Enabling farming communities to overcome poverty through Contract farming

Farming is an age old means of livelihood for lakhs of Bhutanese. There have been few systems / models in which farmers are assured of a market for their produce, leave alone a remunerative price. However, farmers have on occasions had to throw their produce away for want of buyers. This is one side of the coin. The PAR (Poverty Analysis Report) 2004, based on the BLSS (Bhutan Living Standard Survey) 2003, estimated that 31.7 percent of the Bhutanese population (or about 173,500 of the 547,000 extrapolated total number of persons from the sample) belonged to households who were consuming less than the national poverty line of Nu. 740.36 per person per month. Further, the PAR 2004 indicated that poverty in Bhutan was more of a rural phenomenon, i.e. 97.4 percent of the poor reside in rural areas Contract farming usually involves certain basic elements viz., pre-agreed price, quantity, quality or acreage (min/max) and time. According to the contract the farmer is required to plant the contractor’s crop on his land, and to harvest and deliver to the contractor a quantum of produce, based on the anticipated yield and contracted acreage. This could be at a pre-agreed price. Towards these ends the contractor supplies the farmers with selected inputs, including the required technical advice. To be successful, it requires a long term commitment from both parties. And to safeguard the interests of both the farmers and the contractors, it becomes necessary that the contracts are made in writing and duly backed up by appropriate legislative measures. This system when handled properly becomes a lever that would lift few lakhs of farmers to a higher plain. If wrongly handled it becomes a weapon of destruction which destroys all their cherished hope and dreams for a better living.