The increased demand for agricultural products in developed countries together with globalization presents a great opportunity for the export of agricultural products from Africa. However, poor farmers in Sub Saharan Africa face several constraints that prevent them from taking advantage of these opportunities. Contract farming presents viable opportunities for linkages between growers of an agricultural commodity and buyers or processors of that commodity. Contract farming would, therefore, play a significant role in alleviating those constraints.
Contract farming is an agricultural food production model that is guided by an agreement between a buyer and a farmer for the production and marketing of farm produce. Contract farming is popular among financial investors including multinational companies, smaller private firms, parastatals, individual entrepreneurs and farmer cooperatives.
As a means of commercializing agricultural food production, this farming system has been expanding in developing countries bellied on land reforms, planning policies and the needs for food security while incorporating sustainable land, water, and management practices.
Most farmers in Africa lack access to both reliable and cost-efficient inputs such as extension services, mechanization services, quality seeds, fertilizers, credit facilities in addition to guaranteed and profitable markets for their output. As a result, millions of hectares of land are exposed to poor land practices, soil erosion and loss of productivity.
Zimbabwe loses 17.8 million tons of soil nutrients as a result of poor land management practices associated with soil erosion, soil structures, and wildfires. However, areas that practice contract farming are characterized with good land management practices and reduced risk of land degradation. As a means of promoting development and land benefits, contract farming is a powerful tool to promote efficiency in agricultural production, land and environmental conservation.
At different levels, contract farming enables smallholder farmers to reduce costs through access to new markets, managing risk, acquiring information or increasing employment opportunities.
This agricultural production system has the potential to link farmers to markets and stimulate agricultural production hence a tool for poverty alleviation in Sub Sahara Africa. This agricultural production model has been successful in tea, tobacco and sugar industry in various African countries.
In climate change mitigation and adaptation, contract farming plays a critical role in the adoption of coping mechanisms. Contract farming builds farmers capacity to improve their farming system by adopting environmental and land friendly practices such as correct use of chemicals sprays, row planting, mixed farming, mixed cropping and crop rotation. This, therefore, makes contract farming a viable policy instrument for climate change adaptation.
In terms of land management, smallholder farmers who form the bulk of the agricultural sector in Africa benefit from extension services that have a positive influence on climate change adaption.