The "Contract Farming Resource Centre" has been established to offer a "one-stop" site, where information on contract farming is freely made available. Interest in contract farming as a mechanism to coordinate linkages between farmers and agribusiness firms has grown recently, in view of the international trends towards tighter alignment in agrifood supply chains. FAO has been responding to the growing demand for information and technical support on planning and implementing contract farming operations. http://www.fao.org/in-action/contract-farming/en/

1. http://www.fao.org/in-action/contract-farming
Course on
LEGAL AND OPERATIONAL ASPECTS OF CONTRACT
FARMING SCHEMES
MODULE 5: HOW TO FOSTER AN ENABLING
ENVIRONMENT FOR CONTRACT FARMING?

2. http://www.fao.org/in-action/contract-farming
CONTENT
This module will help you to better
understand:
• The importance of having a good regulatory
framework for contract farming
• How to ensure an adequate regulatory
framework for contract farming?
• Other alternatives to promote CF

3. http://www.fao.org/in-action/contract-farming
1. THE IMPORTANCE OF HAVING A GOOD
REGULATORY FRAMEWORK FOR CONTRACT
FARMING

4. http://www.fao.org/in-action/contract-farming
Laws are important for CF
• Before signing a contract farmers should
understand the rules and regulations that
govern this type of agreement.
• Understanding how contracts are regulated by
law can be important, particularly if things go
wrong.
• Governments need to ensure that there are
adequate regulatory frameworks in place for CF.

5. http://www.fao.org/in-action/contract-farming
Benefits of regulatory frameworks
• Appropriate CF regulatory frameworks help:
▫ Recognize and protect people’s rights
▫ Provide legal security to contractual relations
▫ Facilitate enforcement
• Laws are harder to change than policies and are
thus more likely to survive longer.

6. http://www.fao.org/in-action/contract-farming
Which type of regulatory framework
works best for CF?
• There is no need for specific legislation on CF and there is
no one regulatory approach to CF that can be
recommended as best for all countries.
• Countries should look for their best regulatory option in
consideration of their legal framework, system and policy
priorities.
• Countries may want to improve enforcement and
implementation of existing legislation before initiating a
new legal reform process.

7. http://www.fao.org/in-action/contract-farming
• CF regulations can be found in:
▫ Specific laws regulating CF
▫ Other non-specific laws on CF, which are relevant to
this topic
Regulatory framework for CF : options

8. http://www.fao.org/in-action/contract-farming
Specific CF Laws
• Specific CF laws
▫ Not very common, but growing in importance
▫ Usually they will contain requirements regarding structure and
content of a contract, as well as its negotiation process
▫ Examples: France, Morocco, Malawi, Brazil
Ex: Brazilian CF law (May 2016)
▫ Affects only resource provision contracts
▫ Essentially promotes fairness, transparency, power balance, representation
and conflict minimization through good practices and mediation
▫ Ensures that CF ≠ a labour relation between farmer and firm
▫ Mostly formalizes standard practices of the affected sectors: neutral effect

9. http://www.fao.org/in-action/contract-farming
• Non-specific CF relevant legislation can be found
in:
▫ Civil codes and general contract laws
▫ Agricultural laws and codes
▫ Commodity-specific legislation
▫ Or any combination of these
Non-specific laws relevant to CF

10. http://www.fao.org/in-action/contract-farming
• Other laws and regulatory instruments can
influence CF:
▫ Competition laws
▫ Self/co-regulation
Different laws can also apply in CF relationships:
▫ Input legislation, IPR, quality standards,
environmental rules… (cont.)
Non-specific laws relevant to CF

11. http://www.fao.org/in-action/contract-farming
Non-specific laws relevant to CF
• Examples:
▫ Food Safety: Animal health, SPS, quarantine, etc.
▫ Agricultural sector laws: Acts covering specific sectors (tea, cocoa,
rubber, etc.)
▫ Land tenure laws
▫ Farm input legislation: Seeds, use of pesticides, etc.
▫ Human rights: Participation, accountability, empowerment, non-
discrimination, transparency, human dignity and respect for the rule of
law
▫ Labor laws: Decent labour
▫ Environment and natural resources

12. http://www.fao.org/in-action/contract-farming
Soft law instruments
• Soft law may also be relevant: Codes of conduct, good practices,
etc.
Ex: UNIDROIT/FAO/IFAD Legal Guide on Contract Farming
FAO Guiding principles for
responsible CF operations
• Common purpose
• Adherence to a legal framework
• Contract clarity
• Transparency
• Prevention of unfair practices
• Open dialogue
• Dispute settlement mechanisms
• Force majeure and contractual flexibility

13. http://www.fao.org/in-action/contract-farming
2. HOW TO ENSURE AN ADEQUATE
REGULATORY FRAMEWORK FOR
CONTRACT FARMING?

14. http://www.fao.org/in-action/contract-farming
Criteria to determine whether an existing
regulatory framework enables CF
• It is developed following participatory processes
involving all stakeholders;
• It is clear and easy to understand

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• It supports mutually beneficial CF relationships, from
negotiation to termination:
√Promotes the use of written contracts
√Addresses the rights and obligations of the parties
√Provides tools for dispute resolution
• It provides a clear role for the government.
Criteria to determine whether an existing
regulatory framework enables CF

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3. ALTERNATIVES TO PROMOTE CF
Alternatives?

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Other alternatives
Ensuring that CF is adequately regulated is
a sine qua non condition for fostering
sustainable CF, but there are other
alternatives :
• Governments can also:
▫ Implement CF policies
▫ Design and implement programmes and
projects supporting CF schemes

18. http://www.fao.org/in-action/contract-farming
CF policies and programmes
• Both CF policies and programmes are flexible
and efficient instruments, but they do not ensure
long-term continuity.
• They are useful for introducing CF in a country
or a value chain (pilot initiatives)
• They can align various existing support tools
around CF, such as technical assistance, public-
private partnerships, financial instruments, etc.

19. http://www.fao.org/in-action/contract-farming
http://www.fao.org/in-action/contract-
farming