ACI Agribusiness: Designing and testing an integrated contract farming model in Bangladesh

The case study analysis of the Advanced Chemical Industry's (ACI) pilot integrated contract farming project in Bangladesh seeks to provide insights and lessons for ACI and other companies developing inclusive business models, particularly in agriculture.

Main findings

• Different contract farming models as well as options of buy back prices influence the impact of similar projects.
• In the context of technical difficulties, including harvest loss, the commercial viability of the pilot project was limited. However this highlighted the importance of managing risk for low-income farmers who are financially vulnerable to crop failures.
• Communication and central leadership within the company is needed for stronger buy-in internally. Roles and communication between the company and its intermediary partners and farmers should be clear, and combined with regular and practical training of farmers as well as close monitoring.

Intervention description

The project applies an intermediary model of contract farming in which an NGO acts as an intermediary between ACI and the farmers. ACI is responsible for providing financing, inputs, training and guaranteed crop purchases. The NGO provides field training and technical assistance to farmers. The project aims to reduce overall costs and increasing yields for farmers while providing a secure supply chain for ACI.

Evidence methodology

• The case study involves primary and secondary research. Primary research included individual meetings with relevant stakeholders as well as two focus group discussions. Secondary data included BIF baseline reports, project deliverables, workshop documents and desk research about poverty levels in Bangladesh.
• The case study identifies internal and external factors influencing inclusive business models and analyses the value chain of the integrated contract farming project before noting the results, impact and lessons from the pilot project.

Useful for:

Integrated contract farming projects.