The main benefit of contract farming is that a farmer does not have to invest his own money in chicks and feed under the contract growing system, says a farmer

A majority of marginal broiler farmers are interested in becoming contract broiler farmers after suffering extensive losses during the Covid-19 pandemic.

Narshingdi is one of the major broiler-producing districts, which supplies a large quantity of broiler chicken to Dhaka every day. The reporter visited some broiler farms in Narshingdi. Many farmers said they suffered huge losses during the Covid-19 pandemic. Most workplaces were closed, and consumer demand was low, resulting in a very low price of broiler chicken. Broiler farmers sold broilers at a loss, and had to stop producing because of a lack of funds.

“Kazi Farms came forward when we were in dire straits. We got chicks, feed, medicine, and technical support to resume our business without investing our own money,” said Md Shaymal, a farmer in Chaitanya village of Shibpur Upazila under Narshingdi district.

“Kazi Farms sells the broiler chickens which we grow, and pays us a growing fee. So we no longer have to worry about the market price,” he added.

Like Shaymal, many farmers have expressed their satisfaction and interest in contract broiler farming.

According to Kazi Farms, over 2,000 broiler farmers have already signed agreements with them in 16 districts. The company expects that the contract farming system will gradually expand across the country.

Dr Md Hafizur Rahman, deputy general manager of contract broiler farming at Kazi Farms, said: “The contracted broiler farmers are provided inputs like day-old broiler chicks, feed, medicine, vaccines, and veterinary services from the company, We do not take payment for these inputs, as we are not selling them to the farmer. They give us a bank cheque as security for these inputs. The broiler chicks are grown by farmers in their sheds under the supervision of representatives of the company. When the broiler chickens are sellable at the age of 35-40 days, they are sold by the company, and we pay the farmer a growing fee per kg of live chicken. We will only encash the farmer's security cheque if he sells the broilers without informing us.”

Why did Kazi Farms start this initiative? Dr Hafiz said: "The farmers suffered greatly due to the low price of broiler chicken during the Covid-19 period. Many farmers lost their capital and stopped growing chickens. As a result, the broiler industry of Bangladesh was on the verge of collapse. Kazi Farms Group, the largest producer of day-old chicks in Bangladesh, set up its contract broiler farming system so these farmers could continue their business.

Emran Ahmed, a farmer at Chaitanya in Narshindi said that the main benefit of contract farming is that a farmer does not have to invest his own money in chicks and feed under the contract growing system.

“The selling price of broilers is always going up and down, but we never worry about it anymore. Kazi Farms sells the broilers, and we are paid the agreed rate,” said Emran, who was paid a growing fee of nearly Tk80,000 after his first batch of broilers were sold.

Kazi Sohrab, a farmer in Moyjal area, Raypura Upazila in Narshindi said: “We never worry about day-old chick price, the feed price or the medicine and vaccination cost as Kazi Farms delivers these to us.”

Dr Md Hafiz, deputy general manager of Kazi Farms, said the company bears all the risk. The farmers get paid a growing fee to compensate them for their labor and the use of his shed.

“The company sells the broilers. If the broiler selling price is low, or if the feed cost is high, the company might make a loss, but the farmer gets the same growing fee,” he said. “If the broiler price is high, the company will make a profit, but the farmer’s growing fee will not increase. So the company accepts a loss when the broiler market is bad, and will make a profit when the broiler market is good.

“It means the farmer gets a guaranteed income throughout the year based on his productivity. He makes more money if he is more productive.” he added.

According to Kazi Farms officials, the company bears the loss if broiler chickens die of disease, provided that the number of dead chickens is confirmed by a company representative.

“We train the farmers to improve their productivity. We train them to improve farm bio-security, meaning how to prevent diseases from entering the farm, by fencing around the farm, protecting it from rats and wild birds, and by bathing, and washing their hands, and wearing gum boots before entering the farm.” Dr Hafiz, deputy general manager of Kazi Farms.

Some have recently claimed that contract farming hurts small farmers.

“These criticisms are false. Our contract farmers are benefitting from the contract farming arrangement. Any farmer who feels it is not beneficial can become independent after we sell the batch of broilers they are growing for us. Our contract farming organization competes with many businesses which sell feed and medicines to broiler farmers. It is likely that those competing businesses are spreading malicious lies about our contract farming organization,” said Kazi Zahin Hasan, director of Kazi Farms.

“Kazi Farms and other poultry companies which are engaged in contract broiler farming have made a big contribution to the rural economy, which should be recognized. During the past few months, feed costs have been high, and most independent broiler farmers lost money. However, our contract broiler farmers did not have to buy feed. We buy feed for them. We swallowed a loss when the feed price was high, and the broiler price was low. The contract farmers still received the same growing fee per kg of broiler.”

Consumers also benefit. Without the contract farming arrangement, many broiler farms would have gone out of business. The supply of broiler chicken would have been lower, and consumers would have had to buy broilers at a higher price. Also, technical assistance from Kazi Farms has reduced the incidence of disease on contract farms. This means consumers also get healthier broiler chickens than before, according to Dr Hafiz, DGM of contract farming at Kazi Farms.