GUIDES

Block Farms

What is this guide and why does it matter?

This guide contains actionable steps on how to design and implement a block farming model (hereafter referred to as a “block farm”). Block farming is a model of clustering smallholder farmers together while providing services and sourcing produce from them. While we have not explicitly focused on block farms in our aggregate analyses, their prominence in the business models that we have analyzed has seen them heavily discussed in the following pages:

We see several consistent patterns with block farms when compared to scattered farming models. For instance, block farms have higher service delivery costs, recover more costs directly through service payments and create more value at farm-level.

This guide is for companies either implementing or looking to implement a block farming model. It is also useful to organizations and donors supporting companies in setting up or strengthening a block farm model. The information in this guide is based on the direct experience of companies that have implemented block farms in a range of contexts. 

What is block farming?

Block farming is a model that works by establishing a single contiguous large area of agricultural land and parceling this into numerous smaller plots. Under this model, smallholder farmers are assigned a specific plot to farm within this larger block. Alternatively, though less common, if the block farm is set up using already established farms, farmers usually keep working on their respective plots. The whole block farm is overseen by a company that is responsible for providing farmers with access to goods and services at scale. These include inputs, mechanization, training and affordable financing and a guaranteed market. Typically, the company in question will either own or lease the land and allocate it to farmers for a specified period of time.

How does it typically work?

While there is no one-size-fits-all approach to block farming, we do provide an illustrative overview of how it works in the graphic below. This guide’s “How to design a block farm” section provides more detailed guidance on how to design, set up and operate a block farm.

Block farms3x
  1. A company acts as a produce off-taker and in some cases, an agri-food processor.
  2. The company acquires several contiguous plots or a single large plot of land, which is then segmented into smaller plots. Each of these smaller plots is allocated to farmers.
  3. The company provides its block farmers with several agricultural services such as inputs, training, mechanization, irrigation, etc. Due to the contiguous nature of the plots, mechanization is possible for land preparation, planting, input application and harvesting.
  4. The farmers grow their produce in their respective plots, under close supervision of the company’s dedicated staff.
  5. At the appropriate time, the company coordinates and often conducts (using mechanization) the harvesting and off-taking of produce
  6. The company pays the farmers for their produce and/or labor. The cost of providing farmers with goods and services throughout the season is typically deducted from these payments.

Why implement it?

Click the links below for more information on the benefits that block farming offers different stakeholders across the value chain:

Context matters: What are the enabling conditions for a block farm?

Context plays a major role in the viability of block farms. Having worked with multiple block farm business models in different contexts, FarmFit is able to identify the conditions in which block farms flourish:

  • Value chain
  • Perishability
  • Geographical dispersion of farmers
  • Degree of farmer organization
  • Policy environment
  • Digital infrastructure
  • Rural infrastructure

Why not? Key limitations, risks and unintended consequences

  • Capital intensity
  • Crop viability 
  • Land availability 
  • Litigation risks 
  • Low diversification of sourcing area 

Similarly, there are unintended consequences that can emerge as a result of block farms. These can impact (certain segments of) farmers, the environment, local communities, partner organizations and other stakeholders as shown below:

  • Reduced farmer agency
  • Land degradation 
  • Conflicts with and within the community
  • Disengaged farmers  

Smarter design choices can help mitigate some of these limitations, risks and unintended consequences. Read on further to see how you can smartly design your block farm.

How to design a block farm

This section first outlines the steps involved in establishing a block farm, before providing key recommendations on how a block farm can be optimized to improve performance outcomes. Click on the sub-headings below for more details:

How to get started 

From our experience supporting companies in the design and implementation of block farms, we propose the following five steps:

How to optimize your block farm

How to complement your block farm

The successful implementation of an innovation can often be supported by other complementary innovations. From our experience, the following innovations work well alongside a block farm:

  • Crop insurance - Block farms are capital intensive. They involve high risks, especially in cases of crop failure. Insuring crops against extreme weather events can mitigate those risks, both for the company and the farmers.
  • Tripartite financing agreements - Securing and delivering all the required services needed to run a block farm requires substantial financial capacities. Small and medium-sized enterprises (SMEs) typically face difficulties in securing that capital. Tripartite financing agreements can alleviate that burden while securing the smooth flow of services
  • Mechanization, irrigation, precision farming - Block farms benefit from economies of scale and the contiguous nature of the land. They make it possible for farmers to access services that would be otherwise infeasible or unaffordable like mechanization, irrigation, and precision farming. These services can considerably improve the productivity, profitability and efficiency of your block farm.
  • Crop rotation and organic fertilizer use - Block farms can contribute to climate change mitigation and ecosystem restoration through the large-scale adoption of environmentally conscious practices such as crop rotation and the use of organic fertilizer, both of which favor soil regeneration.

What is the impact of block farming?

There are a number of ways in which block farms impact outcomes: 

Where to find more inspiration