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Myanmar

Facilitating a fair and socially responsible contract farming scheme in the rice sector in Myanmar

Attachments

By: Stefanie Kaegi and Hla Myo Thwe

1. Introduction

Contract farming is a well-known mechanism to coordinate agricultural production and trade. It helps agricultural producers, processors, traders and distributers to plan and improve their production and procurement systems. For agricultural producers, contract farming can offer improved access markets, technologies, agricultural inputs and credit facilities. It has the potential to reduce risk of fluctuating prices or natural disasters and can significantly enhance productivity. And for traders, processors and distributers of agricultural products, contract farming becomes more and more a means to secure continued supply of high-quality agricultural produce.

Usually contract arrangements define quantity and quality of produce, timing of delivery and pricing modalities. It may also specify the desired processes for agricultural crop production and postharvest management. Recent transformations in food and agricultural systems make it increasingly difficult to meet consumer demands based on open-market procurement. And through increasing food safety requirements and growing competition for land and water, contract farming is further gaining importance (UNIDROIT, FAO and IFAD: 2015).

This study is a mandate of the Climate Smart Rice (CSR) Project that is implemented by the United Nations Environment Programme (UNEP), Sustainable Rice Platform (SRP), Helvetas Myanmar and Prime Agri and is funded by Norwegian Agency for Development Cooperation (NORAD) and Swiss Agency for Development and Cooperation (SDC). The objective of the study is to support the facilitation of fair and socially responsible contract farming arrangements in the rice sector in Myanmar, particularly in the project target areas. The report consists of the following components:

  1. Legal framework for contract farming in Myanmar
  2. Lessons learned on fair and socially responsible contract farming systems globally and from Myanmar
  3. Key elements of a contract farming agreement
  4. Guidance for discussion on contracting terms: options for key elements of a contract (for discussions between producers and buyers)
  5. A sample contract farming agreement adapted by the contracting parties (rice millers and farmers)

These components shall support contracting parties and facilitators to define contract farming arrangements that are fair for both, the producers and the companies, inclusive as well as scalable to a higher number of rice producers in the project area.