growing gap between food supplies in transitional countries
and the rest of the world. While some countries face surplus food production -
others face famine. The world agricultural system has become a single market and
important developments are reshaping the competitive field for all players. Some
organisations are working out how and where they fit, while others are left behind.
The Agribusiness, Post Harvesting and Marketing Management training programme
aims to assess the global agricultural system from the perspective of genomics,
governments, farms, supermarkets and consumers.
One of the biggest problems that transitional countries face is how to market their
hard grown agricultural products, both inland and for export. Professional
agricultural marketing is regarded as one of the ways to overcome seasonal
agricultural surpluses, shortages of food supplies and also as a means of generating
more income. The combination of these aspects in one training programme is
derived from the ever growing need for all small farmers, suppliers to marketing
firms and processing companies to better interact with each other to the mutual
benefit of everyone concerned.

Successful marketing of agricultural products is dependent on the creation of

favourable circumstances as well as the provision of resources and services.
Effective marketing channels have to include infrastructure and facilities such as
storage, handling, transporting, processing, packaging and retailing services.
Successful marketing must also include product location, timing, product, quantity,
quality, prices and all other information required by producers and consumers to
make beneficial decisions.

Investment must also be made in research and development of product variety,

post-harvest and processing, farm mechanisation as well as in food quality control.
Research and development will be discussed extensively in this programme as one
of the most influential components for the business success of each farmer.