Out-grower and Food Security Toolkit

1 EBONYI STATE FRAMEWORK FOR RESPONSIBLE AND INCLUSIVE LAND INTENSIVE AGRICULTURE (FRILIA) OUT-GROWER AND FOOD SECURITY TOOLKIT DATE: 28TH December, 2024 [Issued according to Executive Order No. 007 2024, Executive Order on the Establishment, Adoption and Implementation of Framework for Responsible and Inclusive Land Intensive Agriculture (FRILIA)] issued on [15Th November, 2024] 2 Table of Contents Acronyms and Abbreviations ................................................................................................ 4 1. INTRODUCTION ................................................................................................................... 5 1.1 Out-grower Schemes ............................................................................................. 5 1.2 Elements of Successful Out-grower Schemes .................................................... 5 2. OBJECTIVES OF OUT-GROWER SCHEMES ......................................................................... 7 2.1 Key Features of Out-grower Schemes ........................................................... 8 3. APPLICABLE FRILIA PRINCIPLES ...................................................................................... 10 3.1 Roles and Responsibilities of Key Stakeholders ................................................ 10 3.2 Optimizing Out-grower Scheme Benefits .......................................................... 11 3.3 Out-grower Organisation Models ...................................................................... 12 3.4 Model 1: Individual Farmers ................................................................................ 12 3.4.1 Model 2: Cooperative ....................................................................................... 12 3.4.2 Model 3: Farmer’s Corporate Entity ................................................................ 12 3.5 Investor Out-grower Models .............................................................................. 12 Box 4 13 Investor/Buyer’s Out-grower Scheme Development Process ................... 13 4. OUT-GROWERS SELECTION AND MANAGEMENT.......................................................... 14 4.1.1 Selection criteria for out-growers .................................................................... 14 4.1.2 Assessing Farmer Capacity and Resources ..................................................... 14 4.1.3 Farmers’ Commitment and Reliability ............................................................. 14 4.2 Engaging Stakeholders ....................................................................................... 15 4.3 Pre-Selection Interviews and Field Assessments .............................................. 15 4.4 Registration of Out-growers and Management Information .................... 15 4.4.1 Basic Personal Data Capturing ......................................................................... 15 4.4.2 Farmers' Performance Monitoring Data ........................................................ 16 4.5 Input Supply and Loan Recovery ....................................................................... 16 The better and wider the range of services offered, the closer the relationship between farmers/out-growers and the investor, and the more the farmer will lose by breaking the relationship. ......................................................... 16 4.6 Extension Services and Field Monitoring .......................................................... 16 4.7 Marketing Arrangements ............................................................................. 18 4.8. Pricing Mechanisms and Payment Modalities ................................................. 18 3 4.9 Group Development Facilitation ........................................................................ 19 5. OUT-GROWERS SCHEME PROCESS ................................................................................. 21 6. CONTRACTS OR PRODUCTION AGREEMENTS ............................................................... 24 6.1 The out-grower contract should cover at least the following key issues: ...... 24 7. FOOD SECURITY ................................................................................................................ 26 7.1 Food Security Objectives ..................................................................................... 26 7.2 Challenges to Achieving Food Security .............................................................. 27 7.3 Strategies to Improve Food Security ................................................................. 27 7.4 Out-growers scheme relationship with Food Security ..................................... 27 8. EXTENSION SERVICES AND FIELD MONITORING ........................................................... 31 8.1 Technical Training and Extension Services ........................................................ 31 8.2 Community Engagement and Social Responsibility ......................................... 31 9. TEMPLATES ....................................................................................................................... 33 OUT-GROWER TEMPLATE 1: AGREEMENT TEMPLATE ........................................... 34 OUT-GROWER TEMPLATE 2: MONITORING AND REPORTING TEMPLATE ........... 36 OUT-GROWER TEMPLATE 3: TRAINING AND EXTENSION SERVICES TEMPLATE . 37 OUT-GROWER TEMPLATE 4: PAYMENT AND DELIVERY LOG TEMPLATE ............. 38 OUT-GROWER TEMPLATE 5: ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT (ESIA) TEMPLATE .................................................................. 39 OUT-GROWER TEMPLATE 6: ANNUAL REVIEW AND EVALUATION TEMPLATE ... 40 OUT-GROWER TEMPLATE 7: OUT-GROWERS REGISTRATION FORM/MANAGEMENT INFORMATION ........................................................ 41 OUT-GROWER TEMPLATE 8: INDIVIDUAL FARMER’S PERFORMANCE MONITORING TEMPLATE ............................................................................. 42 4 Acronyms and Abbreviations CFS RAI – Committee on World Food Security on Responsible Investment in Agriculture ESIA- Environmental and Social Impact Assessment FPIC – Free, Prior and Informed Consent FRILIA - Framework for Responsible and Inclusive Land Intensive Agriculture GMoU - Global Memorandum of Understanding GRM - Grievance Redress Mechanism NGOs - Non-governmental organizations OG - Out-grower VGGT - Voluntary Guidelines on the Responsible Governance of Tenure https://www.fao.org/tenure/voluntary-guidelines/en/ 5 1. INTRODUCTION The Out-grower and Food Security Toolkit is aimed at encouraging and supporting large-scale agribusiness investments to engage smallholder farmers to participate as out-growers in the investment. It is intended to support both the investor and the out-growers and their communities. It also includes a focus on the potential impact of out-grower schemes on household food security and nutrition. In this arrangement, the investor provides essential support to smallholder farmers, who agree to produce specific crops that meet certain standards, typically for supply to the agribusiness. The main goal is to promote sustainable agriculture and inclusive economic growth by integrating small-scale farmers into larger, more structured supply chains. More specifically, this toolkit guides investors and out-growers on how to:  Ensure compliance with all applicable FRILIA principles.  Structure the investor-out-grower relationship so it enables parties to sustainably contract with each other, and others in their value chain.  Ensure the investor's quality and production requirements are met.  Ensure that the out-growers are properly compensated for their produce and are o continuously upskilled by learning and extension o improving productivity by adopting modern techniques and equipment o reducing impact on climate and environment o continuously growing income. As such the toolkit and supporting templates include recommendations for organizing, contracting and operating a modern value chain in agriculture. 1.1 Out-grower Schemes Broadly defined, out-grower schemes are contractual agreements between small scale farmers and buyers of farm products in which:  Farmers agree to supply a buyer (sometimes called an “off-taker”) with agricultural produce that meets stated requirements of quantity, quality, timing and price. The off-taker agrees to buy the produce, often at a prior agreed price. Usually, the off-taker also provides some incentives such as pre-finance; seeds and fertilisers and other inputs; creditworthy contracts with the farmers; and knowledge of modern business farming.  Investors can obtain more produce without the need for acquiring more land, and without using additional capital.  Outgrowing ensures involvement of local farmers, introduces modern farming techniques, contributes significantly to economic upliftment and social harmony of the surrounding communities.  Outgrowing keeps land and other natural resources in the hands of the community. 