The Plantations International Outgrowers Programme will enables small to medium size land holders producing at a commercial level, known as outgrowers, to supply crops to a guaranteed market.
Outgrower programmes are systems that link networks of unorganized smallholder farmers with domestic and international buyers. Also known as contract farming, these programmes 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 programmes.
As with any business, farmers need skills and resources to prosper. We have programs to train them in new technology and agronomy best practice, help them finance higher-yielding products, and enable them to reach markets to sell their crops with guaranteed offtake agreements. This enables them to sell crops for higher prices supplies and access premium markets through certification, traceability and certificates of origin.
As an example in Kenya, we’re able to increase yields of farmers by more than 20% and their incremental profit by more than $300 per hectare/ per season… It means they’re able to break the cycle of poverty for their future generations.
Plantations International works to train farmers to use technology effectively and safely, leading to better crop yields and more sustainable practices. The partnership transfers crop knowledge and technology to farmers via the Internet and mobile technology and the sharing of best practices.
It is possible to grow more plantations and food without using more inputs like chemicals and water, and without clearing more land for farming? We believe it’s not only possible, it’s critical if we’re going to protect our planet for the future.
Great strides have already been made. Take corn in the USA, for example. Between 1987 and 2007, productivity increased by 41 percent. Soil loss for each bushel of corn grown has been cut by 69 percent since 1987. Irrigation has decreased 37 percent.1 Other major crops show similar progress.
Plantations International “Good Growers Plan” and our partners will create a process for measuring and sharing our progress. We’ve now established a foundation for measurement that relies on internal and third party data collection and validation, as well as assessment by independent auditors.
We are committed to:
- Making crops more efficient
- Making the land more productive
- Increasing nutrient efficiency
- Pesticide efficiency
- Water efficiency
- Energy efficiency
- Rescue more farmland
- Conservation tillage
- Crop rotation
- Permanent ground cover
We reach growers in a range of ways: hands-on training, farm visits, and demonstration field days that educate growers on safe use of crop protection products, seeds, post-harvest storage, and sustainable farming methods.
Measuring yield improvements by smallholders is done through our farm network of benchmark and reference farms. We’ll compare productivity differences between smallholder farms using existing practices (benchmark farms) and smallholder farms that use optimized methods as offered by Plantations International field experts (reference farms).
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.
We define an out-grower scheme as a contractual partnership between growers or landholders and a company for the production of commercial forest products. Out-grower schemes or partnerships vary considerably in the extent to which inputs, costs, risks and benefits are shared between growers/landholders and Plantations International. Partnerships may be short or long-term (eg. 1-15 years), and may offer growers only financial benefits or a wider range of benefits. Also, growers may act individually or as a group in partnership with a company, and use private or communal land.
Within this definition out-grower schemes may include joint ventures and contract tree farming. Differences between these arrangements are largely in responsibility for silviculture, resource ownership and control, and the financial remuneration to growers. In conventional out-grower schemes the landholder is contractually responsible for the silviculture and the supply of the product, usually agarwood, to the company at harvest. Under the contract, the company may provide inputs or technical support to the grower, and guarantees a market for the product.
Employing organizational models that allow for high levels of farmer-company interaction to build trust and effectively transfer knowledge and skills;
- Securing buy-in and support from local authorities and community leaders
- Providing training on good agricultural practices, directly or via third parties, typically leveraging lead farmer models; Utilizing formal contracts with the following elements:
– Clear explanation of quality specifications
– Expected volume based on the size of the farm and input package
– Minimum guaranteed price or an indicative price based on quality grades; and
– List of pre-financed inputs with transparent pricing and payment deducted from crop purchase.
In addition to these widespread best practices, we also found that companies operating large schemes continue to explore new techniques to mitigate risks. Some of these include:
• Developing robust systems for collecting, tracking and analyzing program and farmer data and using this data to inform resource deployment and continuous improvement of the scheme
• Employing a merit-based process for farmer selection and consulting community leaders and authorities;
• Creating farmer loyalty programs, including incrementally raising input package sizes or providing a bonus for farmers who fully repay their loans and deliver according to pre-agreed volumes, quality and timelines
• Leveraging mobile solutions, including mobile payments and tracking crop deliveries
• Supplementing traditional agronomic training with training in personal finance and business management, as well as climate-smart agriculture
• Deploying holistic outgrower finance, including incorporating savings programs, as well as weather, life or health insurance into input packages; and
• Intercropping staple crops to improve soil quality, farmer incomes and food security
The long-standing and large-scale nature of these schemes illustrates the potential of contract farming to produce benefits for both companies and smallholder farmers.
Given the strong potential of the contract farming model, Plantations International and its partners are working to expand the reach of outgrower schemes and enhance their value to participants through the adoption of improved practices. In light of this objective, we are building a coalition of companies operating large-scale outgrower schemes that are interested in learning about, testing and adopting innovations in contract farming. For more information about this initiative, please contact us Plantations International