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A contract farming is an arrangement between an agribusiness firm and their clients to engage in the production of agricultural produces under an agreement. It provides an avenue for individuals who would like to engage in farming activities but lack the necessary inputs and technical advice as to how to go about it. The individuals enter into a fixed term agreement with the agribusiness firm before the production of the agricultural produce begins. The firm agrees to pay the client according to a specified method and at an agreed time.

Contract farming is supposed to be seen as a partnership between both parties. The farming of the crop is undertaken in a way that will be profitable to both the client and the firm. The firm provides a ready market for the produces and also ensures that all the farms are insured. The risks involved in this farming is shared between the firm and the clients.

Farming is done on behalf of the clients . However, clients are able to trace the performance on the farm by getting updated by the firm and also, they are allowed to pay visits to the farms to get to know the progress.  Profits are only shared when the farming cycle ends.


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