1.2 Elements of Successful Out-grower Schemes For investors, the elements of a successful out-grower scheme are well-recognized:  Build strong relationships with out-growers based on trust and communication by engaging in initial and ongoing consultations so out-growers understand the company’s business development plan. Conduct an ongoing dialogue. (See Stakeholder Engagement Toolkit.) 6  Utilize and abide by fair contracts with out-growers and ensure all parties clearly understand their roles and responsibilities.  Negotiate and abide by fair and transparent pricing and quality assessment mechanisms and ensure out-growers understand and agree with them. Prices should be subject to change based on market conditions and ideally contain a price floor to ensure financial viability for the out-growers.  Provide technical support to out-growers along with high quality inputs at reasonable cost to ensure improved quality, output and incomes. In some cases, provide access to finance.  Consider implementing programs to improve participation of women, youth and marginalized groups in the out-grower program.  Avoid negative impacts on the environment.  Establish and utilize in a participatory manner fair and accessible monitoring and grievance redress mechanisms. (See GRM Toolkit.) Box 1-Key Requirements for Successful Out-grower Schemes  Careful pre-investment evaluations of the business plan, sustainability, and benefits for participating farmers and communities  Early-stage community consultation, particularly with respect to community impacts and access to land  Written and signed contracts, with effective monitoring and grievance procedures  Efforts at multiple levels to improve the productivity and quality achieved by smallholders  Processes for managing risk in responding to changing circumstances  Support for community engagement and capacity to engage Source: UNCTAD; World Bank. 2018. Out-grower Schemes. Responsible Agricultural Investment (RAI) Knowledge Into Action Note, no. 4. World Bank, Washington, DC. http://hdl.handle.net/10986/29466. http://hdl.handle.net/10986/29466 7 2. OBJECTIVES OF OUT-GROWER SCHEMES Out-grower arrangements have gained prominence due to their potential to create mutually beneficial relationships between agribusiness investors and affected communities, especially smallholder farmers. But not all such schemes result in this “win-win” outcome. The objectives of an out-grower scheme typically focus on fostering sustainable agricultural practices, empowering smallholder farmers, and securing reliable, quality supplies for agribusinesses. Here are some key objectives: a. To Secure Supply Chain for Agribusinesses: Ensure a reliable, high-quality supply of agricultural produce for the agribusiness, reducing dependency on external markets and ensuring consistency. b. To Enhance Productivity and Quality Assurance: Improve the yield and quality of crops produced by smallholder farmers through the provision of inputs, technical support, and training. c. To Create Economic Empowerment for Smallholder Farmers: Provide smallholder farmers with access to inputs, credit, and stable markets, helping to improve their incomes and livelihoods. d. To provide Market Access for Farmers: Guarantee market access for smallholder farmers, reducing the risks associated with fluctuating market prices and helping them secure fair prices for their crops. e. To promote Sustainable Agricultural Practices: Encourage the adoption of environmentally friendly and sustainable farming practices, including soil management, pest control, climate-smart techniques, and efficient resource use. f. To ensure Rural Development and Poverty Alleviation: Drive rural development by creating jobs, increasing income stability, and improving access to infrastructure and services in farming communities. g. To Mitigate Risks in the agricultural Value Chain: Distribute risks between the agribusiness and farmers, with agribusinesses supporting farmers to withstand market fluctuations, crop failures, and other production challenges. h. To Build Long-Term Partnerships: Establish mutually beneficial, long-term relationships between agribusinesses and farmers, fostering trust, collaboration, and resilience in the agricultural sector. i. To Enhance Food Security: Contribute to national and regional food security by boosting agricultural output, stabilizing supplies, and making food products more accessible and affordable. j. To encourage Social Responsibility and Community Engagement: Strengthen the social license of agribusinesses by supporting local economies, respecting land rights, and actively engaging with communities and other stakeholders. These objectives align agribusiness goals with those of smallholder farmers, promoting a model that is economically viable, socially inclusive, and environmentally responsible. 8 2.1 Key Features of Out-grower Schemes 1. Input Support: Agribusinesses often supply farmers with inputs like seeds, fertilizers, pesticides, and sometimes financial assistance. This helps to improve crop quality and productivity. 2. Technical Training and Extension Services: Farmers receive training on best farming practices, pest and disease control, and post-harvest management. This support ensures consistent and high-quality output that meets market demands. 3. Guaranteed Market Access: One of the most attractive features of out-grower schemes is the assurance of a market. Farmers have a pre-arranged buyer (the agribusiness) for their produce, which reduces the risks of fluctuating market prices and helps stabilize farmers' income. 4. Income Stability and Rural Development: By integrating smallholders into structured agricultural supply chains, out-grower schemes help boost rural economies, improve income stability for farmers, and increase food security at the local level. 5. Shared Risks and Costs: Both the farmers and the agribusinesses share the risks and costs involved in the production process, which encourages joint responsibility for yield and quality outcomes. 9 Box 2: Characteristics of successful outgrower projects A successful outgrower project is typically characterized by profitability for the company, improved household income for the outgrower, and sustainability. Common attributes of successful outgrower schemes include: 1. Crop Type:  Cash crops that require large-scale processing and are complex to cultivate benefit from the outgrower model as smallholders depend on companies for inputs, technology, and training. With such crops, side-selling is almost impossible as smallholders rely on the investor for market access.  Crops that are highly perishable are particularly well-suited for outgrower projects.  Outgrower schemes are less common for staple crops. 2. Company Size: Successful outgrower schemes are often managed by large companies with:  Financial reserves to build long-term relationships with farmers, which are critical for project sustainability.  Supply chain integration: This vertical integration helps companies control market access and reduce side-selling, as they often hold a monopoly in the supply chain.  Market Access: Larger investors are more capable of reaching urban supermarkets and international markets. 3. Level of Interaction: Effective outgrower schemes usually involve extensive engagement between the investors and farmers, often including:  Extension services: Essential for training and education, extension services are a hallmark of successful outgrower programs.  Provision of inputs and credit: A “deep” relationship where the company supplies inputs, credit, and education, though it involves higher risk and cost for the company if the scheme fails. 10 3. APPLICABLE FRILIA PRINCIPLES The following FRILIA principles relate to food security and out-grower arrangements:  Investments should be consistent with and contribute to policy objectives, including poverty eradication, food security, sustainable land use, employment creation, and support to local communities (FRILIA principle 1.1)  Investments should occur transparently (FRILIA principle 1.2)  Land acquisition and related adverse impacts will as much as possible be minimised or avoided (FRILIA principle 1.3)  Range of investment and production models should be considered including alternatives to large scale transfer of land (FRILIA principle 1.4)  Investments should be subject to consultation and participation, including the disadvantaged and vulnerable, informed of their rights and assisted in their capacity to negotiate (FRILIA principle 1.5)  Communities have the opportunity and responsibility to decide whether or not to make land available, based on informed choices (FRILIA principle 1.6)  Investments should be monitored (FRILIA principle 1.7)  Investments should safeguard against dispossession of legitimate tenure rights (FRILIA principle 2.1)  Safeguard against environmental damage unless adequately mitigated (FRILIA principle 4.1)  Investments preceded by independent assessments of potential positive and negative impacts on tenure rights, food security, livelihoods, and environment (FRILIA principle 4.2) The FRILIA principles apply to all stakeholders acting in the agri-investment environment, including all stakeholders involved in out-grower arrangements. 