Outgrower schemes or services are basically a contract that links smallholder farmers with domestic or international buyers. It is also referred to as contract farming.
An outgrower scheme provides a lot of benefits to both the farmers and the buyers of agricultural produce. Because of the scheme, buyers will be able to improve their control over the supply of crops(quantity and quality-wise), while farmers will be able to access more stable markets.Also, farmers would, more often than not, receive technical or financial aid by participating in an outgrower scheme.
Agro-allied companies are most often the initiators of these schemes. The schemes, largely, allow the company to gain access to additional, more stable, high quality and cheaper raw materials.
When efficiently designed and properly managed, Outgrower services will be able to address various agricultural objectives. Outgrower schemes can also facilitate higher investments from the private sector.
The scheme is, thus, defined as a contractual business relationship between farmers and an organization made on the commercial production of farm products.
Outgrower schemes vary considerably as regards the extent to how inputs, costs, risks and benefits are shared between the partners. The outgrower scheme partnerships may be short term or long-term. Also, farmers may act individually or together as a group in their partnership with a company. The terms of the schemes are often outlined in a formal contract.
Typically, outgrower schemes offer technical and financial support to farmers to increase the cultivation of the optimal quantity and quality of produce. However, the most successful schemes offer farmers a broad arrangement that will provide them technical aid and advice needed to overcome a wide range of socio-economicand environmental obstacles or assist farming communities in achieving wider socio-economic goals.
There is a varying nature in some out-grower scheme partnerships and the benefits they offer. While most companies offer farmers a guaranteed and secure market for their products, either at a fixed, indexed or market value, some other companies encourage these partnerships with the added incentive of a percentage share of the farm produce at harvest.
Other arrangements may offer stable employment or some other contribution to community development.
Nonetheless, there are some major concerns of outgrower schemes. Environmental or ecological risks are one of such major sources of concern for the farmers and the whole outgrower scheme.
Damages to plantations by disease, pests, animals or fire can’t be easily overturned. Sometimes, farmers in outgrower schemes have to replant crops due to the immense damage caused by fire, insects and diseases. Such environmental risks are identified as the primary problem for outgrower schemes, as the farmers bear the risk of production.
But there are still great benefits from outgrower schemes as will be seen below.
WHY YOU SHOULD GET INTO AN OUTGROWER SCHEME:
- Contract farming looks towards benefits for both for the farmer as well as the buyer. Outgrower schemes are outlined in contracts that are made to be mutually beneficial to both the farmer and the buyer.
- Outgrower schemes would make small scale farming competitive and productive. Small scale farmers can now access technology, credit, marketing channels and information while, at the same time, lowering transaction costs.
- The stable and fixed market for This helps in reducing marketing efforts and transactional costs. In essence, the farmer does not have to worry about looking for a market for his produce; so he channels that time and energy to his farm.
- It drastically reduces the cost of production, price fluctuations and also marketing costs.
- Contract farming opens up new, previously unavailable markets to the farmers.
- Outgrower schemes also ensure a greater production of higher quality farm produce, financial aid in cash and, also, technical training to the farmers.
- On the side of agro-processing, outgrower schemes ensure the nonstop supply of quality farm produce, on time, and ata lesser, predetermined cost.
- It expands future supplies of farm produce for the agriculture industry.
- It increases the number and willingness of growers to participate in farming
- It provides a wide range of social and economic benefits for the individual farmers and farming communities involved.
- It builds self-reliance of participating communities. Beyond monetary and technical gains accrued by the farmers, the outgrower scheme provides employment opportunities, which will in turn build individual self-reliance on the part of the members of the farming community.
- Under-utilized land becomes available for crop cultivation
- Net returns from outgrower schemes are higher than returns gotten from more traditional/conventional means.
- Revenue is stable through a regular income and assured sales.
- Technical and financial aid is made available.
- The means of negotiation and participation with the partner is clear.
- Resource security for farmers also exists with a long-term leasehold, or with community ownership, as well as with private ownership.
More advantages include:
Providing farmers with good technical advice on modern farm practices is advantageous to these companies, as it is more likely to produce the quality of product required. The provision of appropriate technical aid to farmers will be important for the overall success of outgrower schemes. Some of the most successful schemes have had companies that went as far as to establish nurseries to provide farmers with high-quality seeds for planting.
- Access to financial loans
Access to financial loans is important for farmers’ involvement in outgrower schemes. The loans are usually taken to cover the costs of establishing and maintaining the plantations/farm, and it will also cover the finances of the farmer until the farm produce are harvested and subsequently sold.
- Competitive markets
Where competitive markets for agricultural products occur, outgrower schemes are most likely to provide the fairest prices to the farmers. In some outgrower schemes, the company may guarantee a ready and secure market, and the farmers would still have the option to sell to other buyers offering a higher price.
To avoid the loss of supplies from outgrower schemes to other buyers, a company will typically choose to meet the current market price for farm produce and also develop a good and positive relationship with farmers.
The development of positive relations will always involve meeting the farmer’s technical needs, providing a higher market share of the profits. It could also include the provision of wider community benefits.
In conclusion, to learn more or to get involved in an outgrower scheme, follow this link to http://www.xtremereturns.com where you can immediately get the necessary training, be linked up and start reaping the benefits of an outgrower scheme.