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Contract farming based on value chain of agricultural products: An inevitable approach to organizing production and the market
Volume 1, Issue 3, 2019, Pages 150 - 173
1 Assistant Professor and Faculty Member of the Research Institute for Planning, Agricultural Economics and Rural Development
2 Master of Planning and Economic Deputy of the Ministry of Jihad Agriculture
3 M.Sc. Deputy Minister of Development of Agricultural Transformation Industries and Businesses of the Ministry of Agriculture
Abstract :
Contract farming is a model that can overcome many value chain failures of agricultural products. The special circumstances of the country show that this model can be used as a main option to strengthen the link between farmers and related industries. In the present study, the library and field method (based on a supplementary questionnaire by experts and specialists of 32 provincial agricultural jihad organizations in 2018) has been used. Studies show that the problems of the agricultural sector in the value chain of agricultural products is mainly due to lack of coordination and inadequate link between different parts of the chain, lack of access to the market for farmers, especially small farmers, instability of employment and income, supply of agricultural inputs, high transaction costs and the final cost of production, lack of working capital liquidity, lack of access and identification of target markets. Therefore, contract farming is a model that connects the value chain actors of agricultural products in the chain and during these connections, along the value chain to respond to the market, as a trusting tool in business relations with industries will lead to success that ultimately leads to risk reduction and business creation with the aim of developing the agricultural sector. Due to the inevitability of using this method in completing the value chain and according to the results of this study in different provinces, the feasibility of establishing a center or an office to monitor contract production in the agricultural sector is suggested, so that both production planning and marketing of agricultural products and finally designing the scope of support for this issue in the future is achieved with maximum utilization and the least error.
Contract farming is a model that can overcome many value chain failures of agricultural products. The special circumstances of the country show that this model can be used as a main option to strengthen the link between farmers and related industries. In the present study, the library and field method (based on a supplementary questionnaire by experts and specialists of 32 provincial agricultural jihad organizations in 2018) has been used. Studies show that the problems of the agricultural sector in the value chain of agricultural products is mainly due to lack of coordination and inadequate link between different parts of the chain, lack of access to the market for farmers, especially small farmers, instability of employment and income, supply of agricultural inputs, high transaction costs and the final cost of production, lack of working capital liquidity, lack of access and identification of target markets. Therefore, contract farming is a model that connects the value chain actors of agricultural products in the chain and during these connections, along the value chain to respond to the market, as a trusting tool in business relations with industries will lead to success that ultimately leads to risk reduction and business creation with the aim of developing the agricultural sector. Due to the inevitability of using this method in completing the value chain and according to the results of this study in different provinces, the feasibility of establishing a center or an office to monitor contract production in the agricultural sector is suggested, so that both production planning and marketing of agricultural products and finally designing the scope of support for this issue in the future is achieved with maximum utilization and the least error.
Keywords :
contract farming, value chain, risk reduction, market, price fluctuation
contract farming, value chain, risk reduction, market, price fluctuation