TEHAN (Press Shia Agency) – Contract farming as a motivating system can bring about a win-win game for all the stakeholders of the agriculture as well as industry, Deputy Minister of Agriculture-Jihad Hossein Shirzad said.
In a meeting of agro-economist and CEO of the national unions of agro-cooperatives on “necessities of the contract farming”, Hossein Shirzad, who is also the CEO of the Central Organization for Rural Cooperatives of Iran (CORC), said since CORC enjoys the appropriate legal capacity, organizational chart and technical backup for contract farming.
The contract farming can be used by the rural and agricultural network to create a symmetric symbiotic between agriculture and industry, he added.
Referring to the outstanding achievements of using contract farming in Europe, Latin America, North America and the Middle East, Shirzad said that contract farming can bring about mutual profit, fair sharing of costs and risks incurred by marketing, storage and selling of the crops for both parties.
Recalling the experience of India, Kazakhstan, and France in applying contract farming, the official asserted that improving contract farming, however, requires making fundamental changes in the banking mechanism, including the interest rate, loan-giving procedure, and guarantee.
“Nowadays, the dichotomy of subsistence farming and industrial farming has diminished thanks to contract farming throughout the world. The largest trade partners of rural cooperatives union in the developed countries are the association of the grain exporters, big chain-stores, hypermarkets, and food multi-national corporations and startups,” Shirzad added.
Today 82% of Cucumis Sativus, 41% of Basmati rice, 38% greenhouse tomato and red pepper, 25 % of peanut and 37% of hazelnut are produced throughout the world by the contract farming. Meanwhile, the world huge production of Durum wheat and more than 69% of certified seeds is due to improving contract farming, he underlined.
He noted that In the Eurasia district, contract farming means to select appropriate farms, employing professional labor force, using qualified seeds, professional machinery and applying accessible and economical inputs and transportation system, adding, “Accompanied by the supportive pricing mechanism, applying these factors will lead to boosting farmers’ income and improving their living standards”
The development of contract farming is dependent upon development of a modern pricing body that adopts an appropriate pricing policy based on the cultivation pattern and land-use systems. Currently, the national farming system suffers from the lack of such a reference body, Shirzad went on to say.
Hence the crops are perishable in their very nature, accessing emerging and sustainable markets necessitate creating a close link and cooperation among farmers, food processors, and exporters, the deputy minister said.
Elaborating the advantages of the contract farming, Shirzad added that by contract farming, farmers have no concern about price fluctuations, they can focus on boosting yield, therefore the long term capital raising and mid-term risk distribution will be facilitated.
“However, the agriculture system needs a supportive judiciary system as well as an insurance system. We ask the parliament to support all stakeholders by approving supportive Rules and Act for farmers.”