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Contract farming and public−private partnerships in ...

FAO. ISSN 2070-7010. FISHERIES AND. AQUACULTURE. TECHNICAL. PAPER. 623. Contract farming and public private partnerships in aquaculture Lessons learned from East African countries Cover photos: top: Irrigation basin in the wilaya of Ghardaia. @FAO Aquaculture photo library / V. Crespi bottom left: Hardap Inland Aquaculture Centre, Namibia. @FAO Aquaculture photo library / V. Crespi bottom right: Farm integrated with chicken houses. Rwanda. @FAO Aquaculture photo library Contract farming and FAO. FISHERIES AND. AQUACULTURE. public private partnerships TECHNICAL. PAPER. in aquaculture 623. Lessons learned from East African countries by Pierre Murekezi Consultant Aquaculture Branch FAO Fisheries and Aquaculture Department Rome, Italy Ana Menezes Aquaculture Officer Aquaculture branch FAO fisheries and aquaculture department Rome, Italy and Neil Ridler Professor Emeritus in Economics University of New Brunswick Canada FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS.

Securing decent work for young people in Africa is critical given the large numbers of young people entering the labour force each year (about 11˜million).

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1 FAO. ISSN 2070-7010. FISHERIES AND. AQUACULTURE. TECHNICAL. PAPER. 623. Contract farming and public private partnerships in aquaculture Lessons learned from East African countries Cover photos: top: Irrigation basin in the wilaya of Ghardaia. @FAO Aquaculture photo library / V. Crespi bottom left: Hardap Inland Aquaculture Centre, Namibia. @FAO Aquaculture photo library / V. Crespi bottom right: Farm integrated with chicken houses. Rwanda. @FAO Aquaculture photo library Contract farming and FAO. FISHERIES AND. AQUACULTURE. public private partnerships TECHNICAL. PAPER. in aquaculture 623. Lessons learned from East African countries by Pierre Murekezi Consultant Aquaculture Branch FAO Fisheries and Aquaculture Department Rome, Italy Ana Menezes Aquaculture Officer Aquaculture branch FAO fisheries and aquaculture department Rome, Italy and Neil Ridler Professor Emeritus in Economics University of New Brunswick Canada FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS.

2 Rome, 2018. The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO in preference to others of a similar nature that are not mentioned. The views expressed in this information product are those of the author(s) and do not necessarily reflect the views or policies of FAO. ISBN 978-92-5-130711-3. FAO, 2018.

3 FAO encourages the use, reproduction and dissemination of material in this information product. Except where otherwise indicated, material may be copied, downloaded and printed for private study, research and teaching purposes, or for use in non-commercial products or services, provided that appropriate acknowledgement of FAO as the source and copyright holder is given and that FAO's endorsement of users' views, products or services is not implied in any way. All requests for translation and adaptation rights, and for resale and other commercial use rights should be made via or addressed to FAO information products are available on the FAO website ( ) and can be purchased through This publication has been printed using selected products and processes so as to ensure minimal environmental impact and to promote sustainable forest management.

4 Iii Preparation of this document This technical report was prepared under the coordination of Uwe Barg and Ana Menezes of the Aquaculture Branch, FAO fisheries and aquaculture department as part of FAO Strategic Objective (SO3): Reduce rural poverty. This publication will contribute to FAO Strategic Objective 3 (SO3/001), the rural poor have enhanced and equitable access to productive resources, services, organizations and markets and can manage their resources more sustainably , and S03/002: the rural poor have greater opportunities to access decent farm and non-farm employment. The rationale behind this study is to provide resource information, coming as it does at a time when there is limited systematic information available about the current experiences and best practice for using Contract farming and public private partnerships to initiate programmes in aquaculture and poultry farming .

5 This study, and the publication of the document, were partially funded under the auspices of the Promoting Agricultural Diversification to Reduce Poverty, Fight Malnutrition and enhance Youth Employment Opportunities in Eastern africa GCP/SFE/001/MUL project, which was financed by The African Solidarity Trust Fund (ASTF). The authors gratefully acknowledge the contributions of the following individuals in the preparation of this report: Ms Elisabetta Martone, for the inputs and active support; Ms Marianne Guyonnet, for overall coordination of publication process;. Ms Danielle Rizcallah, for her assistance in quality control and FAO house style;. Mr Edward Fortes, who edited the text for linguistic quality and technical content;. and Ms Chorouk Benkabbour, who prepared the layout design for printing.

