An Overview of Contract Farming: Legal Issues and Challenges

Contract farming has recently risen to prominence in the development literature because of the potential benefits that may result from sound contractual practices in agricultural production. As a mechanism to coordinate linkages between farmers and agribusiness,1 contract farming may improve farmers’ access to national and international markets and help to increase income in remote rural areas. Likewise, from the perspective of agribusiness companies working in production, processing and marketing of farm products, contract farming may ensure a steady supply of agricultural products compliant with the agreed quality requirements, as well as a reduction of administrative costs. The potential advantages that come from sound contractual practices may be fostered by an adequate legal framework that supports the parties in the correct implementation of contracts. A large number of different arrangements have been characterized as contract farming in the social science and economics literature.2 In this