“Clearing Bank” (Takas Bank) model proposal for contract farming…
Fehmi Kiraz, Chairman of Turkish Agricultural Engineers’ Association (TZYMB), regarding the contract production model to be realized through the Digital Agriculture Market (DİTAP), said, “The text of the contract should be arranged very firmly at the right of withdrawal and at other points. The party who has the opportunity to earn 10 kurush more can break the contract.”
Kiraz made an assessment to AA (Anatolian Agency) correspondent concerning DİTAP, which was implemented by the Ministry of Agriculture and Forestry and brought together all stakeholders of the sector on a single platform with its contractual production model.
Indicating that they support the contract production until the end, Kiraz said that this model is important in terms of price regulation, evaluation of agricultural products, farmer inputs and advance supply.
Reminding that the contract production has been used by some industrialists so far, Kiraz noted, “The producer who knows what to produce and at which price to sell his product, will be happy, there is no market concern. In this sense, DİTAP has a contractual production model and online marketing opportunity.”
Stressing that the legislation of this work should be regulated well in contract production, Kiraz made the following assessment:
“Contractual production is carried out with an old regulation from the past years. The legislation of this work should be well established and updated. The contract text in contractual production should be arranged very firmly at the right of withdrawal and at other points. The party who has the opportunity to earn 10 kurush more can quit from the agreement. Contracts must be organized so well that the healthy operation of the system does’nt consist of any problem. The contract should be very good and a mechanism to prevent the withdrawal should be established, such as Clearing Bank, where the contract value will be kept with a certain deposit. If some amount of money is kept in a formation like Clearing Bank during the production season, there will be no withdrawals when the product arrives. If there is a withdrawal, the deposit amount in Clearing Bank will be made up for this.”
“Small businesses should not be crushed”
Pointing out that small producers should be prevented from being crushed under the chain markets that have a branch in each district while establishing the contractual production model, Kiraz warned, “Here, a structure that will prevent monopolization of these markets should be set up. If small family businesses are caught in this vortex, these markets determine the price as they want. Then the price may be determined to the detriment of both consumers and producers. There should be a structure that will prevent this. For instance a quota can be placed in these market chains, a quota allocation can be made between certain sectors. In the event of a price formation against the producer, penal sanctions may be imposed.”
“Auditing must be done in the field”
Emphasizing that product planning can also be done with the system and that the product prices will be balanced by ensuring, Kiraz added, “It is also positive that Ziraat Bank and Agricultural Credit Cooperatives supported contracting companies with an interest rate reduction of up to 80 percent.”
Kiraz also suggested that it is not enough to follow the product subject to contract production via satellite image and underlined that the Ministry of Agriculture and Forestry should supervise this issue in the field.
“This platform should be exempt from taxes for 5 years until the system is settled. Furthermore these producers can have positive discrimination at the point of agricultural support to encourage contract production. Some amount of supports can be made until the producer thrives without victimizing others,” Kiraz concluded…