How To Start A Contract Farming In Nigeria: Advantages & Disadvantages

Are you interested in contract farming in Nigeria? Do you want to know how to get started with contract farming business? If YES, Then this article will give out the information about the business.

Contract farming involves the agreement between the farmer and the buyer based on agricultural production. This process involves the buyer to be specific on the required farm input and prices, while the farmer will agree to deliver on the future date at the agreed input and prices. The agricultural products can be crops or livestock. The buyer or company often assist the farmer in land preparation and logistics.

Advantages Of Contract Farming For Farmers And Buyers (Company)

FOR FARMERS

1. The farm inputs and production are majorly supplied by the buyer.

2. Sometimes the contract is done on credit.

3. New markets could be made available to the farmers unlike other farmers.

4. The price risk is sometimes reduced as the prices have been specified.

FOR BUYERS (COMPANY)

1. Land constraints can be overcome by working with small farmers.

2. The production is more reliable than purchasing from markets.

3. Good quality can be obtained than purchases from open markets.

4. Contract farming will appear more cheaper than doing it themselves.

Disadvantages Of Contract Farming For Farmers And Buyers (Company)

FOR FARMERS

1. Farmers may face production problems and market failure while starting new.

2. The buyers may not be reliable which may affects the buyer.

3. Farmers can become debtors when production problems may occur.

4. Marketing problems may cause the products not to be purchased.

FOR BUYERS

1. Land constraints may occur to the contracted farmers due to lack of security.

2. Poor management practices of some farmers.

3. Farmers may sell the farm products to other consumers which might cause problems between the buyers & the farmers.

4. Production problems will affect the agreement between the buyer and the farmer.

Getting Started With Contract Farming:

Investors should plan on the investment proposals. The should meet the farmers and inform them on their plans. And farmers who are planning to have an agreement with the investors (Buyers) should have a good business plan. The contract farming is a serious business that requires serious farmers.

SUMMARY

Contract farming in Nigeria is a good business. Although it has lots of risk and challenges (Both the farmers and the investors [buyers] ). That is why it is very important for both parties to have a strong business plan before getting started.