FAO. 2022. Innovative contract farming arrangements in Asia and the Pacific. Bangkok.
https://doi.org/10.4060/cc1146enAlthough informal transactions are still the norm in Asia and the Pacific, contractual agreements are on the rise, especially for high-value agricultural commodities. As contract farming arrangements grow in number and become more sophisticated, a series of innovations are emerging to enhance their inclusion and efficiency. The nature of these innovations can range widely – from the adoption of digital technologies, to new governance mechanisms and novel regulations.
Governments in the region face the challenge to further mainstream contract farming while ensuring inclusiveness and fairness. Recent government interventions are targeting areas such as introducing gender sensitive regulations leading to the increased participation of women in economic transactions, facilitating insurance to reduce contract farming risks related to weather-based agriculture or natural disasters, utilizing third-party verification systems to combat power abuse, and promoting sustainable public-private partnerships that enhance inclusion and equity.
The discussed policy measures can contribute to facilitating the shift towards more structured market channels that provide farmers the opportunity to integrate into modern and more complex agrifood value chains that serve remunerative markets. Nonetheless, governments should ensure that those interventions are able to create a suitable enabling environment to potentially lead to contractual arrangements that are fair to all value chain actors, including smallholder farmers.
