Contracted Tobacco Agriculture
Contractual Production Model: Contract farming is named in different ways such as contract farming, contract farming, and refers to the form of production made on the basis of a contract between farmers engaged in agricultural production and private or legal persons who will purchase their products. This model, which has shown a rapid development in the agricultural sector in recent years, has started to be effective in rural development as it is both a production model and a marketing model.
Contractual agriculture is a production and marketing model based on an agreement between companies and producers before production, in which the companies guarantee to buy the product under certain conditions, although the farmer is responsible for a certain cultivation area and production. Reducing the marketing risks and uncertainties of the model, providing a balanced and continuous source of income for small farmers, growing the product in accordance with the standards and with high quality, supplying sufficient amount and quality raw materials to the industry, technology transfer, planned production, establishing an effective relationship with producers and being in close dialogue. There are many benefits such as.
Contractual Agriculture in Our Country: The villagers of our country were introduced to a system similar to contract farming in the 19th century. At the end of the 1860s, in Western Anatolia, where export-oriented agricultural production was concentrated, practices similar to contract farming were encountered between English traders and peasants. As part of a contract with the first sugar beet factory manufacturers in Turkey contracted sugar beet cultivation is carried out. This application Since 1965 Agricultural Enterprises General Directorate (TIGEM) applied to contracted seed breeding, 1970s, industry type tomatoes, and in 1996 Development Foundation of Turkey (TKV) by followed contracted corn production in the GAP region. Today, all tobacco varieties produced in our country are included in this scope and are carried out in many areas, together with contracted production, cut flower cultivation, industrial potato production, barley and durum wheat, fruit, vegetable, meat poultry, turkey production and American type tobacco. On the other hand, the number of agricultural products whose cultivation is contracted is also increasing. Large international companies have taken the lead in spreading the contract manufacturing model.
Tobacco Agreements: After the enactment of Law No. 4733, known as the “Tobacco Law” in the public, on January 9, 2002, support purchases in tobacco were abolished and since 2002, contracted tobacco production has been started in our country. However, while contracted production was done to increase tobacco production all over the world, it was initially made to restrict tobacco production in our country. After the 2002 crop year, when the law was implemented, tobacco was discontinued very quickly. Producers who broke off from tobacco migrated from their villages and tried to find a place for themselves in the suburbs of metropolitan cities. In the first years of implementation, the new tobacco law was met with reaction from producers and various segments. Tobacco production is still carried out according to the written contract procedure. The tobacco market is regulated, controlled and inspected by the Ministry of Agriculture and Forestry, Department of Tobacco and Alcohol (TADB).
The Communiqué on the Procedures and Principles Regarding the Purchase and Sale of Tobacco Produced on the Basis of Written Contract and the Type Contract to be Used in This Purchase and Sale (Communiqué No: 2018/48) was published in the Official Gazette dated 14.12.2018.
Tobacco producers and companies that have obtained Tobacco Trade Authorization Certificate from TADB sign a written contract. Some of the topics included in the type contracts are listed below.
Contracts are signed before planting and by the end of April at the latest.
Buyers give advance payments to producers. Provided that it is agreed, the buyer may give inputs to be used in production activities such as seed, seedling, medicine, machine, vehicle in return for the price on the day it is supplied to the producer or free of charge in the special provisions section of the contract.
No nylon ropes will be used in production.
Medicines licensed by the Ministry of Agriculture and Forestry in tobacco will be used in seedbeds, fields and warehouses. Buyers can sample 4 times. If there is residue 2 times, the contract is canceled.
The producer can object to the tobacco price. An objection must be made within 3 days after the price has been determined on the receipt. Objections cannot be associated with the contract to be signed for the next year.
Purchases are completed at the end of March following production.
10% decrease-increase, full crop tobaccos are taken in balanced-boxed form. If the parts exceeding 10% are in full crop integrity, they can be taken under contract terms.
The cost of tobacco is paid within 10 working days from the date of delivery.
The contract fee is paid by the buyer.
Courts and enforcement offices are authorized in the place of tobacco production in disputes.
Advantages
• Eliminating the marketing problems of the producers with the purchase and type of price guarantee provided by the tobacco companies to the producers,
• Ensuring that the manufacturer receives technical support and training from the contracted company at every production stage, up to the sale,
• Supplies such as seeds, seedlings, medicines, machinery, vehicles, materials and transportation are provided by the buyers for the same price on the day they are provided or free of charge. By using qualified inputs at the right time and with the right technology, increasing efficiency and product quality and improving product standards as a result of reducing costs,
• Alleviating the financial burden on the firm,
• Ensuring agricultural industrial establishments to provide regular and high quality raw materials and providing the flow of goods, cash and technical information between farmers and industrialists through technology transfer,
• Creating synergy between the bank, the company that makes the production, the input seller and the producer,
• Providing a balanced and continuous source of income for small farmers, providing employment opportunities
Disadvantages
Although the tobacco agreements seem bilateral, the farmer's right to appeal is limited. Farmers can sign the contract without reading it. Farmers or chambers of agriculture have no influence on the determination of contract type prices. Kind of prices are determined unilaterally by the buyer. Agricultural producer income decreases if the product unit prices remain below the inflation increase. There are also disadvantages such as the fact that farmers are weak against tobacco companies due to their unorganized nature.
When the quality of tobacco is low, the low price determined has problems such as the weakness of the producers in terms of financing. The stated reasons make it difficult to renew contracts in the coming years, putting the supply of qualified raw materials by tobacco companies in a deadlock. If unorganized small farmers are confronted with economically powerful tobacco companies, having cooperatives or unions will strengthen the hands of producers.