Oil crop producers in northwest Ethiopia have long faced various challenges related to marketing, including poor market linkages, reduced market prices, transport and storage costs, market information gaps, and collusion by brokers or middle-men, apart from significant production issues such as the lack of agricultural inputs, financing and technology.
Efforts have been made to address these issues using the contract farming modality in the last few years. However, such actions did not solve the problem as expected, mainly due to the absence of a tailor-made legal framework that can support both producers and buyers. There has not been a binding law that holds contract buyers responsible and accountable when defaulting.
The soya bean case in the last production and marketing season in the Amhara region of northwest Ethiopia can be a case in point for this situation. Information from the Amhara Bureau of Agriculture shows that of 265 buyers that entered into a contract agreement with 51,138 farmers, only 42 have purchased soya beans per their respective contracts. Others refused to buy according to the agreement, and tracing the whereabouts of these buyers has been challenging.
This defaulting of buyers has significantly contributed to the low soya bean price. Had a binding law been enforced at the ground level, those buyers could have collected the soya beans produce, and farmers may not sell at a lower price.
In order to rectify such kind of challenges in the overall agricultural sector and increase production and productivity, the Ethiopian government promulgated the long-awaited contract farming proclamation, which was thought to resolve multiple challenges and problems related to producers, including input supply for producers, market linkage among producers and buyers, and raw material supply to emerging industrial parks.
The Ethiopian reporter in its May 10, 2023 edition, indicates that the proclamation will allow farmers to increase their production and productivity as they receive support from the buyers- industries, service providers and wholesalers- in the form of technology, knowledge and skills, a good supply of inputs and market linkage between a producer and a contractor. It will play a significant role in the economic structural transformation by enhancing quality, efficiency, and competitiveness and developing agro-processing backward linkages to the agriculture sector.
The proclamation will enable farmers to influence prices and their bargaining power with their buyers if properly enforced.
The Ethiopian reporter also reported that the legal framework will allow for the establishment of an independent and transparent procedure, eliminating the previously chaotic, inconsistent and difficult-to-implement procedure.
The RAISE-FS issue brief #2 brings the conundrum of the contract farming issue to the attention of all concerned bodies, including the policymakers and calls for the importance of making good contractual agreements for law enforcement.
RAISE-FS 