Eaton and Shepherd[2] identify five different models of contract farming. Under the centralized model, a company supports small-scale production, buys the crop and processes it, while tightly controlling quality. This model is used for crops such as tobacco, cotton, sugar cane, banana, tea and rubber. As part of the Nucleus Estate model, the company also runs a plantation to complement small production and provide minimal throughput for the processing plant. This approach is mainly used for tree crops such as oil palm and rubber. The multi-stakeholder model typically includes a partnership between governments, private companies and farmers. At a lower level of sophistication, the intermediate model may include subcontracting companies to intermediaries who have their own (informal) agreements with farmers. Finally, the informal model includes small and medium-sized enterprises that enter into simple seasonal contracts with farmers. Although these are usually only seasonal arrangements, they are often repeated every year and usually depend on the proximity of the buyer to the seller for their success.

The existence of an appropriate legal framework is therefore essential for the successful implementation and long-term sustainability of contract farming. A legal system is essential to help farmers and their buyers negotiate and design contracts. It is also important to protect them against risks that may arise during the performance of the contract, such as.B. Abuse of power by a larger party to the negotiations or breach of the treaty. Strengthening farmers` organizations to improve their contract negotiation capacity can help avoid future misunderstandings. [7] Several countries have adopted guidelines and legislation to ensure fair contracting practices and to provide remedies for dispute resolution. [8] A “Legal Guide on Contract Farming” was developed in 2013/2015 by the International Institute for the Unification of Private Law (UNIDROIT) in collaboration with FAO. [9] [10] Agreements in which, over time, the contractor gradually takes full management and diminishes its links with the farmer are also problematic. See also: Why Share Farming may be the fairest joint venture option This is compared to £300/ha of a conventional CFA (including BPS payment) to keep the contractor`s income at the current level…