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Pasali sees  Rice contract farming as a way to bring socio economic development in rural areas of Palimbang at the same time, a potential investment. The main advantage of contract farming is control over volume, quantity and consistency. Contract farming also allows firms to minimize costs by not purchasing land or directly hiring labor.

Contract farming is not new. It has been done in countries like Thailand, Viet Nam, Cambodia and Laos. In Laos, it is used to move from subsistence to commercial agriculture. Contracts can range from oral to written contracts, initiated by government, trader or foreign contractors. In fact, the majority of contract farming ventures in the Lao PDR are informal arrangements between farmers and small traders that operate outside legal boundaries.

It can be applied to a wide variety of products. In Lao, different provinces are contract farming tea, soybeans, maize, sweet corn and rubber. A study shows that contract farmers earn significantly higher profits than non-contract farmers (ADBI Discussion Paper 90 Setboonsarng, Leung, and Stefan). Contract farms have higher revenue, rice price, yield, cash costs, and profit than noncontract farms, and that the results are statistically significant.

Some countries  rent, even worse, acquires lands to other countries to secure food for their own. In fact, Bahrain was able to sign a 10,000 hectares deal as of February 2009 with Philippines. China attempted to lease 1,240,000 hectares in the Philippines but was blocked. When other neighboring countries are so into it , then, maybe Philippines can ride on to the trend and experience the same success those countries are enjoying now. It should be us, Filipinos to till our lands and make profit out of it.

In Palimbang, the total land area that can be used for rice farming is 3800 hectares, 60 percent of which are irrigated but the actual tilled lands are only 800-900 hectares. The farmers are not lazy it’s just that they are after stability of income. Many of them are afraid to farm and to lose their investment because of conventional way of farming they used to have which does not offset their hard work and expenses. If contract farming will be introduced to this potential area using the sustainable system of rice intensification, it would offer farmers the stability and security of an income. Here comes the time that farmers breakthrough from poverty and subsistence  farming and become sovereign ones.

Sample contract:

Rice Contract Company

Pasali Rice Company

Kanipaan,Palimbang ,Sultan Kudarat

(830) 868-4108 Fax (830)

868-4208

http://www.Pasalirice.com

Page 1 of 5 Initialed by: Owner____ Contractor ____

THIS AGREEMENT, Made as of (Current Date), In the Year of (Current Year),

Between the Owner: Contact Name

Street Address

City, State Postal Code

Contact Telephone

And the Contractor: Rice Construction Company

TRCC #8015

For the Project: Project Name

Project Address

Construction Lender: Lender Name

Lender Address

ARTICLE 1. CONTRACT DOCUMENTS

1.1 The contract documents consist of this agreement, general conditions, construction documents,

specifications, allowances, finish schedules, construction draw schedule, information disclosure

statement, all addenda issued prior to execution of this agreement and all change orders or modifications

issued and agreed to by both parties. All documents noted herein shall be provided to the Contractor by

the Owner. These contract documents represent the entire agreement of both parties and supersede any

prior oral or written agreement.

ARTICLE 2. SCOPE OF WORK

2.1 The Owner agrees to purchase and the Contractor agrees to construct the above mentioned

structure and fixtures attached thereto in (City & County), according to the

construction documents, allowances, finish schedules, all addenda, change orders, modifications and

specifications set forth in the specification booklet.

ARTICLE 3. TIME OF COMPLETION

3.1 The approximate commencement date of the project shall be (Month Day, Year). The

approximate completion date of the project shall be (Month Day, Year), however any change orders

and/or unusual weather might delay or otherwise affect the completion date. The contract execution date

shall be (date).

Page 2 of 5 Initialed by: Owner____ Contractor ____

ARTICLE 4. THE CONTRACT PRICE

–          What are the pre- operating(e.g. permits, insurance) and operating cost that will be included in the contract price?

ARTICLE 5. PROGRESS PAYMENTS

–          How will the purchaser( contract company) pay the contractor?

–          What  is the mode of payment?

–         

ARTICLE 6. DUTIES OF THE CONTRACTOR

–          What are the responsibilities of the contractor?

–          What does he provide?

Page 3 of 5 Initialed by: Owner____ Contractor ____

ARTICLE 7. OWNER

–          What are the Contractor’s duties and responsibility?

ARTICLE 8. INSURANCE

This is to protect both owner’s and contractor’s interests until the work  is completed.

ARTICLE 9. GENERAL PROVISIONS

-What will be the general provisions specially in case of unexpected, unknown and uncontrollable events?

ARTICLE 10. HAZARDOUS MATERIALS AND WASTE/ ACCIDENTS

What will be the agreement by both parties in dealing with hazardous materials, waste or related  accidents?

Page 4 of 5 Initialed by: Owner____ Contractor ____

ARTICLE 12. ARBITRATION OF DISPUTES

12.1 Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be

settled by arbitration administered by the______________________.

ARTICLE 13. TERMINATION OF THE CONTRACT

Should the Owner or Contractor fail to carry out this contract, with all of its provisions, what are the

following options and stipulations that will be applied?

ARTICLE 14. ATTORNEY FEES

In the event of any arbitration or litigation relating to the project, project performance or this

contract, the prevailing party shall be entitled to reasonable attorney fees, costs and expenses.

ARTICLE 15. ACCEPTANCE AND OCCUPANCY

Upon completion, the project shall be inspected by the Owner and the Contractor, and any repairs

necessary to comply with the contract documents shall be made by the Contractor.

Page 5 of 5 Initialed by: Owner____ Contractor ____

WITNESS our hand and seal on this day of ________________, 20 .

Signed in the presence of:

Witness Witness

Contractor Signature Owner Signature

Source list:

Setboonsarng et.al(2006), Contract Farming and Poverty Reduction: the Case of

Organic Rice Contract Farming in Thailand, ADB Institute Discussion Paper No. 49

Setboonsarng et. al(2008), Rice Contract Farming in Lao PDR:

Moving from Subsistence to Commercial Agriculture, ADB Institute Discussion Paper No. 90

http://www.riceconstructioncompany.com/5_Cost%20Plus%20Contract%20-%20Percentage_web.pdf

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