CFTC inspection exercise exposes serious breach of Contract Farming Strategy by industry players

Following up on its mandate, the Competition and Fair Trade Commission (CFTC) conducted inspections on contract farming in which it engaged over 60 farmers’ clubs across the country, that exposed serious breach of Contract Farming Strategy by commercial players in the industry.
The exercise, carried out between October 2-14, identified a number of unfair practices that include:
* No signed contract: Some farmers indicating that they did not sign contracts with contract buyers;
* Contract language: Some contracts were in English, and used difficult legal language which the farmers could not understand:
* Loan inputs prices: Specific prices for inputs were not indicated;
* Contract currency:  Loans were in foreign currency (US$), not in local currency;
* Mandatory inputs: Some of the mandatory inputs supplied to farmers are deemed not necessary, since they can be sourced locally, and cheaply; and
* Pricing of agro-inputs where it was observed that inputs are overpriced, way above prevailing market prices.
CFTC publicist, Innocent Helema said contract farming is under their mandate, saying in

Innocent Helema, CFTC publicist

2017, Government through the Ministry of Agriculture developed a Contract Farming Strategy (CFS) under which the CFTC was a designated institution to regulate and monitor contract farming.

In addition, Section 43(1)(g) of the Competition and Fair Trading Act (CFTA), mandates the Commission to enforce and prohibit business enterprises from engaging in unconscionable conduct — conducts that have contract terms and conditions that are unfair and unreasonable.
Further Section 32(1) of the CFTA also prohibits enterprises from engaging in anti-competitive conduct.
He said according to the Consumer Protection Act (CPA), “contracts must be drafted in terms which are clear and understandable, be in the official language and be drafted in characters that are readable”.
Contract farming

“Where the contract is entered into locally, it must have a written translation into the national local language and must also be read and explained to an illiterate, blind, mute and similarly disabled party in a language she/he understands.”

He added that in monitoring and regulating contracts, the mechanisms CFTC uses include reviewing contracts for farmers and advising them on relevant provisions pertaining to then contracts.
“We also conduct inspections and monitor selected farms and produce markets and premises including the auction floors.
“The Commission also conducts investigations of competition and consumer violations, specifically in relation to contract farming.
“The Commission also sensitises farmers and their associations, and contract buyers. We also collaborates with market regulators and other and other stakeholders.
“We also provide redress to consumers for unconscionable conduct,” Helema said, while emphasizing that engage with the farming companies to guide them on what the law says.
“The vulnerable farmers have been advised on what a contract must have and to report any possible violations to the Commission through Toll free line 2489. We also conduct market surveillances in markets to ensure that the law is being followed.”

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