Contract Farming Proclamation inches towards ratification
The Ministry of Agriculture (MoA) is finalizing legal frameworks that enable private companies provide agricultural extension programs, The Reporter learnt. The move would effectively end government monopoly of the service.
The draft laws currently being discussed with stakeholders and expected to be ratified this fiscal year include directives and manuals that will guide how private extension program operators are licensed, supported and regulated.
“Private companies willing to engage in extension program business are being created in Ethiopia. We will introduce incentive packages to make the business profitable for them. In remote agricultural areas where the private extension service providers cannot operate, the government will maintain the existing program,” Isayas Lemma, Crop Development Director at the Ministry told The Reporter.
Isayas pointed out that lessons have been drawn from countries that use such hybrid extension service.
Agro dealers will be authorized to deliver end-to-end agricultural technologies to farmers. The amendment was necessitated following the wide gap of productivity between agricultural research centers and farmers. High productivity achieved at research centers usually does not diffuse to farmers.
In related news, the Ministry has also finalized the long awaited Contract Farming Proclamation to initiate the out-growers scheme in Ethiopia. The draft proclamation, which has introduced various changes in land policy and the commercial code of Ethiopia, will be ratified this year, according to Isayas.
“We know absence of contract farming law has been a major bottleneck. The drafting took a long time. It will solve the varying land regulations in regional states. This will solve especially the financial shortage Ethiopian farmers usually face. Contract farming is also necessary for industrial parks and other industries, to get quality and a sustainable supply from farmers. It will also improve exports,” said Isayas.
Basically, contract farming or out growers scheme is a modality in which farmers grow what the market wants. Exporters, processors, supermarkets, commodity suppliers and even foreign buyers can provide agricultural inputs for farmers, and finally directly take the harvest. Price is set based on harvest forecast, and farmers enter agreements with buyers.
Shimelis Araya (PhD), an agricultural economist who published papers especially on contract farming, appreciated the moves in both privatizing extension services and contract farming legislation. He said the amendments will soon result in the boom of agro-dealers and agri-businesses.
“Ethiopian farmers usually produce for consumption. Now, these amendments can allure them to produce for the market. For instance, there are a lot of supermarkets and hotels in Addis Ababa that have not been able to start their own farms due to unavailability of land. Such businesses can enter contract farming with farmers who have land. Many have been conducting contract farming informally but now the law can legalize it,” said Shimelis.
Ethiopia’s agricultural extension program is usually considered as one of the most robust programs in Africa.
