Contract agriculture and its relationship to sustainable agricultural development

2023-08-30 12:53:05

By: Dr. Mustafa Khalil

Animal production consultant

Contract agriculture is a civilized method with which the farmer guarantees the marketing of his agricultural product at a satisfactory price agreed between him and the consumer, and the consumer guarantees with him, whether preparation factories or consumer companies, to obtain agricultural products on a specific date at the price agreed between the two parties and in high quality.

 . Some applications of contract farming in agriculture :

First : yellow corn:

Yellow corn is the most important raw material in the poultry industry as it makes up 70% of poultry feed , and it also accounts for 45% of the cost of the product alone ( kilo of chicken meat, table eggs or hatching eggs ) and therefore it is the most influential raw material on the cost .

The poultry industry needs only 6 million tons of yellow corn per year.

And for information, the local product of yellow corn is superior in quality to the imported one in terms of quality .

As for contract farming, it is a civilized method with which the farmer guarantees to market his yellow corn product at an agreed price and the consumer, whether feed factories, poultry companies or poultry farms, guarantees to get yellow corn on a specific date at the price agreed between the two parties and with excellent quality .

The rules that must be kept in mind to ensure the success of contract farming :

Agreement between farms and corn consumers ( poultry companies and feed mills ) on a mutually satisfactory price .
The contract is made between the seller (farmer, Agricultural Association, Agricultural Bank) and poultry companies and feed factories .
Maize farmers should know the needs of the poultry industry from the required quantity and specifications before planting, and the Ministry of Agriculture should announce in various media that all feed factories and poultry producers determine their needs for maize for the coming year well before planting, and the directorates of Agriculture and the animal production sector can determine these quantities based on Statistics data of breeders and poultry companies operating in each governorate are compiled .
Providing vaccines of high-yielding varieties so that production can be increased by area alone and thus reduce the cost of the product, especially that productivity has reached 6 tons per acre in some private companies, while the overall average is still within 3 tons per acre in most areas in Egypt, and this is the primary role of agricultural research centers and the Ministry of Agriculture .
 Determine the areas to be cultivated in the governorates according to the required quantities in each governorate so that it fits with the geographical distribution of corn production with animal production centers , which have advanced to determine their needs as much as possible, and the purpose of this is to increase the places of collecting corn for drying and overloading, as well as reduce the cost of Transportation, which has become an influential factor in the cost of the raw material itself .
Therefore, we believe that for the success of contract cultivation of yellow corn, it is necessary :

Know the required quantity annually .
Determine the planted area in light of the required quantity and its places .
The Ministry of Agriculture guarantees the right of all parties with taking adequate guarantees before planting from both parties .
Providing farmers with high-yield pions and distinguished extension programs .
Determine a fair price formula satisfactory to all parties .
The Ministry of Agriculture announced the start of the cultivation of yellow corn and those wishing to benefit from it should submit the required needs to the Ministry of agriculture within a specified period of time .

Second: livestock products :

Broiler chickens  :

The current traditional methods and methods of trading broiler chickens are considered one of the most important reasons behind the problem of epidemic diseases such as bird flu , which Egypt has been suffering from for many years and causes not only the elimination of birds, but also may lead to deaths in humans, as the current methods of trading are considered uncivilized and incorrect methods in one and the government has issued Law No. 9 of 2007 to prevent the trading of live birds, but it has not achieved the desired success despite the passage of many years since the issuance of these legislations .

Hence, it requires a tight system for marketing and trading broilers from farms to slaughterhouses and then to various outlets, this tight system can be achieved through the contractual system of broilers between commercial farms and between slaughterhouses.

The application of the contractual production system for broiler chickens from commercial farms helps that these farms, most of them with medium or large capacities, and the vast majority of them are licensed farms, and then this helps to conclude contractual supply between those farms and between companies operating in the field of automatic slaughterhouses, and these companies, in turn, can largely rely on the discharge of chickens to outlets according to contracts or at least according to specific distribution programs .

The contractual production system in the field of broiler chickens is one of the prevailing systems in many countries not only to regulate trading and to monitor quality and health safety through the stages of marketing and trading , but also to achieve an advanced form of major integration between the Rings of this industry ( production, slaughterhouses and retail), and then to achieve capacity savings in the performance of operations and marketing functions and reduce marketing margins without intermediaries or brokers, and then a measure of efficiency and fairness is achieved, both in the prices received by producers or paid by consumers or the margins obtained by marketing .

The results obtained .

Eliminate the phenomenon of live chicken circulation and face the problem of epidemic diseases .
Improvement in the level of safety and sanitary standards of products .
Achieve full utilization of existing capacities in the slaughterhouses and encourage investment in New additional capacities .
To achieve a degree of stability in the chicken markets and prices .
Achieving a developed level of value chains in the poultry industry started from contracting inputs from maize and then contracting between farms and slaughterhouses .
Dairy :

Raw milk ( milk ) is considered one of the basic food commodities, however, the primitive methods and methods prevailing in the trading and marketing of this product are still mostly underdeveloped methods in which milk is exposed to pollution, especially as it is one of the most favorable environments for the spread of serious diseases such as tuberculosis . In Egypt, almost 70% of milk production is still traded by primitive methods and only 30% is treated thermally before trading , which is a low percentage compared to civilized countries where this percentage exceeds 90%, and therefore it is necessary to work on the development of raw milk marketing systems ( milk ) .

The majority of milk production in Egypt is carried out on farms with small holdings of dairy cattle , where these holdings (2-5 heads ) contribute to almost 90% of the total production, and therefore it requires a marketing system that can deal with these categories of farms and organizes the process of collecting milk at the village level and rural residential communities through an integrated system of loops that includes refrigerated collection centers and refrigerated means of transportation and subject to quality and safety control systems across various stages and loops .

Dairy products manufacturing companies in Egypt are the most capable link in developing the dairy marketing system, as well as investing in refrigerated collection centers and refrigerated means of transportation , and to ensure the flow of raw milk to them, the contractual production system is the optimal system in this regard, and through this system it is possible to provide some facilities to farmers ( advance or feed ) along with technical guidance that achieves safety and quality of production before delivery to collection centers .

Expected results on the application of contractual farming systems in the field of dairy production :

Contribute to the development of dairy trading systems in modern ways that ensure the safety and quality of products and prevent the possibility of fraud and contamination .
Providing raw materials of milk yogurt to dairy products factories and reducing the import of substitutes .
Improving the conditions of small breeders and getting them fair prices for their milk production .