Policy framework for contract farming: An alternate to Aarthi system in Pakistan
Organization International Food Policy Research Institute (IFPRI)
Year 2022
Global agricultural production is undergoing a remarkable shift due to globalization and market liberalization (Setboonsarng et al., 2008). Food markets are transforming from a ‘non-programmed to programmed’ regime stemming from overwhelming changes in demand patterns happening concurrently with variations in production dynamics internationally (Oostendorp, 2018). This presents both the challenge and opportunity to change and adapt to this more structured world to reap benefits for both smallholder farmers and exporters (Setboonsarng et al., 2008). Over the years, contract farming (CF) has emerged as a viable alternate to Aarthi system in several developed and developing countries in Europe, Asia, and Africa by establishing a direct link between smallholder farmers and the market along the market value chain. The success of contract farming in a developing agricultural economy such as Pakistan depends both on macro (market structure, terms and conditions of investment, corporate buyers, and regulatory mechanisms) and micro (channel of raw material supply, and nature of arrangements) factors.