The Financial Express

Contract farming for export  

Contract farming for export   

The Department of Agricultural Extension (DAE) has taken a tough position on farming for exports. Known for its role in successfully initiating many moves in the country's agriculture, the DAE in a bit to meet compliance issues in overseas markets of Bangladesh's farm products has made it mandatory for exporters of primary and processed food products, especially vegetables and horticulture produce, to follow a few practices.  These among others include steps involved under the Good Agricultural Practice (GAP) to be followed and sourcing of produce under contract farming.

The Plant Quarantine Wing (PQW) under the Department of Agriculture Extension (DAE) of the agriculture ministry had issued the aforementioned directive in 2017, making Good Agricultural Practice (GAP) and contract farming mandatory for exporting vegetables, fruits, potato, betel leaf and other agro products. The directive that came into force from January, 2018 stipulates that to be eligible for export, exporters are required to present documents detailing that they have maintained GAP, hazard analysis and critical control points (HACCP), traceability and maximum residue limit (MRL) and that their products were collected from contract growers under the supervision of upazila agriculture officer.

The directive came against the backdrop of falling exports of agro products over the past few years and also in view of the market trends suggesting no visible prospect of reviving export growth given the problems regarding quality and standard compliance. Although some corrective measures were reportedly taken to meet compliance requirements of the target markets, farm products were not at all doing well in export markets. It got reported that export of agro products slumped by as low as 25-30 per cent during 2014-18. Farm product export was all time high at $615 million in FY'14, but has been experiencing regular decline since then. This has been largely due to restrictions and temporary ban on some of the prospective horticulture and vegetable products, including potatoes, fruits and vegetable in the target markets in Europe and Russia due to noncompliance of sanitary and phyto-sanitary requirements, strictly maintained in those markets.

Although the ban and restrictions were withdrawn on a number of products, shipments from Bangladesh were denied access at the ports of entry on various grounds of noncompliance. Shipments were also turned down due to presence of pests. According to the EU Food and Veterinary Office report, a total of 143 export consignments from Bangladesh were rejected during the first half of the last year at various EU ports. The EU had been quite candid in its actions in the past as regards many of the Bangladeshi farm products and left no doubts in making its intentions known. The EU had also sought government actions on some farm products including vegetables which were found non-compliant repeatedly. Although there were stray moves by the government to apply strict quarantine on exportable farm products in keeping with the required norms in the overseas markets, the situation did not much improve.

One of the reasons, other than the incidents of deliberate flouting of compliance norms, is believed to be due to the fact that farm products for export are procured from various locations, often from small farmers, which makes a likely case for lack of uniformity on scale and in quality. No organised mechanism is available in the country to facilitate procurement in a big way ensuring quality and related standards.

It is against this backdrop that the directive of the DAE was not only timely but a bold one. Although initially it was not received well by the exporters, the underlying intent of bringing a radical change in the culture of farm production was not at all unclear to discern.    

Meanwhile, it is heartening to note that exports of farm products -- both primary and processed - have registered a rise. In fact, Bangladesh earned all time high export proceeds in the last financial year. This surely is a clear indication that the directive of the DAE was the key to the success.

Experts are of the view that in order to be able to produce products on a uniform scale and of quality, the key requirement, among others, is bulk production, which under the existing method of production cannot be ensured. Contract farming is thus believed to be the only alternative, in that it can offer the opportunity for farm products to be produced in a quality package capable of ensuring market-specific standards. 

Contract farming involves agricultural production being carried out on the basis of an agreement between the buyer and farm producers. Sometimes it involves the buyer specifying the quality required and the price, with the farmer agreeing to deliver accordingly. More commonly, however, contracts outline conditions for the production of farm products and for their delivery to the buyer's premises. Experts hold that under contract faming, fruits such as bananas, pineapples among others can prove to be highly rewarding as exportable products from Bangladesh. Contract farming has become attractive to farmers in many countries because the arrangement can offer both an assured market and access to production support.

Now, to be able to make the most of farm cultivation in catering export markets, it is important that attempts were made to popularise the method. A lot depends on DAE's present and future programmes in this regard.



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