Nestlé in Creating Shared Value with Contract Farming
The Nestlé Chilli Club (NCC) is a contract farming model that supports local farmers who are contracted to supply fresh chillies for MAGGI Chilli Sauces. Working closely with Agricultural Services Department and the Farmers’ Association Board, it was ﬁrst introduced to the local farmers in Kelantan in 1995. For over 25 years since its establishment, NCC has since reached other parts of the country, namely Dungun, Terengganu and Kuala Langat, Selangor. In line with digital transformation in agriculture, Nestlé also appoints Agricultural Services professionals to equip farmers in leveraging technology to produce the highest possible yield, at par with global standards. In particular for Farmer Connect initiatives, Nestlé shares best practices with local farmers through the Sustainable Agricultural Initiative (SAIN) toolkit, speciﬁcally designed to train and assist farmers for better crop quality and yield.
Getting Started: FLFAM President shares advice for Beginner Contract Farmers
With the increasing focus on food security and safety, digitalisation is the way forward for the industry. Tan reiterates that the ﬁrst criteria to truly beneﬁt from technology is to implement a closed-house farm system. Aside from providing a better system in maintaining the climate, ventilation, watering system and sanitation, it is also the key in improving disease-control.
Towards a Vision of Shared Prosperity and Sustainability
“Even though Aqina Group is now fully-integrated, we also provide local farmers with the opportunity to participate in contract farming as well. This is in line with the government’s initiative towards shared prosperity and we support this vision wholeheartedly. At the same time, we are proud to contribute to the national economy by supporting local farmers, instead of relying on foreign labour. This ensures shared prosperity throughout the broiler chicken supply chain in Malaysia,” says Wesley Tan Seah Ging, Group Executive Director of Aqina Group.
From A Humble Chicken Supplier to Large-scale Contract Farmer
When starting one’s own contract farming business, there are a few key factors to consider. One must ﬁrst have land to operate the farm, whether it is one’s own land, or rented from other farmers – with license to operate a chicken farm. They also need to have the know-how in managing collaborations with integrators to ensure quality of chicks and the chicken feed are not compromised, or at an optimum level that does not negatively affect productivity levels.
Advantages of Contract farming for the Rising Agropreneur
For small farmers, taking the leap to start contract farming come with many advantages. Firstly, the nature of the pre-agreed contract protects agropreneurs from loss of proﬁt in the future. This means that if the open market price goes down – due to cases such as oversupply - this would not impact the take-home income from the chilies sold. At GrasiCili, this arrangement has worked largely because the extra proﬁts from whenever the market price is high, are strategically funneled into the participants’ collective funds. Thus in seasons of low market price, these funds will later be paid out to the participants to match the pre-agreed sale price. This modern business model is agreed by participants and minimizes risks of failing.