3.1 Roles and Responsibilities of Key Stakeholders a. Investor/Buyer: The investor is the lead partner and off-taker who is the:  Proponent of the investment  Lead researcher and analyst  Provider of credit and inputs and technical expertise  Contracting partner and purchaser b. Out-grower: The out-grower is a contracting partner and supplier who:  Provides local knowledge  Farms and delivers product that meets agreed standards c. Ebonyi State government: The Ministry of Lands and Survey is the enabler and regulator that:  Makes policy and in some cases provides incentives  Monitors to ensure compliance with FRILIA principles and other applicable laws and policies. 11 3.2 Optimizing Out-grower Scheme Benefits Governments can also take steps to maximize the likelihood that an out-grower scheme will benefit both the investor, the out-growers and their communities:  Where an investor includes an out-grower component in a proposed investment that is subject to screening by the government, the responsible agency should assess the agricultural experience, financial capacity and technical expertise of the investor with regard to working with out-growers and local communities more broadly. In Ebonyi state, this screening activity would occur in Stage 1 of the state’s Investment Approval Process. (See Box 4 for a description of the basic steps in that IAP.)  In some cases, it may be appropriate to include the out-grower agreement in the overall investment agreement between the investor and the government in order to firmly establish the investor’s obligation to include out-growers in the project. (See GMoU Toolkit Template 8)  The Ministry of Agriculture and Natural Resources can help to develop the capacity of out- growers and the broader community to engage with investors. This should include encouraging farmers’ associations and other civil society organizations to provide support.  Develop and implement strategies to help women, youth and marginalized groups to participate in out-grower schemes. Box 3: State Investment Approval Process Stage 1 • Initial Inquiries & Know Your Customer (Due Diligence) Stage 2 • Information Exchange & Site Visits Stage 3 •Potential Investor Proceeds or Withdraws Stage 4 • Investor Enters into a Memorandum of Understanding (“MoU”) with [State Coordinating MDA] and Representatives of the Affected Communities Stage 5 • Investor Completes and Shares a Feasibility Study, Business Plan and an independent Environmental and Social Impact Assessment (ESIA) Stage 6 •The parties enter into Final Agreements 12  Ensure that environmental and social impact laws and international standards are followed so as to avoid negative impacts on local communities and their environment. This activity would occur in Stage 5 of the state’s Investment Approval Process  Regularly monitor investors and out-grower schemes against agreed metrics and support the establishment and operation of fair grievance redress mechanisms. 3.3 Out-grower Organisation Models There are three basic organisation models for out-growers as described briefly in this section. 3.4 Model 1: Individual Farmers Individuals, and often their families, farm small pieces of land using traditional methods. The supply contract is between the investor and the farmer. Experience shows that these contracts are often difficult to enforce because it is unseemly for an investor to pursue a smallholder farmer through the courts for a relatively small amount of money. Significant problems arise for credit providers when thousands of small debts are not paid. 3.4.1 Model 2: Cooperative Individual farmers are members of a cooperative. Farming is undertaken individually on small pieces of land using improved traditional methods. The cooperative arranges for technical support and supply of modern fertilizers and improved seeds, usually on credit1 from the investor. The supply contract is between the cooperative and the investor. 3.4.2 Model 3: Farmer’s Corporate Entity Here, individual farmers exchange land use rights for a share in their own, properly registered and incorporated, company. The share entitles each shareholder to a dividend, and an opportunity for wage employment. The corporation is a modern business with an organization structure, business management and farm operations to match. 3.5 Investor Out-grower Models Three common business models for investors in out-grower schemes in Ebonyi State are described in Table 1. Table 1-Investor Out-grower Models Investor Model 1: Aggregate, Process, Market Collects from individual small holders, transport, and aggregates. Processes, packs and ships, sells to Market. Suited to OG Model 1: Individual Farmers Rice, Maize, Cassava; Fresh Vegetables, Small Dairies, Poultry eggs and Broilers, Aquaculture Investor Model 2: Process, Market Investor buys produce already aggregated by the Outgrowers either through their own Suited to OG Models 2 & 3: Cooperatives and Farmers Corporate Rice, Maize, Cassava; Fresh Vegetables, Small Dairies, Poultry for eggs and Broilers, Aquaculture Oil Palm, Cashew, Cacao 1 Either the Investor supplies inputs or provides credit to the cooperative or gives a guarantee to the cooperative lenders. 13 organization or a cooperative. The Investor processes, packs and ships, and sells to market. Investor Model 3: Final Process & Market Produce is processed by the Out- growers and sold to an investor who finishes the process, packs and sells to final market. Suited to OG Models 2 & 3: Cooperatives and Farmers Corporate Medium Dairies, Poultry for day old chicks, eggs and Broilers, Aquaculture Oil Palm, Cashew, Cacao Box 4 Investor/Buyer’s Out-grower Scheme Development Process Investors considering establishing an out-grower arrangement can consider the process flow shown below. Purpose: To enable investors and out-growers to follow clear and parallel processes as they move together from Concept to Operation. Generic Out-grower and Investor Processes Below are the steps to be followed by out-growers and investors in setting up their businesses: Process for OUTGROWERS to follow Matters for OUTGROWERS to consider Design Farm + Organization Technical: Soils, Crops, Water, Nutrients Organization: Groups, Governance, Sharing ESIA + Food Security Impact: Assessment and Mitigation Plan Environment, Food Security Mitigation Business Planning Business: Income, Cost, Management Finance: Loans, Interest, Collateral, Repayment Funding: Sources, Conditions, Repayment; Donors, Dev Banks, Pvt Banks, Govt Permits: Land, water, environment as Govt Requires Construction: Building of Farms and Infrastructure Operate Farms Farm Operations and Business Management Mitigation Environmental Impacts and Food Security Mitigations Repay Loans Funders Loans and Contributions Repaid Process for INVESTORS to follow Matters for INVESTORS to consider Scoping Objectives & Land Requirements Defined. Develop Concept Preliminary Assessments & Concept Designs: Inform Stakeholders Introduction to Local Govt & Community Assess Feasibility Technical Design for Out-growers Parties Agree Model Selection and OG Selection Detailed Design Business Plans; ESIA & Food Security Plan; Funding Application Funding Funding Approved and OG Contracts Signed Implement and operate Final Design & Construction of Farms and Infrastructure Training for Operations and Management Mitigate Impacts ESIA and Food Security Implemented 14 4. OUT-GROWERS SELECTION AND MANAGEMENT The selection of farmers in an out-grower scheme is a critical step that ensures the right participants are chosen for a successful partnership. This process typically involves evaluating farmers' capacity, resources, and commitment to meeting the scheme’s requirements. Developing selection criteria in relation to production standards will assist in assessing what level of support is required to facilitate further development. 4.1.1 Selection criteria for out-growers  Farm Size and Land Suitability: Farmers should have access to land with appropriate soil and climatic conditions for the crops in the scheme. Land size requirements may vary depending on the target production volume.  Experience and Skill Level: Preference should be given to farmers with experience in growing similar crops, as this reduces the learning curve and enhances productivity.  Access to Water and Infrastructure: Ensuring that farmers have adequate water sources and basic infrastructure (e.g., storage, transport access) helps improve crop quality and reduces logistical challenges. 4.1.2 Assessing Farmer Capacity and Resources  Availability of Labor: Farmers should have enough family or hired labor to manage their plots effectively and meet production targets.  Financial Capability: Although some schemes provide inputs on credit, it’s essential to assess whether farmers have basic financial stability to cover incidental costs or repay input credits if required.  