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Good understanding of rules key to contract farming success

To promote cooperation between farmers and companies involved in the value chain of the agricultural sector, the Ministry of Agriculture, Livestock and Irrigation on 31 January announced rules for contract farming.
Contract farming is a system under which companies provide farmers technology and seeds to grow crops and once they are harvested, the companies sell the crops.

It is important for farmers and companies to participate in contract farming with confidence as the government will also play a part in the sector by monitoring businesses under the Stakeholder Participatory Monitoring system.
The contract system outlines 9 provisions for farmers and 10 for farming companies, while it lists 9 obligations that need to be fulfilled by the authorities concerned.

The ministry has posted the contract on its website (www.agri.com.mm), and has urged the two sides to study it thoroughly before going into business.

The contract farming system is part of the government’s efforts to encourage Private-Public Partnerships involving the government and the private sector.

The strategies, directives, and procedures for contract farming are aimed at ensuring a strong market for crops and quality crops. Under the contract farming system, farmers and companies can decide on the price and quality of crops before cultivation, which can help create a sustainable market.

For Myanmar farmers to reach their full potential in agriculture, they need more investment, crop diversification, access to information and research, along with complete mechanization of cultivation.

These challenges can be overcome by farmers as private companies, under the contract farming system, are obliged to support farmers in terms of technology and supervision, in cooperation with governmental departments.

Farmers, on their part, would be responsible for growing crops using Good Agricultural Practices and producing crops that meet the quality, quantity, and standards set by both sides under the contract.
We are confident that the contract farming system would push the development of farmers as well as the private business sector.

But, we all need to understand that contract farming allows not just a higher profit margin, but also helps both sides understand the needs of the domestic and foreign markets.

The most important factor for the success of the contract farming system is a good understanding of the contract and its observance by both sides.

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Source : The Global New Light of Myanmar

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