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Institutions and policy processes

Unlocking the potential of contract farming: lessons from Ghana

Industrialising agriculture through contract farming

Authors: C. Kudadjie-Freeman (ed); P. Richards (ed); P., C. Struik (ed)
Publisher: International Institute for Environment and Development , 2008

Full text of document

This paper examines sorghum contract farming in north-east Ghana in order to explore ways of making such arrangements viable for small farmers. Using the narratives from the key stakeholders who have participated in the contract, this research analyses the technical and institutional problems in the scheme.

The findings from this study reveal that:

  • the new contract farming in Ghana is a vehicle for industrialising agriculture, giving small farmers access to modern technologies, quality control, marketing and other services
  • the failure and problems encountered in this particular contracting scheme were both technical and institutional. The technical issues were a combination of pest problems, the environment and the sorghum variety chosen. The institutional issues involved the contractual arrangements and relations between the contracting parties.
Some policy recommendations noted for making contract farming fairer and more viable include:
  • science should tackle specific technical problems that are likely to be faced by farmers in this new contract farming system, making technology development part of the contracting process
  • potential stakeholders in the contract such as farmers, the processor, the NGO sector and scientists should come together to negotiate technological adaptations
  • farmers should improve negotiating power by forming organisation
  • governments should strengthen these small farmers by providing protection through appropriate institutional and legal framework
In summary, this study highlights some ways in which convergence between farmers, scientists and the processing company around technological issues could make contract farming work better and be more beneficial. If contracts are to be fair, they must allow for compensation, contingencies and production risks; however, scientific knowledge is required in order to adequately incorporate these elements.