Willingness to invest in new Practices: Farmers open to adopting improved practices, such as new seeds or cultivation methods, are often more successful in out-grower schemes.  Agricultural Knowledge and Experience: Preference should be given to farmers with deep knowledge of farming and who have had experience in out-growers scheme operation.  Basic Business-Awareness: Farmers to be selected should be able to keep simple records and should be able to fully understand contractual terms, including expectations, pricing, quality standards, and delivery obligations. 4.1.3 Farmers’ Commitment and Reliability  History of Engagement: Farmers with a proven track record in previous out-grower schemes or similar contractual arrangements may be more reliable and committed.  Willingness to Adhere to Scheme Guidelines: Farmers must commit to quality standards, delivery schedules, and use of the inputs provided by the agribusiness. 15 4.2 Engaging Stakeholders Stakeholder engagement begins early in the investment process and should continue for the entire life of the investment project. It is one of the essential elements of a responsible and successful investment in agriculture. The principles of free, prior and informed consent (FPIC) (as described above and pursuant to FRILIA principle 1.5) should be followed at all times. (Refer to Stakeholder Engagement Toolkit) 4.3 Pre-Selection Interviews and Field Assessments By carefully selecting farmers based on these criteria and involving community leaders, investors can improve the scheme's efficiency, ensure high-quality production, and foster long- term partnerships. This approach helps ensure that selected farmers are well-prepared and positioned to succeed in the scheme, benefiting both the investors and the farmers themselves.  Field Visits: Investors’ representatives should conduct field assessments to evaluate the farm conditions, soil quality, and farmers’ existing practices.  Interviews and Screening: There should be Interviews or orientation sessions for intending out-growers. This provides an opportunity to assess farmers’ understanding of the scheme and answer questions, ensuring clarity and alignment on expectations. 4.4 Registration of Out-growers and Management Information To ensure good and transparent management practices it is imperative that clear, detailed information is recorded for individual farmers. These include:  Basic Personal data of individual farmers  Farmers’ Performance Monitoring Data 4.4.1 Basic Personal Data Capturing Personal details of the individual should be obtained including location, National Identification Number and others (see Template 7) 16 4.4.2 Farmers' Performance Monitoring Data  Computer programmes should be designed to facilitate monitoring the performance of individual smallholder farmers, providing a basis for assessing the eligibility of farmers for higher or follow-up/next-step input packages through tracking their performances and general management decisions.  Reporting formats to be used by individual farmers, farmer groups and/or field officers should be developed to capture the required data in a consistent manner and allow for easy use by the farmer and processing by the investor (see Template 8).  It is equally important that the activities of any field or Extension Officers are properly monitored from farmer mobilization and contracting to the efficient delivery of extension messages (see Template 3) 4.5 Input Supply and Loan Recovery Input Provision  Seeds, Fertilizers, and Pesticides: Investors may provide farmers with high-quality seeds, fertilizers, and pesticides to ensure consistent yield and quality.  Credit Facilities: Some schemes provide inputs on credit, which farmers can repay after harvest, making participation more accessible.  Management Information Systems: Investors should embrace digital information system for proper recording of all inputs supplied on credit against the producers’ number, as well as deductions made against crop delivery. The same applies to every other activity and transactions with the out-growers.  Timeliness: There should be timely delivery of inputs and other services, and these must be properly planned and to respond to farmers’ needs, creating incentives for farmers to honour contracts. The better and wider the range of services offered, the closer the relationship between farmers/out-growers and the investor, and the more the farmer will lose by breaking the relationship. 4.6 Extension Services and Field Monitoring Technical Training and Extension Services  Training: Farmers should be trained on best agricultural practices, crop management, pest control, and post-harvest handling to improve productivity and crop quality.  Extension Support: Regular visits by extension officers help monitor crop progress, address issues, and support farmers with guidance.  There may be a need for investors to perform full training and extension needs analysis to establish a baseline to enable them to plan the implementation or expansion of extension services to their out-grower farmers, who should be involved in the process to ensure that their needs are being addressed where feasible. 17  The delivery of extension services should be properly planned to ensure timely delivery.  The number of extension officers required should be dictated by, among others, the geographical spread of the farmers or farmer groups, and the effective coverage a single extension officer can provide.  Extension Officers should monitor crop growth stages, input use, pest management, and overall progress which is essential in tracking the scheme’s performance.  Record keeping of yield, input usage, harvest, produce sales and quality data allow for better analysis, decision making and improvement over time.  Extension services are often a major expenditure in an out-grower scheme, and ultimately the cost of the extension services should be commensurate with the volumes and value of the commodity in question. The cost must be reasonable and sustainable. Community Engagement and Social Responsibility: This involves Community Integration and Social responsibility.  Community Integration: Investors should engage and interact with the local community, including traditional leaders and local authorities. This builds trust and supports smooth operation.  Social Initiatives: Investors should essentially invest in social projects as responsibility to local development. 18 4.7 Marketing Arrangements Out-grower schemes usually involve hundreds or even thousands of small-holder farmers, therefore, a network of depots and buying centers should be set up to facilitate delivery of produce by farmers, either throughout the marketing period or at designated times. It is important that staff positioned at these depots are well trained in grading procedures, and closely monitored to ensure adherence to such grading procedures. Quality Standards should be set to help ensure that the produce meets the investor’s requirements. Regular Inspection and Grading of produce should be made to verify quality and grade, with clear criteria for rejections, bonuses, or penalties. Grading standards should be clear and transparent to the farmers. When possible, visual grading aids should be made available. Farmers should be well trained in grading of the produce. When there is a differentiation in prices paid at the factory gate or at the depots/buying centres (farm-gate price), farmers should have a free choice in where to deliver their produce. Bulk produce supply should be encouraged by the investor’s payment of premium price for such bulk supply. This in addition encourages group formation processes. Investors should coordinate harvesting and transportation from farms to central processing or storage locations in order to preserve quality during transit. 4.8. Pricing Mechanisms and Payment Modalities  There should pre-agreed or market-based prices by investors and out-growers in order for farmers to have guaranteed market and predictable income.  Pricing structures should be clearly defined to protect farmers from fluctuating market prices and ensure fair compensation.  Payment to farmers should be as prompt as possible. This should be when the produce changes hands, but at least no later than the pre-planting agreed period after the transfer of produce has taken place.  All transactions should be properly recorded, indicating grades, corresponding weights and prices, total value of the delivery, and any deductions for inputs or, if applicable, other services provided. 