1. The Expansion of Contract Farming in Southeast Asia: Comments and Questions Rodolphe De Koninck Professor Emeritus Department of Geography Université de Montréal Workshop on Responsible Large Scale Agriculture Investments in the Mekong Region Vientiane, Lao PDR, November 2017

2. I-On the nature, origins and types of contract farming
“Contract farming is agricultural production carried out according to an agreement between farmers and a buyer, which places conditions on the production and marketing of the commodity” (Sheperd, CTA, 2004).
1.1-Long history, which can be traced back to early forms of commercial farming.
1.2-In its modern forms, it began to spread rapidly during the 1950s, primarily in the USA…
1.3-World agriculture has become largely conditioned by various forms of contract farming
1.4-Producers tied to a market dominated and controlled by buyers, i.e. large multinational retailers and agro-exporters.
1.5-Product supply chains for agricultural commodities increasingly globalized
1.6-A large number of types of contract farming exist, starting with the most basic kind..
1.7-… such as the following two, identified by Sheperd in 2004.

3. Two basic types of contract farming (Sheperd, 2004)

4. II-Smallholdings in Southeast Asia’s agricultural heritage
2.1-For centuries, SEA has played a key role in the global market of agricultural commodities.
2.2-Throughout the colonial period, the agricultural scene was often described, as dual.
2.3-In short…the dialogue between labour and capital has a long history in the region.
2.4-Land based agricultural investment in the region refers primarily to investment in…
2.5-The dynamic smallholder tradition, well established in the region…
-Malaysia, FELDA, etc. …
-Indonesia, transmigration…
-Thailand, smallholders and traders…
-Vietnam, “transmigration”…
2.6-Over the last ~20 years, the state has gradually been withdrawing from the frontier,
2.7-The lessons of the dynamic smallholder sector backed by the state are forgotten…

5. III-Who runs the expansion of contract farming?
3.1-The development of contract farming is largely driven by big corporation investments.
3.2-Global demand usually precedes local needs… as, throughout Southeast Asia, the cultivation of export crops is growing faster than that of food crops for the local population.
3.3-In order for contract farming to be more than just that – i.e. labour tapping on cheap land by foreign or even local capital, responding primarily to global commodity needs – the local states have a huge role to play.
3.4- Pressing need for clearly defined national agricultural policies in the region, prioritizing:
1) local and regional needs over global demand
2) local livelihoods over global ones,
3) local population livelihoods, including among ethnic minorities
4) environmental sustainability rather than depletion!
3.5-Given that global demand is not driven by genuine global food needs
3.6-States must ensure agriculture doesn’t become mean to mine the land and milk the smallholders
3.7-A huge responsibility, as transnational investments
IV-Who wins and who loses? How and why?
The presentations of the following four case studies should provide some answers to these questions.

6. Figure 1. Share of smallholdings in Malayan rubber production, 1929-40
Source: Bauer 1948, p. 97

7. Figure 2. Rubber yields on Malaysian estates and smallholdings, 1998-2010
Source: Department of Statistics, Malaysia; Malaysian Rubber Board (MRB)

8. Figure 3. Average rubber yields in Indonesia, Malaysia and Thailand, 1961-2011
Source: FAO STAT 2015

9. Figure 4. Average rubber yields in Indonesia, Malaysia and Thailand, 1961-2011
Source: FAO STAT 2015

10. Figure 5. Oil palm fruit yields in Indonesia, Malaysia and Thailand, 1963-2013
Source : FAO STAT 2015

11. Figure 6. Share of smallholder-operated oil palm area in Indonesia, 1980-2009
Source: Directorate General of Estate, Department of Agriculture 2008; *IPOC, Indonesian oil pam statistics 2010 cited in IFC WB