Contracts are legally binding agreements between two partners. The exact nature of a seed grower contract will depend on the circumstances, but will usually contain details of the following, couched in legal terminology:
Obligations of the farmer
- Agree to produce a particular seed crop and variety exclusively for the seed company.
- Produce the agreed quantity of seed.
- Follow crop management specifications.
- Allow company representatives to inspect seed fields.
- Follow the delivery schedule.
Obligations of the seed company
- Supply parent seed.
- Specify services to be rendered to the farmer.
- Pay for seed at the agreed price, including any applicable bonuses or penalties.
- Follow the payment schedule.
Contracts usually also specify that the germplasm supplied by the seed company and produced by the farmer remains the property of the seed company. Where small-scale farmers are involved in seed production, it may be necessary or preferable to establish a contract with a consortium of growers. This might be a whole village, to ensure that all farmers grow the same variety to avoid admixture or contamination of the seed, or with a cooperative or farmers’ group to engender a certain degree of group responsibility and accountability. In these cases, the contract needs to be negotiated with the village head or group leaders, with the full involvement and agreement of the community. The advantage to the seed company, apart from quality assurance, is that greater seed quantities can be produced, while negotiations, transactions, and inspections are localized, simplifying management. For the community, the contract offers a level of security and may be used for collective bargaining, securing loans, and community wealth creation.
A number of options determine the price paid to seed growers and the method of payment.
- The grower is paid a company-determined price per ton of seed delivered. This is the simplest form of pricing and enables the farmer easily to compare the price and profitability of seed production with other enterprise options. The seed company will calculate a price based on either
- the average yield of seed and a presumed realistic return per ha for the farmer.
- a margin over the variable costs of production based on a seed crop budget. In the latter system, it is necessary to develop a realistic seed crop budget.
- The grower is paid a proportion of the seed value upon delivery and the remainder is paid once the seed is sold. This system may be used in a cooperative setting or where the market is not assured. The farmer therefore shares the risk of seed marketing.
- The grower delivers a quota (specified quantity) of seed for which he is paid a set price per ton. Any seed in excess of the quota is delivered but is only paid for at a later date, usually once the seed is sold. This provides security for the seed company in the event that the farmer produces more than what is required, but ensures that the seed is delivered and gives the farmer potential future income when the seed is sold.
- The grower is paid a basic price per ton of raw seed, with a bonus payment for quality (e.g., freedom from defects; acceptable purity and germination) or for meeting delivery schedules.
- This system provides the farmer with incentives to produce quality seed according to the seed company’s schedule. An alternative approach is to apply penalties in the event of poor quality or late delivery of seed.
Hybrid seed production involves many steps, most of which are affected by the environment (air temperature, rainfall, soil type) and management. The first time a hybrid is produced, it is unlikely that everything will work out well and there is usually a steep learning curve with each new hybrid produced. Consequently, it is helpful to keep comprehensive records of all stages of production and to use these records to improve production in the following seasons. In addition to these records, records for rainfall, finances, labor, and seed stocks will enhance the management of all farm resources. The use of a day-page diary in which daily tasks needed to be done, contacts made and notable events recorded will provide a valuable record of each season. Such record-keeping will supply valuable historical information useful for present and future seed production.
Hybrid seed maize can enhance farmer productivity, but this will only be possible if the seed meets high genetic, physical, and phytosanitary standards. Quality seed production is assured by good management of hybrid seed fields and adherence to seed regulations. Beginning with the correct source seed, quality maize hybrid seed production involves a series of steps, each dependant on the success of preceding steps. This manual has laid out the basic procedures of each step. By following these in a timely and efficient manner and conforming to the required standards, the final certified seed will be marketable and seed growers will achieve good yields that will contribute to profitability and sustainability.