Multinational corporations, smaller private companies, parastatals, individual
entrepreneurs and, in some cases, farmer cooperatives can all act as sponsors
and financial investors for contract farming activities. In nearly all instances,
the sponsors are also responsible for management of the venture.
Contract farming can be structured in a variety of ways depending on the
crop, the objectives and resources of the sponsor and the experience of the
farmers. Contracting out production is a commercial decision to facilitate an
adequate supply within a designated period and at an economic price. Any
crop or livestock product can theoretically be contracted out using any of the
models; however, certain products favour specific approaches. Broadly
speaking, contract farming arrangements fall into one of five models: