Contract farming links smallholders with export markets

A private company farming 50 hectares in North Mecha district – KogaVeg – is engaging surrounding smallholders in a contract farming arrangement to supply fresh sugar snaps, snow peas and baby corn to European markets. AgroBIG has facilitated the involvement of 43 farmers during the 2018/19 off-season, enabling them to learn more about the concept of contract farming.

Baby corn packaged and ready for export to Europe

AgroBIG supports the scheme in meeting Global Good Agricultural Practices (G.A.P.) standards that are demanded when exporting fresh commodities. To this end, the Programme has funded the construction of sanitary blocks for two farmer groups that have made contracts with KogaVeg in the Chehona and Tekledib irrigation blocks in the Koga area of North Mecha. This is to enable compliance with the Global G.A.P. requirement that producers need to have appropriate sanitary facilities next to their plot.

A grant of ETB 660 000 was provided via the Value Chain Facility Fund, to construct a toilet and shower, product collection room and appropriate store for pesticides. KogaVeg provides seed and other inputs, technical  training, monitoring and follow-up to contracted farmers and covers the costs related to Global G.A.P. certification.

AgroBIG is funding the construction of infrastructure required to meet Global G.A.P. certification standards

Contract farming offers many benefits to both parties involved. The farmers gain access to assured markets and secure payments, hence, predictability and reduced marketing costs; improved technical skills and experience of fulfilling export market requirements. The contractor, KogaVeg enjoys reduced overall market uncertainty, lower transaction costs and a more reliable, predictable flow of produce that meets the buyers’ required quality and volume standards.