Short Contract Farming Window Closes, Leaves Many in the Dark

Agribusiness firms without a contractual agreement with crop farmers are no longer allowed to export, following the expiration of a deadline set by the Ministry of Trade & Industry last week.

The authorities introduced the restriction claiming to clamp down on illicit trade, but the short registration window and lack of notice mean many are left out. It is a part of an effort to allow smallholder farmers access to commercial and export markets, officials at the Ministry said.

Contract farming has been instrumental in the advancement of the agricultural production system in developed economies. It is increasingly applied in developing countries, including Ethiopia, to commercialise smallholder farming, the lifeline for the majority of the population.

The Ministry communicated the call in the last week of August this year for producers, suppliers and exporters of cash crops and teff to register. The time for registration lasted for two weeks, where less than 100 agribusiness firms submitted applications before the deadline. Selected companies are expected to provide farmers with technical assistance, farm inputs, and credit.

It is expected to benefit 23.4 million farmers harvesting these crops as they are struggling to get inputs to increase their productivity. Ensuring the implementation of contract farming will provide a secure market for the farmer, according to experts.

"Farmers would be able to know their future income and produce accordingly," says Demis Chanyalew (PhD), an agricultural economist, emphasising that the move would make the farming process demand-driven and save farmers from passive recipients of public extension services.

Previously, agreements were reviewed and authenticated by lower administrative levels in regional states. This is the first time the Ministry has taken charge of the process.

Interested companies were expected to present several documents, including the contracts signed between the farmers and exporters, which have to be authenticated by regional agriculture and land management bureaus and the Ethiopian Commodity Exchange (ECX). A document detailing the size of land and the type of crop to be produced, as well as an investment permit, have to be provided.