[OPTION 1: this provision can be used where the Project does not include a contract farming scheme from its inception but could in future]
35.1 No later than [insert number] years from the Effective Date, the Company shall produce a detailed assessment determining the commercial and technical viability of establishing a contract farming scheme (the Contract Farming Scheme) to procure raw materials for the Project from local smallholder farmers who wish to participate (Contract Farmers). Where, based on this assessment, the Parties agree that the Contract Farming Scheme is likely to be viable and sustainable, the Company shall establish a Contract Farming Scheme in the Project Area in accordance with Section 35.
[OPTION 2: to be used where the Project is expected to include a contract farming scheme from the outset]
35.2 The Company shall establish a contract farming scheme (the Contract Farming Scheme) to procure raw materials for the Project from local smallholder farmers who wish to participate (Contract Farmers). The Contract Farming scheme shall be established after the Project’s production model and market/s are fully tested and found to be viable, but in any event no later than [insert] years from the Effective Date.
35.3 Where, at least [insert] years after the Effective Date, the Project’s production model and market/s does not support the establishment of a Contract Farming Scheme, the Parties [and representatives of the Local Community] shall meet to discuss the reasons for this and to negotiate in good faith any necessary variations to the Agreement, including but not limited to:
(a) Increases to the Rental Amount;
(b) Additional obligations on the Parties to provide support and technical advice to Contract Farmers to enable them to produce to the quality and quantity required by the Contract Farming Scheme; and
(c) [insert other as appropriate for the Project]
35.4 Where the Parties cannot agree as to any necessary variations in accordance with the previous paragraph, the Parties shall refer the matter to an Independent Expert for final determination in accordance with Section 61.
[The following provisions can be used regardless of option 1 or 2 above]
35.5 The Company shall conduct consultations with Legitimate Tenure Rights Holders, Indigenous Peoples, and members of the Local Community on the design of the Contract Farming Scheme in such a way that ensures active, free, effective, meaningful, and informed participation and ensures that the Contract Farming Scheme adequately reflects the needs and capacities of women and men farmers. The Authority shall, upon request by the Company, facilitate and support such consultations.
35.6 The Company shall take all reasonable measures necessary to achieve equal, or as close to equal as possible, numbers of women and men Contract Farmers.
35.7 The Company shall report annually on the implementation of the Contract Farming Scheme using Gender-Disaggregated Data and assessing women’s participation, economic outcomes, obstacles to participation, and the company’s progress towards Gender Equality.
[OPTION A: The following provisions can be used if no model contract farming agreement is annexed]
(a) purchase all produce that is of a quality generally accepted in the industry and of a minimum agreed quantity, and shall support Contract Farmers, especially women, to improve the quality of their production when quality differentials are observed;
(b) support and assist Contract Farmers with the purchase of equipment and fertilizer and the purchase of production materials appropriate to the location, skills and needs of the Company and the Contract Farmers, identifying the differential needs for financing and for farming inputs of women and men farmers, and providing extra resources where necessary to ensure gender equitable production opportunities;
(c) support and assist Contract Farmers to develop technical knowledge and business management skills, identifying and addressing the different information needs of women and men Contract Farmers;
(d) establish mechanisms for women who have informal and/or collective land rights to gain the ability to participate in the Contract Farming Scheme; and
(e) collaborate with the Authority and the Contract Farmers to establish a transparent price-setting mechanism, agreed upon by women and men farmers.
35.9 The Company shall enter into a written agreement with each [Contract Farmer]/[Cooperative of Contract Farmers]/[organization representing Contract Farmers] outlining the terms of the contract and taking measures to ensure the contractual terms are presented in a form that is familiar and understandable to women and men Contract Farmers who face literacy barriers. Such agreement shall include, at a minimum, terms relating to:
(a) the price or mechanism for determining the price to be paid under the agreement and the terms of payment;
(b) the quality and quantity of required produce as defined with reference to transparent and objective standards; and
(c) the quality and timely delivery of an inputs or technical assistance to be provided by the Company.
35.10 The Company shall provide each Contract Farmer with a copy of the written agreement referred to in the previous paragraph no less than 10 days before the signature of the agreement and shall take reasonable measures to ensure that the Contract Farmer has read the agreement or had the agreement read to him/her by an independent third party, legal advisor or producer organization and had a reasonable opportunity to understand the agreement before signature.
[OPTION B: This provision can be used if the agreement annexes the IISD-FAO Model Agreement for Responsible Contract Farming or similar template contract farming agreement].
35.11 The Company shall enter into a separate contract with each [Contract Farmer]/[Cooperative of Contract Farmers]/[organization representing Contract Farmers] substantially in the form of the Contract Farming Agreement attached to this Agreement as Annex [X].
35.12 The Company may adapt and customize the Contract Farming Agreement to the Project, and the adapted form of the Contract Farming Agreement shall be submitted to the Authority for approval prior to its use.
For more information: See generally Smaller & Brewin, 2018.; IISD, 2014, Section 8.2 (Outgrower Schemes); ISLP & CCSI, 2016, Section 2.13.5 (Outgrower Programs); UNIDROIT & IFAD, 2021, Chapter 4.II.D (Contract Farming, Outgrower Schemes and Supply-Chain Relations). See also the International Institute for the Unification of Private Law, Food and Agriculture Organization of the United Nations, & International Fund for Agricultural Development. (2015). Legal guide on contract farming. https://www.unidroit.org/wp-content/uploads/2021/06/Contract-farming-legal-guide.pdf
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