Editorial: Small farms, big business

21 July 2007 (New Straits Times)

A FAIR price for farmers’ produce and a guaranteed supply of it for retail to consumers, with quality standards upheld "from farm to fork": this is the promise of contract farming, an idea whose time has surely come.
In these early stages of the genesis of the Northern Corridor Economic Region, the differences of mindset with the Southern Corridor’s Iskandar Development Region are already apparent.

Where the IDR is about massive investment, multinational participation and top-down economic growth, the NCER is being grown, literally, from the ground up.

Here the onus is on the small farmer and his individual efforts. The potential of contract farming had to wait for certain downstream developments in this country, but now the hypermarkets, supermarkets and retail franchises are up, running and spreading, offering the economies of scale and retail capacity to deal directly with farmers and cut out the middlemen that have for so long been the bogeymen of the agricultural business.

Today, for foodstuff ranging from prawns, chicken and vegetables to sweet corn and vanilla beans, the huge new urban retailers are dealing directly with growers and breeders, offering capital, technology, incentives and guidance to ensure they acquire the produce they need at the quality they desire and prices appreciated by farmers and consumers alike.
This marks an advance for everyone in the food supply chain. Farmers are freed from the vagaries of price fluctuations, and retailers from the whims of wholesalers and middlemen, with their predilection for restricting supplies when prices rise and dumping produce when they fall, in effect holding the rest of the supply chain to ransom for their own interests.

The Giant supermarket chain works directly with Cameron Highlands fruit and vegetable growers; Tesco deals with lowland farmers and animal rearers in Perak and Perlis, and now sources up to a quarter of such produce through contract farming.

These players form the vanguard in this pragmatic new approach to raising the status of the agricultural sector into an engine of growth for the national economy; one of the principal planks of the present administration on taking office three years ago.

This understated revolution, taking place on rural acres far away from the glitz and grandiosity of urban development, promises to be far-reaching in its emancipation of Malaysian agriculture from a green rut of poverty into a thriving cornerstone of national prosperity.