One of the biggest challenges for smallholder farmers is selling their produce at fair prices. Factors such as unstable demand, post-harvest losses, and a lack of guaranteed buyers often result in financial hardship. Off-taker agreements help solve these issues by providing farmers with assured markets, reducing risks, and strengthening food security. This approach mitigates risks and improves food security by stabilising farmers’ incomes.
An off-taker is an entity that commits to purchasing agricultural products from farmers, often before harvest. These off-takers range from large corporations to small retailers and distribution companies. This commitment is formalised in an off-taker agreement, a legally binding contract that specifies price, quantity, quality standards, payment terms, and delivery schedules.
In September 2024, Niger State Government signed a $2 billion Memorandum of Understanding with a Turkish company, Direkci Group, for the off-taking of soya beans in the state. This marked the beginning of a 10-year partnership expected to boost agriculture in the state, create job opportunities and improve the economic status of local farmers.
Off-taker agreements play a crucial role in ensuring a transition from food scarcity to food security by stabilising markets, minimising post-harvest losses, and creating efficient supply chains. However, in many cases, unreliable off-takers lead to significant food waste and economic instability for farmers. Initiatives like the CF Alliance are addressing this gap by connecting buyers and sellers through a shared platform, improving market access and reducing risks for producers.
Guaranteed buyers shield farmers from market fluctuations, ensuring consistent sales and predictable income. This stability enables them to plan production cycles effectively, providing a steady and reliable food supply.
With off-taker agreements in place, farmers have a higher chance of securing loans from banks and financial institutions. Lenders view these contracts as a sign of financial stability, making it easier for farmers to access funds for better seeds, fertilisers, and modern equipment.
Many off-takers encourage farmers to adopt sustainable agricultural methods by offering better contract terms for eco-friendly practices like organic farming, water conservation, and minimal pesticide use. This not only benefits the environment but also ensures long-term food security.
Off-taker agreements enhance logistics, reduce delays, and prevent post-harvest losses by establishing clear commitments between farmers and buyers. This improves food availability and ensures that produce reaches consumers on time.
With a secured buyer, farmers will no longer struggle to find markets or face price exploitation. This assurance allows them to focus on improving production and investing in better inputs.
Perishable crops often go to waste due to unpredictable demand. Off-taker agreements eliminate this risk by ensuring that harvested products are sold, reducing waste and increasing food availability.
Banks are more willing to finance farmers with buyer agreements in place, as it lowers the risk of loan defaults. With increased access to funding, farmers can scale production, adopt modern techniques, and improve yields.
Off-takers often set quality standards, pushing farmers to adopt better storage, handling, and sustainable farming methods. This leads to higher-quality produce and a more resilient agricultural sector.
Off-taker agreements are powerful tools for food security. They provide stability, reduce waste, and encourage sustainable farming. These contracts help create a more resilient and efficient agricultural system by fostering stronger partnerships between farmers and buyers.
To maximise their impact, policymakers and stakeholders must create an enabling environment where smallholder farmers can fully benefit from these agreements. Strengthening and expanding off-taker partnerships will empower farmers and enhance national food security and economic stability.
