Global Policy Forum

UN Human Rights Expert Warns of Pitfalls of Contract Farming

UN Special Rapporteur on the Right to Food Oliver De Schutter has issued a new report highlighting that smallholder farmers face the risk of exploitation under current contract farming arrangements. De Schutter says that it is extremely difficult for farmers to “move up the value chain” into processing, packaging, and marketing of their food without access to markets. Fair contracts should include minimum price guarantees and farmers must be allowed to set aside land to meet family and community needs, says De Schutter.

UN News Centre 

October 24, 2011

The United Nations independent expert on the right to food cautioned today that smallholder farmers face the risk of exploitation under contract farming arrangements with processing or marketing companies, and recommended mechanisms that could ensure that such agreements are fairer.

“Contract farming for its benefits, which I am not denying, nevertheless locks farmers into one segment of the food chain,” said Olivier De Schutter, the Special Rapporteur on the right to food, at a news conference at UN Headquarters before he presented his annual report to General Assembly’s third committee, which focuses on social, humanitarian and cultural affairs.

“It will be very difficult for farmers to move up the value chain into the processing, the packaging, the marketing of their food if all that is expected from them is to produce the crops that then the commodity buyer shall buy, transport, process and sell on the global market,” he said.

“We need to allow small farmer to climb up the value chain… by encouraging farmers to develop cooperatives which themselves could process, package and market the food that they produce. We must allow them to have access to local markets in order to ensure that they are not excessively dependent on one commodity buyer that has access to the global market and essentially acts as a gatekeeper for access to the high value Northern countries.”

In his report, Mr. De Schutter highlights the pitfalls of contract farming agreements in which the balance is often tilted against the small-scale farmer.

“How much benefit can this arrangement bring the farmer if the buyer can dictate the terms of that contract? If they are not careful, farmers end up as disempowered labourers on their own land,” he warns.

Mr. De Schutter stresses that fair contracts should include minimum price guarantees, the provision of inputs at or below commercial rates, and should have built-in dispute settlement mechanisms. They must also allow the farmer to set aside a portion of land for food crops to meet family and community needs.

He pointed that the lack of checks and balances in contractual farming arrangements often “left the door left open for produce to be summarily rejected, for farm debt to spiral, for labour to be sub-contracted without regulatory oversight, and for a region’s food security to be undermined by production of export-oriented cash crops at the expense of all else.”

He urges governments to scrutinize the contracts to ensure that farmers are not being cheated. “They must also put greater knowledge, information and services at the fingertips of small-scale farmers. If farmers can access technical know-how, inputs, distribution circuits and markets only via investors, then they become trapped in an unhealthy cycle.”


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