Tripartite Financing Arrangements to provide loans to smallholders through farmer associations and aggregators
Lenders seeking to directly finance smallholders face high transaction costs, risks, and asymmetric information. In this presentation from the AgriFinForum, Cententary, a bank operating in Uganda, details their use of tripartite financial arrangements to provide loans to smallholders through farmer associations and aggregators.
UNIDROIT/FAO/IFAD Legal Guide on Contract Farming
The UNIDROIT/FAO/IFAD Legal Guide on Contract Farming is an important resource for designing contract farming arrangements. It provides advice and guidance on the entire relationship, from negotiation to conclusion, including performance and possible breach or termination of the contract.
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Producer Penalties and Bonuses
Producer penalties and bonuses can help reduce the incidence of side-selling and better align farmers' incentives with purchasers'. Bonuses can help ensure that farmers take the necessary measurements to produce the quality charachteristics often present in contract farming arrangements. A randomized controlled experiement with milk producers in Vietnam showed that the presence of penalties and bonuses drove farmers to higher input use which resulted in higher quality milk.