19 4.9 Group Development Facilitation • It should be noted that in most cases Group or Association leaders, sometimes also referred to as farmer facilitators or lead/contact farmers, are the link with the investor. • Group leaders must be approved by the investor, they must be literate and have a minimum of administrative skill. • The Group leader must be accepted, approved and trusted by the farmers. • Group leaders and members must be trained in group dynamics and development. • Group size is often determined by the nature of the commodity. • Larger groups are the norm for annual crops, but for perennial crops where longer-term partnerships are at the core of the relationship, with a relatively high Box 5: Price Mechanism in Out-growers Scheme Pricing mechanisms in out-grower schemes are crucial as they directly impact the sustainability of the scheme, farmer livelihoods, and the investor’s profitability. Effective pricing structures aim to balance fair compensation for farmers with the competitive needs of investors. Types of pricing mechanism 1. Fixed Price Mechanism: Under a fixed price mechanism, the agribusiness and the farmer agree on a predetermined price at the beginning of the season, regardless of market fluctuations. 2. Market-Linked or Floating Price Mechanism: Prices are set based on prevailing market rates at the time of harvest or delivery, often referencing a local, national, or international market index. 3. Cost-Plus Pricing: The price is calculated based on the actual cost of production (seeds, labor, inputs) plus a margin to ensure profitability for the farmer. 4. Guaranteed Minimum Price with Market Adjustment: The agribusiness offers a guaranteed minimum price, ensuring that farmers earn at least a certain amount, even if market prices fall. If market prices are higher, farmers are compensated at the market rate. 5. Profit-Sharing Mechanism: Agribusinesses and farmers agree on a profit-sharing model, where a portion of profits from the final product sales is shared with the farmers, sometimes based on yield or quality. 6. Quality-Based Pricing: Prices are determined based on the quality of the produce, with higher- quality yields earning premium prices. 7. Input Deduction Model: Agribusinesses provide inputs (seeds, fertilizers, pesticides) on credit and deduct the cost of inputs from the payment at harvest, sometimes with interest. 8. Hybrid Pricing Models: A combination of mechanisms, such as guaranteed minimum price with quality-based bonuses, is used to ensure fair compensation while maintaining flexibility for both farmers and agribusinesses. Each pricing mechanism offers different levels of income stability, market exposure, and incentives for quality, which impact the overall success and sustainability of an out-grower scheme. Selecting the right pricing model requires balancing market dynamics, farmer welfare, and the agribusiness’s operational goals. 20 level of investment by the supporting investor, smaller groups of 10-15 farmers are more effective. 21 5. OUT-GROWERS SCHEME PROCESS The out-grower process typically involves several stages that ensure a structured and mutually beneficial relationship between agribusinesses and smallholder farmers. Here’s an outline of the general process: Figure 1: Out-growers Scheme Process Flow Chart 1. Planning and Feasibility Assessment  Define Objectives: Establish the purpose of the out-grower scheme, whether to increase production, support smallholder farmers, or ensure consistent supply.  Identify Crops and Regions: Select crops suited to the agribusiness needs and regions where these crops can thrive.  Stakeholder Engagement: Involve relevant stakeholders, including government agencies, NGOs, local leaders, and financial institutions, to secure support and partnerships.  Feasibility Study: Assess the economic, social, and environmental impact of the scheme, considering potential challenges like climate, land availability, and market demand. 2. Farmers Selection and Onboarding  Farmers Recruitment: Identify eligible smallholder farmers based on set criteria, such as land size, experience, and location.  Screening and Selection: Screen farmers for their willingness to participate, their capacity to meet quality standards, and their history with similar schemes (if any).  Agreement Formation: Develop and sign an out-grower agreement detailing inputs provided, expected outputs, payment terms, and other responsibilities. 22 3. Input Provision and Training  Input Distribution: Provide selected farmers with inputs such as seeds, fertilizers, and pesticides, either at subsidized rates or on credit.  Technical Training: Conduct training sessions on sustainable farming practices, pest management, quality control, and post-harvest handling.  Extension Support: Assign extension officers or agronomists to regularly visit farmers, monitor crop progress, and offer on-ground support. 4. Crop Monitoring and Support  Field Monitoring: Regular field visits to assess crop growth, identify potential issues (pests, diseases), and track input usage.  Data Collection: Record crop development stages, yields, and other data for performance analysis.  Feedback Mechanism: Maintain open communication with farmers, allowing them to report challenges and receive prompt support from agribusiness representatives. 5. Harvesting and Quality Control  Harvest Scheduling: Organize a harvesting plan to ensure crops are collected at optimal times for quality preservation.  Quality Assessment: Inspect harvested crops against pre-set quality standards. Grade the produce and document any discrepancies or rejections.  Transport Arrangements: Arrange transportation from farms to processing centres or storage facilities, maintaining quality during transit. 6. Payment and Profit Distribution  Payment Processing: Based on the agreed terms, process payments to farmers, either at delivery or after quality verification.  Bonus and Penalties: Implement any performance-based bonuses or deductions as outlined in the agreement.  Documentation: Maintain detailed records of each transaction, including quantities delivered, payment amounts, and dates, for transparency. 7. Evaluation and Feedback  Annual Review: Conduct a thorough review of the scheme’s outcomes, including yields, financial performance, and areas for improvement.  Stakeholder Feedback: Gather insights from farmers, extension officers, and other stakeholders to refine processes and address any recurring issues.  Plan Adjustments: Based on evaluation findings, adjust the strategy, improve training, or amend agreements for future cycles. 23 8. Sustainability and Growth  Continuous Improvement: Implement new technologies, improve training, and enhance input distribution based on lessons learned.  Scaling Up: If successful, consider expanding the scheme to include more farmers, additional crops, or even new regions.  Social and Environmental Responsibility: Continuously monitor the social and environmental impacts of the scheme and apply sustainable practices to maintain a positive impact on communities and ecosystems. This structured process is essential to ensure that all parties benefit, fostering a stable and sustainable partnership between agribusinesses and smallholder farmers. Box 7: Main Challenges Facing Outgrower Schemes 1. Quality and Yield Issues: Outgrower schemes often struggle with farmers failing to deliver produce of the required quality and or quantity. Contributing factors include insufficient training, slow adoption of best practices, inadequate incentives, side-selling, and limited access to essential inputs. These challenges can lead to farmers producing insufficient yields, undermining the initial investment by investors, which may incur losses, especially when large capital investments are involved. 2. Side-Selling: Farmers may sell part of their crop to local buyers instead of the contracting investor, often due to higher prices offered by these buyers or the impact of input costs factored into contract prices. This practice reduces the investor’s return on input and training investments and can complicate cost recovery for inputs provided on credit. Side-selling is especially prevalent with staple crops that are easy to sell locally or consume within the household. 3. Recruitment Issues: Attracting farmers to participate in outgrower schemes can be challenging, especially when they are reluctant to shift from traditional staples to new crops, which may have long maturation times or require substantial upfront investments. Since these projects often require scale to offset high initial costs, recruitment challenges can significantly impact the scheme's viability. 24 6. CONTRACTS OR PRODUCTION AGREEMENTS The Investor and Out-grower agreement should be governed by a formal, legally enforceable contract. The terms of the contract should be fair to both parties.  Formal contracts specify the terms of engagement, covering responsibilities, inputs, pricing, delivery schedules, and quality standards.  Agreements establish expectations, outline obligations for both parties, and help minimize misunderstandings.  Contracts or production agreements between investors and farmers should be transparent and comprehensive.  Farmers should understand the contract or production agreement, and how these affect them. The contract or production agreement can be translated into the local language and be fully explained to the farmers to ensure that they understand and accept the terms of the contract. 