By Delroy A. Whyte-Hall
Freelance Writer & Blogger
Agriculture – not tourism, not mining, not telecommunication, not financial services, not manufacturing, not distribution – is the cornerstone Jamaica’s lagging economy. For those who are so minded to invest a viable farming business, one would be well advised to get into Contract Farming, an area of opportunity pointed by Dr. David Lowe in his analysis of the World Investment Report, launched recently at Jamaica Trade & Invest (JTI) head office in Kingston.
Even though Contract Farming is not a new concept to Jamaica and, Dr. Lowe said that it was a viable option with “less capital intensive, less risky, and more flexible than land lease or ownership. And from the farmers’ perspective, Contract Farming can provide predictable incomes, access to markets and transnational corporations support in areas such as credit and expertise, and research through to knowledge transfer.”
What is Contract Farming?
“Contract farming,” according to Dr. Lowe, “can be defined as agricultural production carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products.”
Speaking to The Blog Enterprise, in an exclusive post-presentation interview, Dr. Lowe explained that Contract Farming was typically a situation where the farmer agrees to provide established quantities of a specific agricultural product, meeting the quality standards and delivery schedule set by the purchaser.
In turn, the buyer commits to purchase the product, often at a pre-determined price.
In some instances of Contract Farming, the buyer also commits to support production through, for example, supplying farm inputs, land preparation, providing technical advice and arranging transport of produce to the buyer’s premises.
Another term often used to refer to Contract Farming operations is out-grower schemes, whereby farmers are linked with a large farm or processing plant which supports production planning, input supply, extension advice and transport.
Contract farming is used for a wide variety of agricultural products. Several years ago, Sandals Resorts International introduced this concept to several small farmers in Western Jamaica. In an effort to reduce its foreign exchange expenditure for certain exotic fruits and vegetable that weren’t readily available locally, the hotel chain forged a contractual agreement with several farmers in Western Jamaica.
The agreement called for Sandals to provide all the fruits and vegetable seeds to the farmers, who, with the expert assistance from RADA, grow the crops. However, on maturity, the produce be sold in the desired quantity and quality, to Sandals, and whatever quantity was left, the farmers were free to sell it to whomever they want.
Other key benefits of Contract Farming for farmers can be summarized as follows:
- improved access to local markets;
- assured markets and prices (lower risks) especially for non-traditional crops;
- assured and often higher returns;
- enhanced farmer access to production inputs, mechanization and transport services, and extension services
Additional key benefits for contract partners and rural development often include:
- assured quality and timeliness in delivery of farmers’ products;
- improved local infrastructure, such as roads and irrigation facilities, dairy coolers/collection centres, etc.
- lower transport costs, as coordinated and larger loads are planned, an especially important feature in the case of more dispersed producers.
Another attractive area in which small business investors might want venture is in agro-processing, which is basically turning primary agricultural products into other commodities for market.
Its primary aim is to increase income and access to food for many. All it calls for is the establishing of small-scale, appropriate and sustainable processing businesses, which are by nature flexible, require little capital investment and can be carried out in the home without the need for sophisticated or expensive equipment.
So, there you have it! Contract Farming and Agro-procession are two viable farming business choices you have before you. You can pick one or the other – money is there to be had in both, but the choice is now yours.
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The Blog Enterprise (https://whytehallcommunications.wordpress.com) is an online publication that publishes the latest Jamaican small business and non-profit organisation news, information, profiles, and industry trends. It is published every Monday by multi-award-winning Caribbean journalist, copywriter and blogger, Delroy A. Whyte-Hall, Publisher/Editor-in-Chief.
You are invited to send your submissions (notices, news releases, profiles (send email for list of questions), or any other small business related information) to: email@example.com.