PROPOSED CONTRACT FARMING FROM E.L.O NGODO LLC. IN CONJUNCTION WITH WADGY AGRICOLA INT'L LLC.

Executive summary
Agriculture has been the target of modernisation for a long time. The earlier interventions of deploying the ‘green revolution’ technologies were a statist project and aimed at increasing productivity. The focus of public policy has shifted from increasing productivity to finding and servicing consumer markets. It is in this context that contract farming and linkages, with formal retail sector have been proposed. Contract farming has been in existence for many years as a means of organizing the commercial agricultural production of both large-scale and medium -scale farmers. Commercially viable farmer–enterprise relationships built on equity, mutual trust, and shared benefits are seen by the E.L.O NGODO LLC ltd as a way to accelerate agricultural industrialization to benefit both enterprises and farmers.

Contract Farming introduction
In an age of market liberalization, globalization and expanding agribusiness, there is a danger that small-scale exporters and farmers will find difficulty in fully participating in the market economy. This is largely because the necessary backward and forward market linkages are rarely in place, that is farmers and small-scale entrepreneurs lack both reliable and cost-efficient inputs such as extension advice, mechanization services, seeds, fertilizers and credit, guaranteed and profitable markets for their output. Well-organized contract farming does, however, provide such linkages, and would appear to offer an important way in which smaller producers can farm in a commercial manner. Similarly, it also provides investors with the opportunity to guarantee a reliable source of supply, from the perspectives of both quantity and quality.

Contract farming has been defined by the Food and Agriculture Organization of the United Nations (FAO) as:
“Agricultural production carried out according to an agreement between a buyers firms and farmers, which establishes conditions for the production and marketing of a farm product or products. Typically, the farmer agrees to provide agreed quantities of a specific agricultural product. These should meet the quality standards of the purchaser and be supplied at the time determined by the purchaser. In turn, the buyer commits to purchase the product and, in some cases, to support production through, for example, the supply of farm inputs, land preparation and the provision of technical advice.

The key factors in any contract farming agreement are:
(i) The farmer agrees to provide a specific agricultural product,
(ii) The purchaser agrees in advance to buy the specified product,
(iii) Quality standards are agreed on.
(iv) The purchaser provides support to the production process.

Benefits

The principal benefits from contract farming agreements for the enterprise are:
(i) Some measure of guarantee of regular and reliable supplies of raw materials;
(ii) Raw materials grown to meet the specific requirements of the processing enterprises;
(iii) Opportunity to ensure the necessary amount of raw materials are available as needed;
(iv) No capital cost of machinery or depreciation charges and Generally avoids employment costs/HR regulations
(v) Working with contract farming overcomes land constraints
(vi) better access to up-market segments requiring compliance with global standards For farmers, principal benefits will include:
(i) The opportunity to know in advance that they have a guaranteed buyer for their produce;
(ii) Some advance knowledge of the price that they will receive;
(iii) Support from the enterprise in the form of short-term credit, or in cash (e.g., seeds, fertilizer, etc.);
(iv) reliable and stable market access

Products
E.L.O NGODO LLC is a 20 hectares farm that concentrates on the growing of Ginger. Wadgy Agricola A SUBSIDARY OF E.L.O NGODO LLC has chosen ginger for it significant alternative medicine value and market demand as well being well suited for growth in the southern Kaduna Nigeria. Wadgy Agricola feature FORMAL CENTRALIZED MODEL for it contract farming product.
Formal Centralized model in this model, the buyers’involvement vary from minimal input provision (e.g. specific varieties) to control of most production aspects (e.g. from land preparation to harvesting). This is the most common CF model, which can be characterized as follows:
The buyer sources products from and provides services to farmers.
The relation between farmers and contractor is strictly vertically organized.
The quantities (quota), qualities and delivery conditions are determined at the beginning of the season.
The production and harvesting processes and qualities are tightly controlled, sometimes directly implemented by the buyer’s staff.
Typical products: large volumes of uniform quality usually for processing; e.g. sugar cane, tobacco, tea, coffee, cotton, tree crops, dairy, poultry, pulse.
Benefits
- Allows for close monitoring and direct feedback from Farmers
- Assurance of clear communication between company and farmer
- Company has total control of inputs & processes - assured quality control
- Company can respond quickly to farmer issues
The S.W.O.T Analysis (for contract farming with Wadgy Agricola)
Strengths
1 Strong asset base by Wadgy Agricola
2 Aversion of price risk
3 Well equipped with modern machinery and grain storage
4 Decreased transaction costs and risk
5 Location in relation to accessibility
6 Good technical knowledge and skills
7 strong agro ecology
8 Co-operative networks.
9 Favorable climates.
Weaknesses
1 Interrupt power supply.
2 Water pollution due to industrial & city waste.
3 Non-availability of labor. (Shortage of labor especially during season is one limitation and the wage rates are on rise has created wage spiral and shortage of labor)

4 Complicated loan procedures.
5 Farmers risk is not covered in Contract Farming.
6 Delays in payment by company

Opportunities
1 Political acceptability.
2 It gives an opportunity to develop backward linkages with farmers
3 Provide homogeneous quality of product to international market.
4 standardized the pattern of production
5 integrate the complete process from farming to consumable product
6 Lower cost of production for both the farmer & client
7 Commercialization of farming businesses.

Threats
1 Entrance of foreign player in market.
2 Cost of cultivation increasing day by day due to labor availability directly affecting net returns.
3 Breach of contract from either end
4 Pest and epidemic outbreaks
5 Decrease commodity price
6 Hungry Neighbors
7 Soil health problems.


At WADGY AGRICOLA INT'L LLC a subsidary of E.L.O NGODO LLC we enhancing value based activities so WOULD RATHER CONTRACT FARM WITH US? directly on 08037202394 / 08131626440