Advocating for contract farming in Nigeria

Farmers ploughing a field by FAO

Farmers ploughing a field with oxen in preparation for planting crops in Nigeria. Photo: ©FAO/Pius Ekpei

Contract farming is a system in which a large agricultural unit or company replaces or supplements its own production with purchases from local smallholders on a contractual basis. In such agreements, conditions of purchase are set out, and sometimes imply that the company will provide technical assistance, inputs and other services to the contracted smallholders. Contract farming has a longer history in Latin America than in Africa and lessons can be shared between the two regions.  Oscar Obasi is one of the ‘students’ who  has explored contract farming in Latin America and has researched its benefits for productivity and welfare in South Eastern Nigeria, examining the case of cassava- based farmers.

Oscar is an enthusiastic and committed professor at Michael Okpara University of Agriculture in Umudike, Nigeria.  Three years ago, he participated in a Learning Alliance under the ELLA Programme, a UK Aid funded south-south knowledge initiative that mixes research, exchange and learning to inspire evidence-based policies and practices. Together with GRADE, a Peruvian think tank, Practical Action Consulting Latin America managed a Learning Alliance on Smallholder Farmers and Rural Development, in which Oscar and peers from Latin America, Africa and Asia, discussed contract farming, among many other issues. After a four-month dialogue, it was clear to all participants that the modality of contract farming differs in each case and that whether small-scale farmers can benefit from contract farming will depend on the type of crop and business firm, as well as the public policy environment.

In a recent interview Oscar noted that “Contract farming in Latin America is more developed than in Nigeria. The farmers we saw in Peru have agreements, which have been put together with the help of a legal adviser and an  NGO intermediary. In Anambra State in Nigeria it is different. The firm often goes directly to the farmer, and discusses the quantity of commodities and supplies with them, with neither legal agreement nor an intermediary to help”[1]. So Oscar started to formulate some questions about how contract farming could be made to work better in Nigeria and if so, to what extent it could be promoted by the Ministry of Agriculture. He had been inspired by the experience of farmers in the Mantaro Valley in Peru and he decided to research into one local experience with contract farming in Nigeria, which was more developed than most.

Pepper farmer Nigeria by FAO

Pepper farmer in Nigeria. Photo: ©FAO/Pius Utomi Ekpeia

He wrote up the article The Effect of Contract Farming on Productivity and Welfare of Cassava- Based Farmers in South Eastern Nigeria (published in the European Journal of Business and Management). He found that farmers under contract farming had larger land areas of cultivation, are relatively younger and more educated than farmers not in contract farming.  The research also revealed that farm size, productivity, net returns, and welfare levels of the contract farmers were higher than those not involved in contract farming.  Contract farming had beneficial impacts and Oscar could see it should be promoted. Based on his experience in the ELLA exchange and learning programme, he also wrote up how socio economic and marketing infrastructure should be improved to reduce costs and how policies were needed to address potential shortcomings in the system. He also noted the need for more agro allied firms.

A couple of years after these findings were shared, and with more researchers and experts promoting contract farming systems, the policy environment has started to improve for contract farmers. In Abuja, the Federal Government is considering contract farming in its national plans, and is providing support for production with fertilizers, access to credit, and building capacity. Oscar also believes there might now be more cassava- based contract farming, backed by legal agreements.

Stories like Oscar Obasi’s and how he generated local evidence for policy development in Nigeria inspired by an international experience show that south-south exchange can contribute to change when there are windows of opportunity, and where programmes work with committed, capable individuals able to deploy the knowledge they picked up when the opportunity develops.

In the ELLA programme UK Aid bet on the benefits of south-south learning. Oscar’s story is just one case among the many registered by the programme.  Knowledge exchange between regions of the ´global south’ can work, even where countries are very different, when sufficient attention is paid to identifying and understanding context.  In this case, learning from Latin America inspired new research for producing local knowledge to inform national policy.

[1] Oscar Obasi in an interview on 2 March 2016.

This article has been written by Alicia Quezada, Manager of Practical Action Consulting Latin America, and is based on an interview with Oscar Obasi (2 March 2016) and programme reports, including a report on the ELLA Learning Alliance on Small-scale farming “Small-scale farming: successes and limitations of market reforms”, and Obasi, O. (2014) “Effect of Contract Farming on Productivity and Welfare of Cassava- Based Farmers in South Eastern Nigeria”. European Journal of Business and Management, Vol.6, No.7, 2014
You can contact Mark Lewis if you want to know more about the ELLA Programme and Alicia Quezada if you want to engage with Practical Action Consulting Latin America.
CCThis article is licensed under a Creative Commons Attribution 4.0 International license
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