6.1 The out-grower contract should cover at least the following key issues:  Personal details of the farmer, including identification and registration number  Description of the area contracted  The term of the agreement  Product bought by the Investor: Specifications of Quantity, Quality, Timing and Price  Support offered by the Investor: Extension Service, Credit Supply, Machinery Loan  Obligations of both Parties: Implementation of ESIA, Food Security, Repayment of Debts  Non-performance and disputes: Remedies for non-performance; Arbitration or other method of dispute resolution (refer to GMoU Toolkit) 25 Box 8: Key Components of an Out-grower Scheme Contract or Production Agreement The contracts or production agreements should stipulate in the minimum:  Quality requirements  Grades and their descriptions  Details on all inputs, tools and/or equipment to be provided by the investor and their costs, and the conditions under which these are to be provided (credit, cash, part- payment)  Details of any loans to be provided by the company (if applicable)  Provision of extension (type and frequency) and its cost  Loan recovery / repayment modalities (interest, grace period, instalments and payment period)  Pricing mechanisms/formulas for the produce (if feasible)  Payment modalities for the produce  Obligations and responsibilities of the two parties to the contract or agreement  Enforcement mechanisms Apart from stipulating which inputs and services are to be provided by the investor, farmers’ contributions should also be prescribed in details. Box 9: Out-grower Contract Principles  Clear documentation. Contracts should be in writing.  Readability. Contracts should be written in clear and coherent language, using a language and vocabulary that is understandable to a farmer of average education and experience.  Time to Understand and Review. Farmers should have a sufficient period of time, depending on the case, to review the draft contract and seek legal or other advice before signing.  Transparency on Pricing. Prices and payment constitute a key element of any contract, and these points need to be clearly understood and agreed upon by farmer and buyer. Contracts should ensure transparency in price determination and payment procedures. It is advisable that a contract should allow provision for prices to be renegotiated in the event of unforeseen circumstances, such as substantial changes in market conditions leading to large differences in price with respect to the contracted terms.  Transparency on Quantity and Quality. Contracts should clearly indicate the quantity of the commodity to be supplied by the farmer over a period of time, the quality standards required and the means of assessing these on delivery. They should avoid complex formulas or measurements of quantity and quality unlikely to be fully understood by farmers. The agreement should clearly state whether farmers are allowed to sell to other buyers and, if so, under what circumstances.  Transparency on Inputs. The contract should stipulate which party will be responsible for supplying and applying farming inputs. More specifically, contracts should also clearly state the costs of any inputs and services the buyer will supply to the farmers.  Dispute Resolution. Farmers and buyers should agree in the contract on a neutral third party to assist them in the event of disputes. Source: Guiding Principles for Successful Contract Farming Operations” at 1; FAO 2012 (https://openknowledge.fao.org/server/api/core/bitstreams/c495eff5-7acc-4e9f-8af5- aedbda402757/content). https://openknowledge.fao.org/server/api/core/bitstreams/c495eff5-7acc-4e9f-8af5-aedbda402757/content https://openknowledge.fao.org/server/api/core/bitstreams/c495eff5-7acc-4e9f-8af5-aedbda402757/content 26 7. FOOD SECURITY Food security refers to the condition in which all people always have physical, social, and economic access to sufficient, safe, and nutritious food to meet their dietary needs and food preferences for an active and healthy life. It’s a multi-dimensional concept that encompasses four main pillars: 1. Availability: Food must be available in sufficient quantities and on a consistent basis, whether through domestic production, imports, or reserves. It also depends on a stable supply, free from disruptions caused by conflicts, economic downturns, or environmental factors. 2. Access: Individuals must have sufficient resources and purchasing power to acquire appropriate foods for a nutritious diet. This includes physical access (proximity to food markets) and economic access (affordability). 3. Utilization: Proper biological use of food, requiring a diet with adequate variety and nutrition, as well as proper food preparation, storage, and sanitary conditions. 4. Stability: Stability implies that all pillars of food security—availability, access, and utilization—are consistently met over time. It addresses resilience against risks, such as economic or environmental shocks, that could disrupt food security. 7.1 Food Security Objectives To achieve food security for all, international best practices suggest seeking to achieve the following four “SMART”2 objectives: Table 2: Objective 1 Higher Productivity that leads to Higher Total Food Production Indicators to measure success: +Baseline and Current Food Crop Total Production. +Baseline and Current Food Crop Productivity Objective 2 More Economic Activity within the Community leads to decreased poverty levels and increased food expenditure Indicators to Measure success: +Poverty levels among Vulnerable People +Baseline and Current Expenditure on Food Products +Female participation in economy Objective 3 Increased Collaboration leads to more effective use of Human Resources Indicators to Measure success: +Number of conflict reports and referrals to the Grievance System. +Number of new jobs available within the Community Objective 4 Increased nutrition knowledge and gender equity in household decision making leads to increased food nutrition Indicators to Measure success: +Level of Stunting among under 5s +Bodyweight mass index (BMI) +Female participation in household decision making 2 SMART objectives are “Specific Measurable Achievable Realistic Time Bound.” 27 7.2 Challenges to Achieving Food Security 1. Climate Change: Extreme weather events, temperature changes, and shifting precipitation patterns and other natural disasters affect crop yields and food availability. 2. Population Growth: Rising populations increase the demand for food, putting pressure on land, water, and other resources and often leading to poor health, inadequate sanitation, lack of clean water, and insufficient knowledge about nutrition. This can impair food utilization and thus lead to malnutrition and poor health. 3. Conflict and Displacement: Wars and conflicts disrupt food production, distribution, and access, often leading to severe food insecurity in affected regions. 4. Economic Inequality: Disparities in income and access to resources and poverty create unequal access to food especially in vulnerable or marginalized communities. 5. Food Waste: Significant amounts of food are lost or wasted in supply chains, reducing overall food availability and contributing to hunger and malnutrition. 7.3 Strategies to Improve Food Security 1. Sustainable Agricultural Practices: Enhancing productivity while preserving natural resources and reducing environmental impact. 2. Strengthening Food Systems: Improving infrastructure, storage facilities, and transport networks to reduce food loss and waste. 3. Social Protection Programs: Providing safety nets, such as cash transfers or food assistance, to support vulnerable populations. 4. Climate Adaptation and Resilience: Supporting farmers with climate-resilient seeds, water conservation techniques, and other adaptive practices. 5. Improving Market Access: Enhancing local and international trade opportunities to stabilize food prices and improve access. 6. Educational Programs: Raising awareness about nutrition, food preparation, and health to improve food utilization. 7.4 Out-growers scheme relationship with Food Security Out-grower schemes have a significant relationship with food security, especially in regions where smallholder farmers make up a large portion of the agricultural workforce. Here’s how out-grower schemes contribute to food security: 1. Increased Agricultural Production  Out-grower schemes boost production by providing farmers with high-quality inputs, technical training, and ongoing support, resulting in higher yields. Increased production of staple or cash crops contributes to local and national food availability, a key pillar of food security. 2. Enhanced Access to Markets  Out-grower schemes guarantee farmers a stable market for their produce, encouraging them to invest more in agriculture and expand production. This reliable market access reduces post-harvest losses and ensures that more food reaches consumers, enhancing food distribution and availability. 