A/HRC/13/33 local and regional organizations experimenting with alternative food supply chains — such as the Slow Food movement — which also involve some sort of certification, albeit in a decentralized and bottom-up manner, is encouraging in this regard. States have ceded a part of their responsibility to regulate food chains to the private sector in the past two decades. They would now gain from strengthening these local experiences in order to create a diversity of options for farmers and consumers. 2. Contract farming 43. One arrangement that is often referred to as a means to improve the ability of smallholders to participate in higher-value chains is contract farming. This consists in smallholders being provided with credit, inputs, and technical assistance by a buyer who typically commits to buy predefined volumes at certain prices, thus ensuring that the producer will have a market and that the investments will pay back.51 44. Ideally, contract farming should benefit both sides, improving the ability of farmers to modernize and increase their production, and guaranteeing a stable supply to the buyer. However, since the farmer in many cases has very few alternatives to choose from, it is particularly important to ensure that such contracts do not lead to inequitable outcomes.52 This risk is present when farmers have no access to credit or to technical advice, as a result of the failure of public policies to provide them with the kind of support they require. Abuses have been documented, for instance, whereby the buyer provided loans to the supplier that the latter was unable to repay, or sold inputs above market prices because of his dominant position. 45. At a minimum, contract farming arrangements should not result in a disproportionate proportion of the value going to the buyer, and all the risks linked to production (as a result of weather-related events or pests, or due to changes in consumer preferences) being shifted to the producer. Model contracts should serve as a basis for the negotiation of specific arrangements. They should include: (a) the setting of prices at predefined levels that shield the producer from variations in market prices; (b) where the inputs are paid for by the producer, an adaptation of the prices paid to the producer to take into account any increases in the cost of inputs; (c) the guarantee of at least a minimum income calculated on the basis of the expected output; and (d) appropriate redress mechanisms, including automatic penalties, if the buyer fails to comply with its obligations. This would shift the risk onto the buyer, but reinsurance mechanisms should be made available to the buyer in order to make such forms of contract farming sustainable in the long term. 3. Fair trade 46. A still small but growing segment of the market functions according to the principles of “fair trade”. This segment accounted for around US$ 5.88 billion in worldwide sales by the end of 2008, and its increase over the years has been spectacular. Although it still represents less than 1 per cent of total trade53 and remains centred on coffee, bananas, 51 52 53 GE.09-17776 for distant consumers’”, Journal of Agrarian Change, vol. 8, No. 2–3 (April 2008), p. 408. S. Henson, O. Masakurea and D. Boselie, “Private food safety and quality standards for fresh produce exporters: the case of Hortico Agrisystems, Zimbabwe”, Food Policy, vol. 30, No. 4 (August 2005), p. 371. On the risks inherent in contract farming, see P.D. Little and M.J. Watts, eds., Living under Contract: Contract Farming and Agrarian Transformation in Sub-Saharan Africa (Madison, University of Wisconsin Press, 1994). There are wide variations across commodities. In bananas, 500,000 tons are traded annually under Fairtrade certification, out of a total of 13.5 million tons of banana exports worldwide. 17