6 Finally, Dr Malcolm Beveridge, Head of the Aquaculture Branch of the FAO fisheries and aquaculture Department is acknowledged for providing the necessary support, advice and insight to complete this publication. iv Abstract Securing decent work for young people in africa is critical given the large numbers of young people entering the labour force each year (about 11 million). With few opportunities for formal employment in manufacturing and services, agribusinesses offer young people the opportunity to earn income in rural areas. If others emulate them, there is the potential for positive regional spillovers. One institutional innovation that enables young people to mitigate financial and knowledge handicaps is Contract farming . By supplying their produce to a third party (such as an agri-processor or retail outlet), which in return guarantees markets and often inputs, young workers are able to access credit, markets and technology.

7 This can be a win win solution because young workers gain access to markets, while the private company has access to produce without having to either acquire land or supervise labour. Fiscally constrained governments also benefit because private sector involvement obviates expenditure and reduces risks, and may also provide expertise unavailable in the public sector. This report presents the lessons learned from a project in four East African countries Burundi, Kenya, Rwanda and Uganda focusing on youth and their agribusinesses. In Burundi and Rwanda, poultry and eggs were sold to retailers but were also provided to schools to alleviate malnutrition. In Kenya and Uganda the focus was on fish farming , raising finfish in cages and selling fingerlings. Partnering with private companies enabled young people to obtain business and technical knowledge in addition to a market for their produce.

8 Murekezi, P.; Menezes, A. & Ridler, N. 2018. Contract farming and public private partnerships in aquaculture. Lessons learned from East African countries. FAO Fisheries and Aquaculture Technical Paper No. 623. Rome, Italy. v Contents Preparation of this document iii Abstract iv Abbreviations and acronyms vii Introduction 1. 1. Contract farming 3. Enhancing youth opportunities in aquaculture and poultry production through the astf experience 3. Contract farming 5. Types of CF 6. The Informal Model 8. The Intermediary Model 10. The Multipartite Model 10. The Nucleus Estate Model 11. Advantages and disadvantages for farmers and processors 12. Impacts of CF 19. Lessons and best practices 22. Governance 22. Agribusiness participation 22. Side selling and input diversion 23. Opportunistic processors 24. Farmer groups and producer associations 26.

9 Pricing practices of CF 26. Crop failure and insurance 28. Dependency and food insecurity 28. Lack of trust 28. 2. Contract farming and youth 31. Access to land 31. Land policies 32. Access to credit 34. Credit policies 34. Attitude towards agriculture 36. Image policies 37. Training 37. Training policies 37. 3. Public Private partnerships 39. Supply chain management and credence conditions 41. Business development 42. New products and market access 42. General and sector-specific infrastructure 42. Research and technical development 42. Capacity building 44. FInancial services 47. vi Lessons learned 48. General lessons 48. Case-specific lessons 51. 4 Conclusions 53. References 54. Tables 1. Contract farming models 40. 2. Potential trade-offs for farmers in Contract farming 14. 3. Potential trade-offs for processors in Contract farming 15.

10 4. Crops ranked according to their suitability for Contract farming 16. 5. Measures to mitigate side selling 24. 6. Measures to mitigate opportunistic behaviour by processors 25. 7. Risks of Contract farming and mitigating measures 29. 8. The principal reasons for youths' disinterest in agriculture 31. 9. Measures to increase credit to youth in agriculture 35. 10. PPP activities in agriculture/aquaculture. Supply chain management and credence conditions 40. Boxes 1. Case study: Centralized/Multipartite project to cultivate sugar cane in the Republic of Kenya 11. 2. Case study: Nucleus estate project to cultivate oil palms in Uganda 12. 3. Case study: Transaction costs and mussel cultivation: South africa 17. 4. Case study: Aquaculture's evolution towards vertical integration: catfish in Viet Nam 18.


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