28 3. Improved Farmer Income and Livelihoods  By providing a stable income source, out-grower schemes help farmers earn more consistent and higher income, which can be invested in improved food, healthcare, and education for their families. This economic stability enables households to purchase diverse and nutritious foods, supporting food access and dietary quality. 4. Introduction of Sustainable Farming Practices  Many out-grower schemes incorporate training on sustainable agricultural practices, such as soil conservation, water management, and integrated pest management. These practices improve soil health and long-term agricultural productivity, contributing to a resilient food system that can withstand climate-related or other production shocks. 5. Support for Local and Rural Economies  Out-grower schemes foster rural economic development by creating jobs, boosting local economies, and improving infrastructure such as transportation and storage. This localized economic boost increases overall food access within communities and enhances rural food security. 6. Diversification of Crop Production  Out-grower schemes often promote the cultivation of a mix of staple and cash crops, diversifying production. Crop diversification can reduce dependency on a single food source, making communities less vulnerable to price shocks and supply disruptions, which strengthens resilience and food security. 7. Building Agricultural Resilience  By providing training, support, and insurance options, out-grower schemes help smallholders develop skills and resilience that make them better equipped to handle challenges like climate change, pest outbreaks, and fluctuating markets. Resilient farmers contribute to a more stable food supply chain. In these ways, out-grower schemes promote food security by increasing food availability, improving economic access to food, and supporting a sustainable and resilient agricultural system. Through these initiatives, out-grower schemes help secure not only short-term food needs but also long-term food system stability. Out-grower schemes can positively impact food security by increasing production, supporting farmer incomes, and improving access to resources. However, these schemes can also have negative impacts if they prioritize cash crops over food crops, lead to environmental degradation, or create economic dependencies. To enhance their positive impact on food security, out-grower schemes should:  Incorporate mechanisms that support food crop production alongside cash crops.  Provide education on sustainable practices to preserve soil health and productivity.  Promote income stability through fair pricing models and market diversification.  Ensure inclusivity to empower marginalized farmers and gender equality. 29 Ultimately, well-designed out-grower schemes that consider both economic and environmental factors can significantly contribute to local and regional food security. Food insecurity and poor nutrition are caused by reduced access to physical, economic and social resources. The impact of each is classified below (Table 3) in terms of positive and negative impacts: Table 3: Impact Potential Impact Potential ↓ Fewer Physical resources: Land reallocation to investors: less land for community agriculture means less food. Water re-allocated to investors: less water for community agriculture means less food. ↑ Higher productivity ▪ New knowledge and skills bring better farming. ▪ New improved seeds give greater yield potential. ▪ Higher level of mechanisation increases productivity ▪ Improved post-harvest processes and facilities can reduce losses ↓ Fewer Economic Resources: People engaged in investment activities means fewer people engaged in food production. Actual Income from wages less than envisaged means less money for food. Time lapse between starting and earning income means temporary food shortage. ↑ More Economic Activity ▪ More economic activity means profits and wages which means more money for food purchases. ▪ Move away from subsistence economy means better allocation and more efficient use of economic resources3. ↓ Increased Competition Investors become competitors over land. Conflicts arise, food production declines. Inflows of people from outside the community on the news of work, wages, money available, causes food shortages. Commercialisation of production usually transfers control over income and food resources from women to men ↑ Effective Collaboration between Investor and Communities ▪ The Investor becomes a partner in development: food productivity increases, knowledge around nutrition increases. ▪ Better Community Organization enables more people working together leading to higher 3 For example, savings kept “under the mattress” are used for investment in business. P h ys ic al Ec o n o m ic So ci al 30 who are less inclined to spend on food4. production and better distribution. The text in bold indicates categories that must be included in the investors’ strategy. The list of causes provides guidance to the investor which should be followed while engaging with the community. Investors can avoid harm to food security and nutrition and even improve them by adopting the following practices:5  Do no harm. Ensure that existing sources of food security are not compromised by the investment.  Include food security in community consultations and agreements. This is an essential topic for negotiations with communities and farmers.  Consider impacts on nutrition. An adequate supply of food is not enough; the food must be sufficiently nutritious.  Ensure out-grower schemes improve food security. Design schemes that have fairly priced crop purchase agreements and provide training so out-growers can improve productivity.  Be wary of diverting food crops to cash crops. If this occurs, ensure that the community has alternative land to grow food crops, or that out-grower income is sufficient to purchase sufficient amounts of healthy food.  ESIA. Consider the food security impacts of the out-grower program as part of an environmental and social impact assessment.  Gender. Consider the impacts of the investment on women. Increasing women’s incomes through employment or participation in an out-grower scheme could improve food security but may also have negative impacts through women’s double burden of work and household commitments. Ebonyi state should consider utilizing the following practices in relation to out-grower schemes:  National/state food security strategy. The state should have a coherent food security strategy that aligns with the national strategy. The plan should specify the types of investment and business models most needed, including out-grower schemes where appropriate, and reflect food production and distribution needs and networks.  Give food insecure areas special attention. Promote well-organized and inclusive out- grower schemes in areas that are food insecure.  Consider food security implications of proposed out-grower schemes. The Ministry of Agriculture should consider potential impacts on local food security at the Third (3) stage of the State’s investment approval process (IAP) when assessing proposed investments in Ebonyi state. This includes ensuring that food security protections are contained in the out- grower contract.  Monitor food security impacts. The Ministry of Agriculture should include actual impacts on food security in its investment monitoring activities. 4 Studies suggest that increases in income from out-grower systems were typically controlled by males, and so did not translate to increases in the percentage of income spent on food, which was typically purchased by women - https://www.landgovernance.org/themes/foodsecurity/ 5 This list and the following list aimed at governments are derived from “UNCTAD; World Bank. 2018. Introduction to Responsible Agricultural Investment. Responsible Agricultural Investment (RAI) Knowledge Into Action Note, no. 22; World Bank, Washington, DC. (https://openknowledge.worldbank.org/entities/publication/52b913a1-6ab7-589c-a929-f51116d0ac50). https://www.landgovernance.org/themes/foodsecurity/ https://openknowledge.worldbank.org/entities/publication/52b913a1-6ab7-589c-a929-f51116d0ac50 31 8. EXTENSION SERVICES AND FIELD MONITORING 8.1 Technical Training and Extension Services  Training: Farmers should be trained on best agricultural practices, crop management, pest control, and post-harvest handling to improve productivity and crop quality.  Extension Support: Regular visits by extension officers help monitor crop progress, address issues, and support farmers with guidance.  There may be a need for investors to perform full training and extension needs analysis to establish a baseline to enable them to plan the implementation or expansion of extension services to their out-grower farmers, who should be involved in the process to ensure that their needs are being addressed where feasible.  The delivery of extension services should be properly planned to ensure timely delivery.  