Annex 2

Agreement for contract farming of maize

Annual maize registration

The Company offers to buy grain maize. The conditions under which the crop will be grown and sold are outlined below.

Technical

1. The Company will allocate acreage that must not be exceeded.
2. All crop production activities must be followed in accordance with Company recommendations and instructions.
3. The Company guarantees to buy all grain maize produced from the allocated quota.
4. Buying will be at designated locations and buying slips will be issued immediately after purchase.
5. All maize fields must be effectively fenced against animals.

Financial

6. All necessary seed, chemicals and fertilizer will be supplied and charged to the farmers. Payment for pre-sowing cultivation charges may be advanced.
7. The pricing formula for grain purchase at 14.5 percent moisture level will be as follows:




(a)	Production up to 3 500 kg/ha	=	20 cts/kg
(b)	Production from 3 501 to 4 000 kg/ha	=	21 cts/kg
(c)	Production from 4 001 kg/ha and over	=	22 cts/kg




8. Outlined below is an example of how the weight will be calculated. Assume, for example, that 500 kg are supplied with a 25% moisture content. (100% - 25% = 75%)

Payment for 500 kg wet weight at 14.5% (moisture)
is calculated as follows:

Required dry matter content of grain is 100% - 14.5% = 85.5%

Equation:

500 x 75%
_____________      =      438.5 Kg net x [(a), (b), (c)]

85.5%

9. Farmers will be strictly prohibited from selling maize covered under this agreement, either on the cob or in grain form, to any other buyer without the written consent of the Company. Any breach of this agreement will result in farmers forfeiting their contracts.
10. Bags will be supplied by the Company, which retains ownership thereof, and any loss will be debited to the farmer's account.
11. Farmers will be paid when their crops have been harvested and sold to the Company and all outstanding crop advances have been deducted.

If you wish to grow maize on the above terms and conditions, please complete this form and return it to the Company office before _____________ so that we may reserve your quota of _____________hectares.
Signed on ____/____/19___

Source: Southern Development Company (SDC), pers. comm.