| Full Title: The official title is the “PROCLAMATION NO. 1289/2023 AGRICULTURAL PRODUCTION CONTRACT PROCLAMATION.” Short Title: It can be cited as the “Agricultural Production Contract Proclamation No.1289/2023.” Issuing Authority: The proclamation was issued in accordance with Article 55(1 & 6) of the Constitution of the Federal Democratic Republic of Ethiopia. It was signed by Sahle-Work Zewde, President of the Federal Democratic Republic of Ethiopia. Publication and Effective Dates: The proclamation was published in the Federal Negarit Gazette on July 6, 2023. It entered into force upon the date of its publication in the Federal Negarit Gazette. Purpose and Rationale: The proclamation was deemed necessary for several key reasons: It is considered crucial for improvements in product quality, production efficiency, agricultural production competitiveness, and linkage to agro-industries, which are seen as a pillar to achieving structural economic transformation. It is critical to create sustainable market linkages between agricultural producers and processors, value-adding agro-industries, and larger buyers, by encouraging producers to produce for the market. The existing laws did not adequately address the particular nature of agricultural production contracts, necessitating a comprehensive legal framework to guarantee producer-contractor relationships, and ensure knowledge, skill, and technology transfer, as well as market linkages. |
The “Agricultural Production Contract Proclamation No. 1289/2023” establishes the legal framework for agricultural production contracts in Ethiopia. This crucial legislation, issued in accordance with Article 55(1 & 6) of the Constitution of the Federal Democratic Republic of Ethiopia and signed by President Sahlework Zewde on 6th July 2023, identifies four main types of agricultural production contracts. These types are specifically detailed under PART THREE: TYPES OF AGRICULTURAL PRODUCTION CONTRACTS, RIGHTS AND OBLIGATIONS OF PARTIES, within Article 7: Types of Agricultural Production Contracts.
Main Types of Agricultural Production Contracts
The Proclamation categorizes agricultural production contracts into distinct types, each with a specific structure of engagement between the contractor and the producer.
1. Out-grower Contract
An Out-grower Contract is a type of agricultural production agreement where the contractor is himself a producer on his own land or holdings. In addition to their own production, this contractor enters into agreements with other agricultural producers to facilitate and manage additional agricultural output. This model often sees a larger, established producer coordinating smaller farmers.
2. Centralized Contract
A Centralized Contract refers to an agricultural production agreement where the contractor does not possess their own land or holdings for production. Instead, the contractor enters into direct agreements with a producer and provides support to that producer for the agricultural output. This model typically involves a contractor who focuses on processing, marketing, or financing, relying on producers for the actual cultivation.
3. Multipartite Contract
A Multipartite Contract is a form of agricultural production agreement between the contractor and the producer that involves the active support and coordination of a third party. This arrangement is based on the goodwill and mutual understanding of all contracting parties, ensuring that the additional party contributes to the success of the production process. This third party could provide specialized services, financing, or technical assistance.
4. Intermediary Contract
An Intermediary Contract is an agricultural production contract made by a person who acts on behalf of the producer with the contractor. In this scenario, an intermediary facilitates the agreement between the actual agricultural producer and the contractor, streamlining the contractual relationship.