The number of extension officers required should be dictated by, among other things, the geographical spread of the farmers or farmer groups, and the effective coverage a single extension officer can provide.  Extension Officers should monitor crop growth stages, input use, pest management, and overall progress which is essential in tracking the scheme’s performance.  Record keeping of yield, input usage, harvest, produce sales and quality data allow for better analysis, decision making and improvement over time.  Extension services are often a major expenditure in an out-grower scheme, and ultimately the cost of the extension services should be commensurate with the volumes and value of the commodity in question. The cost must be reasonable and sustainable. 8.2 Community Engagement and Social Responsibility This involves Community Integration and Social responsibility.  Community Integration: Investors should engage and interact with the local community, including traditional leaders and local authorities. This builds trust and supports smooth operation.  Social Initiatives: Investors should essentially invest in social projects as part of their responsibility to local development. 32 Box 11: Phases for Provision of Extension Services in Out-grower Schemes Provision of extension services should take place at distinct periods that can be distinguished in the crop cycle, for example:  mobilization and registration/contracting of farmers including input distribution,  nursery preparation and establishment (if applicable),  field preparation and crop establishment/transplanting (if applicable),  field management including control of pests and diseases,  pre-harvest preparations, harvesting and post-harvest handling including storage hygiene, and  marketing arrangements. 33 9. TEMPLATES Templates for out-grower schemes help to establish clear frameworks for agreements, monitoring, and implementation, ensuring all parties involved understand their roles, responsibilities, and expectations. Below are some key templates commonly used in out-grower schemes: 34 OUT-GROWER TEMPLATE 1: AGREEMENT TEMPLATE This template outlines the contractual relationship between the investor and the farmers, covering expectations, terms, and obligations. Agreement Form Input Provisions Form Description Type Quantity Seeds Provided [Specify type of seeds] [Specify quantity] Fertilizers Provided [Specify type of fertilizer] [Specify quantity] Pesticides Provided [Specify type of pesticide] [Specify quantity] Financial Support [Specify type of support] [Specify amount] Other Inputs [Specify type of input] [Specify quantity/amount] Item Description Details Pricing and Payment Terms Pricing structure and conditions [e.g., Pricing formula, payment schedule, penalties/bonuses based on yield and quality] Payment schedule [e.g., Payment timeline, instalments, final payment] Category Party Name Contact Details Parties Involved Investor Farmer(s) Scope of Agreement Description Details Types of Crops Quantity Quality Standards 35 Penalties/Bonuses [e.g., Penalties for late delivery or bonuses for exceeding quality targets] Delivery Schedule Timeframes for delivery of crops [e.g., Date of first delivery, frequency of deliveries] Consequences for delays [e.g., Penalties for missed deadlines or failure to meet quality expectations] Technical Assistance Type of training or extension services provided [e.g., Crop management training, on-site technical support] Support provided for crop management [e.g., On-the-ground technical assistance, field visits] Dispute Resolution Mechanism for resolving conflicts [e.g., GRM, Mediation, conflict resolution through local councils or legal support] Dispute resolution steps [e.g., Steps to follow if a dispute arises, timeframe for resolution] Termination Clause Conditions for termination of the agreement [e.g., Breach of contract, non-performance, mutual agreement] 36 OUT-GROWER TEMPLATE 2: MONITORING AND REPORTING TEMPLATE This template is used to track crop growth, input use, yield, and challenges faced by farmers. It provides ongoing insight into the scheme’s performance. Monitoring and Reporting Form Farmer Identification Farmer ID Location Plot Size Input Utilization Input Type Quantity Received Quantity Used Date Used Seeds Fertilizers Pesticides Other Inputs Crop Development Stages Stage Date Observed Notes (e.g., pests, diseases) Planting Flowering Harvest Yield Data Estimated Yield Actual Yield Challenges and Recommendations Challenges Observed Recommended Actions Extension Officer Comments Comments 37 OUT-GROWER TEMPLATE 3: TRAINING AND EXTENSION SERVICES TEMPLATE A structured guide for recording training sessions and other extension services provided to farmers. Training Session Report Form Training Schedule Date Time Training Content Topics Covered Trainer/Extension Officer Name Contact Information Farmers Attendance Farmers Names Farmer ID Contact Outcome and Feedback Evaluation of Training Session Feedback from Farmers 38 OUT-GROWER TEMPLATE 4: PAYMENT AND DELIVERY LOG TEMPLATE This template helps in recording details of crop deliveries and payments to ensure transparency in the transaction process. Delivery and Payment Record Form Delivery Details Date of Delivery Quantity Delivered Quality Rating Payment Details Amount Paid Payment Method Date Payment Received Receipt Confirmation Farmer's Name Signature Date Penalty or Bonus Application Type Description Amount Penalty (if applicable) Bonus (if applicable) 39 OUT-GROWER TEMPLATE 5: ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT (ESIA) TEMPLATE This template is used to evaluate the scheme’s social and environmental impacts, especially in cases where sustainability is a key focus. Environmental and Social Impact Assessment Form Environmental Impact Assessment Aspect Assessment Details Soil Quality Water Usage Deforestation Biodiversity Social Impact Assessment Aspect Evaluation Details Local Employment Income Levels Community Well- being Mitigation Measures Adverse Effect Mitigation Strategy Community Feedback Feedback Mechanism Summary of Concerns Actions Taken 40 OUT-GROWER TEMPLATE 6: ANNUAL REVIEW AND EVALUATION TEMPLATE An end-of-year assessment of the outgrower scheme’s overall performance and areas for improvement. Scheme Performance Review Form Performance Against Targets Performance Metric Target Actual Variance Crop Yield (tons/ha) Farmer Participation (No.) Income per Farmer (₦) Training Sessions Delivered Financial Summary Item Amount (₦) Total Expenses Total Revenues Profitability Challenges and Lessons Learned Challenge Lesson Learned Low Crop Yield Adjust input distribution or improve training on techniques. High Side-Selling Rate Strengthen market linkages and communication with farmers. Improvement Plan Weakness Identified Proposed Action Inconsistent Attendance at Training Introduce incentives or schedule sessions flexibly. Soil Degradation Introduce soil conservation practices and crop rotation. Stakeholder Feedback Stakeholder Group Feedback Summary Farmers More timely provision of input is needed. Extension Officers Increase training resources for effective delivery. Other Stakeholders Improved collaboration with local authorities is recommended. 41 OUT-GROWER TEMPLATE 7: OUT-GROWERS REGISTRATION FORM/MANAGEMENT INFORMATION Outgrower Registration Form 1. Personal Details First Name(s) Family Name Date of Birth / Age Gender (Male/Female) 2. Identification Information National Identify Number (NIN) Other Unique Identification (if any) Date of Registration 3. Location Details Village Chief Zone District 4. Support and Cultivation Details Credit Provided (e.g., Inputs, Tools, Extension Support, Financial Assistance) Area Under Cultivation (for Outgrower Crop) 5. Contact Information Mobile Telephone Number Notes:  Ensure all fields are completed accurately for effective record-keeping.  Attach copies of identification where applicable. The above management information could be linked to GIS aerial mapping systems in more developed out-grower schemes. 42 OUT-GROWER TEMPLATE 8: INDIVIDUAL FARMER’S PERFORMANCE MONITORING TEMPLATE Outgrower Scheme Monitoring Form 1. Contract and Inputs Name of Farmer Farmer’s ID Location Contracted Area Distribution of Inputs 2. Nursery and Land Preparation Nursery Management (if applicable) Land Preparation 3. Planting and Crop Development Time of Planting / Transplanting (if applicable) Crop Emergence / Seedling Survival Rate (if applicable) Spacing and Plant/Tree Density Timely Weeding and Adherence to Agronomic Practices 4. Risk Mitigation and Pest Control Establishment of Fire Breaks/Guards (if applicable) Implementation of Pest and Disease Control Practices 5. Crop Monitoring and Harvesting Crop Establishment / Status at Intervals Timely Harvesting and Techniques Post-Harvest Technology 6. Production and Data Management Production Data Formulation of Group Constitution (By-laws) Group Record Keeping Reporting formats to be used by individual farmers, farmer groups and/or field officers should be developed to capture the required data in a consistent manner and allow for easy processing.