The government of Tanzania, under the auspices of the ministry of Agriculture and that of Trade and Industry, has been striving to integrate farmers with agro-industries. The government wants to ensure that farmers have a market and earn better prices for their produce, cut back on post-harvest losses, develop their entrepreneurial capacities, and create viable livelihood options in rural Tanzania. It is along this course that contract farming has come to be viewed as a magic potion.
The Food and Agriculture Organization (FAO) defines contract farming as “an agreement between farmers and processing and/or marketing firms for the production and supply of agricultural products under forward agreements, frequently at predetermined prices”.
The most unique characteristic that unyokes contract farming from other agricultural production and sales contracts is the active involvement of the contractor in both marketing and production of an agricultural product or products. Another unique characteristic of contract farming is the independence of farmers and contractors from each other—this is an attribute lacking in joint venture and cooperative business and employment arrangements.
All these characteristics explain why the government of Tanzania should treat contract farming as a distinct legal arena. This calls for central and local government regulators in the agriculture sector to gain more appreciation and understanding of the legal regime for contract farming, which does not necessarily require a specific Act of Parliament.
Indeed, Tanzania’s legal regime for contract farming includes various extant laws that deal with contracting in agriculture and which are found in numerous pieces of legislation, including the Law of Contract Act, Cap 345; the Land Act, 1999; the Village Land Act, 1999; and crop-specific laws (such as, the Coffee Industry Act, Cap 347; the Tea Act, Cap 275; the Sugar Industry Act, Cap 251 and the Cashew Industry Act, 2009).
The legal regime also entails intellectual property laws (e.g. the Patents (Registration) Act, Cap 217 and the Copyright and Neighbouring Rights Act, Cap 218) and other laws, which may have a spasmodic direct impact on contract farming agreements and operations.
A suitable legal regime for contract farming helps to legally secure contractual relations and to facilitate enforcement of contractual rights by the courts or arbitration tribunals. Involving and interacting with the private sector in developing such a suitable legal regime is essential to the government’s appreciation and understanding of the regime and to determining the optimum ways to support contract farming in the Tanzanian context.
There are two possible options to the legal regulation of contract farming: enacting a stand-alone piece of legislation, or enacting non-specific laws related to contract farming. The first option entails many issues (food safety, labour, land, etc.) and although very rare, is practiced in Malawi, Morocco, Brazil and France.
The second option, currently practiced by Tanzania, is exemplified in the law governing contracts, agriculture, specific crops or any combination of the foregoing. For example, the Law of Contract Act, Cap 345 provides for, among others, the formation, performance and breach of contracts. Furthermore, crop-specific laws contain provisions for the authority of crop boards to regulate contract farming.
These provisions were introduced by the Crops Laws (Miscellaneous Amendments) Act, 2009. However, there’s a need to ensure that the provisions reflect the generally accepted standards of practice embedded in the UNIDROIT/FAO/IFAD Legal Guide on Contract Farming (2015) and the FAO Guiding Principles for Responsible Contract Farming Operations (2014).
So, does Tanzania need a specific law on contract farming? There is no straightforward answer to this question. The government may want to improve the implementation of, compliance with and enforcement of existing laws before iniating fresh reforms through the Tanzania Law Reform Commission.
Ordinarily, there is no need for a specific law on contract farming. Simply transplanting foreign contract farming laws into the country could lead to conflicts with local laws.
Keeping in mind the above ideas, Tanzania should survey its non-specific laws and regulations relating to contract farming with a view to identifying lacunae, contradictions, inconsistencies and conflicts and determine if a specific law on contract farming law will resolve the bottlenecks identified, or if a modest change in the existing legal regime may suffice.
Paul Kibuuka (firstname.lastname@example.org) is a tax and corporate lawyer, tax policy analyst and the chief executive of Isidora & Company.