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National Roadmap for Contract Farming

The second specialized meeting on contract farming was held on Sep, 24the , in CORC.

In this meeting Dr. H. Shirzad, Agriculture-Jahad deputy minister, Dr.Kesharvarz, Agriculture-Jahad deputy minister in cropping affairs, Dr.Khaledi, director-general of office for economic affairs, Dr. kiayanirad, head of APERDI ( Institute of Agricultural research planning, economic and rural development), the CEO of rural, agricultural and rural producers union attended.

According to PAT, Shirzad emphasized on approving of regulations, standards and supervisory criteria as well as briefing the target group of farmers as the pre-requisites of development of contract farming.

Confirming that the agricultural value chain should be covered by subsidy systems as well, the CEO of CORC assured that through contract farming the subsidy system and financial securing of the agricultural sector would evolve too.

Referring to the absence of industrial thought in the agriculture sector, the official affirmed that adopting a mere production-oriented had undermined the agriculture knowledge literature which has trapped us in the product chains.

He affirmed on the significance of the legal aspects of for target groups, adding that contract farming demands to develop mutual legal criteria by two parties.

Elaborating the subsidy system of agriculture sector in the developed countries stated that in Iran, the supportive funds should be allocated to the components of the value chain rather than the final producers or consumers.

He implied that we need to shift from tradition production to industrial production. Applying the scientific methodology of contract farming including, simplification and standardizing are the prerequisites of contract farming.

The official added that are many challenges in contract farming that should be resolved by the unity of both the public and private sectors.

Emphasizing on the importance of the legal rights of both parties in the agricultural value-chain, he asserted that having a win-win game in the contract farming requires recognizing and safeguarding the rights of both parties.

"In the developed countries, the supportive funds are allocated for agricultural value chain components, however in Iran, these funds are dedicated for the final consumers or producer," Shirzad added.

"We need a national roadmap for contract farming in which the government, the research institutes, and stock exchange market would be the governing sector. The research institutes should equip the contract farming with invents innovations and modern technologies in order to boost the competitiveness and decreasing the final price of service and products. The agriculture society should acknowledge contract farming as a national system, hence ordered cropping or contract farming is arranged based on the participatory ecosystem

 ", he reminded.

Explaining the government role in contract farming, the deputy minister went on that development of contract farming requires to the national agricultural value chain as well as different farming systems including core farming model, multi-section, individual and intersection farming models.

" As the governing sectors, the research institutes and insurance agencies from one side and the agricultural civil right activists as the other side should join the contract farming national roadmap in order to coordinate the sustainable provision of qualifies crops and appropriate pricing system."

Referring to the supplying of Saffron in the agricultural mercantile stock exchange as a very successful case, Shirzad mentioned controlling price fluctuation, boosting standardizing and trade commitment as the advantages of contract farming. He also reminded that inefficient insurance system as one the main obstacle of the contract farming that should be removed by expertise working.

"As the final section of the supply chain, the market should be recognized a determining factor in the execution of contract farming, furthermore market modernization could satisfy the final customer", the official said. He also confirmed on the relevancy of empowerment of components of the production value chain by holding training courses accompanied with re-structuralize the infrastructural facilities.

Addressing the CEO and top managers of the national unions, Shirzed affirmed that is it necessary to transform unions to the civil trade societies which seek the interest of the members and capacity building. Meanwhile, he recommended applying Islamic financial tools and Sukuk including Mozarea and Mosaghat (contract for agricultural purpose), Percentage, Purchasing of the Liabilities, renting and ordered production.

Shirzad mentioned the good management of process and expertise transactions as the guarantee for attaining profitability in the contract farming.

" Development of a legal and supportive framework would facilitate the contract and ordered production in the agriculture sector such as Automobile industries that finally lead to sustainable and integrated production", Shirzad added.  


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