Outgrower Schemes: A Pathway to Sustainable Agriculture
Contract farming holds the potential to benefit both smallholders and businesses, while improving sustainability along agricultural supply chains.
Excerpted from a post originally published at NextBillion.
Outgrower schemes are systems that link networks of unorganized smallholder farmers with domestic and international buyers. Also known as contract farming, these schemes provide benefits to players along the supply chain. Buyers can improve their control over crop supply, often at pre-agreed prices, as well as crop quality standards. And farmers can access more secure markets, often receiving technical and financial support by cultivating within outgrower schemes.
When effectively designed and well managed, outgrower schemes can address numerous sustainable agriculture objectives. They can facilitate greater private sector investment in developing countries, improve sustainable sourcing practices by bringing smallholder farmers into mutually beneficial partnerships with large buyers, and increase smallholder farmer incomes by improving yields and quality through training, access to credit and markets.
In practice, however, outgrower models do not always reach their full win-win potential – something we’ve seen firsthand in the field. Without a readily available blueprint for success, TechnoServe set out to investigate the features of effective and sustainable outgrower models, focusing on three priority questions:
- What are the drivers of success or failure in an outgrower scheme?
- What can be learned from outgrower schemes that have scaled and stood the test of time?
- What elements contribute to mutually beneficial outcomes for farmer and company in an outgrower scheme?
To answer these questions, we have examined outgrower models from a range of different perspectives.
Read our full analysis at NextBillion to learn about best practices for operating successful, sustainable outgrower schemes.