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Pros and Cons of Contract Farming that Kenyans Should be Aware of

Like other business owners, farmers have different skills, expertise, financial positions, and appetites for risk.

Reducing costs and risk through contracts allows a farmer to establish a steady income source that is attractive to traditional farm lenders.

Contract farming generally involves a pre-agreed price between the investor or company and the farmer. The agreement is defined by the commitment of the farmer to provide an agricultural commodity of a certain type at a time and a price and in the quantity required by a committed buyer, mostly a large company.

Because farms with limited means to improve or expand often seek off-farm income, contract production could be considered an emerging contributor to individual farm economic sustainability in Kenya.

Factors that form part of a successful arrangement are:

Contract farming has significant benefits for both the farmers and an Investor. However, with these advantages also come problems.

The below writeup considers both advantages and problems from the standpoint of farmer and an Investor.

 FARMERS

Advantages for farmers

Problems faced by farmers


INVESTOR

Advantages for Investors

Problems faced by Investors  

We would also like to hear some of your experience, share below comment box.

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