8 November 2017

Zimbabwe: Is Crowd Farming an Option for Zimbabwe?

analysis

In the UK, most farmers rent the land on which they farm. Landowners let the farms to professional farmers who produce off the land. In Zimbabwe, the most common model is where the farmer is the landowner or long-term lease holder. The UK model pushes farmers to produce off the land otherwise they risk losing the farms. In Zimbabwe' most landowners have an alternative source of income and the risk of losing the farm (for inefficient use) is low. Majority of UK farms operate as businesses.

The recent land redistribution exercise in Zimbabwe transferred a land to new leaseholders most of whom do not have funding to invest in farming. Lack of clarity regarding security of tenure also created uncertainty in the farming sector leaving farmers without sufficient collateral that is required by lenders. The domestic financial markets do not have the capacity nor the confidence to lend to farmers.

Zimbabweans in the Diaspora have some capacity to invest but they do not have the land or the capacity to manage the farming venture. All the ingredients that are required for successful farming entrepreneurship exist, but they are controlled by separate groupings. By excluding Zimbabweans in the Diaspora, the land redistribution exercise created a chasm between the land, agriculture professionals and potential farming investors.

Farming is a hands-on industry which creates logistical challenges for those in the Diaspora to invest in the sector, however, crowd farming can bridge the gap between the land and the investment that is required to make farming profitable if a mechanism that gives investors some security can be found.

Crowd farming is a model where a number of investors share risks and own shares in a farming venture. This allows those that have work commitments away from the land to participate and invest in farming projects on a large scale. Large scale corporate farming allows investors to employ professionals to manage the ventures and spread the costs of overheads. The origins of the 'crowd' concept can be traced to crowdsourcing where a large number of people are invited to participate in a project.

In crowd farming, participants put financial resources together to enter into a farming venture. This means that instead of being a lone farmer, the participants become shareholders in a farming business. There is lots of idle land in Zimbabwe that could be used for this purpose. Zimbabwe has a record of large scale corporate agro-businesses so the model can work.

There are many potential advantages/benefits. The model encourages Zimbabweans to adopt a more corporate model (rather than a general dealer model) to farming. International investors are likely to be attracted to investing in an agro business.

One's ownership of the crowd faming venture is determined by the amount that they invest. One's share of the profits from the venture is also determined by shareholding. Shares in the venture can be bought or sold.

It is however critical that investors in crowd farming ventures sign up to a robust corporate governance framework to safeguard investment. Crowd (corporate) farming can work in Zimbabwe. All that's needed is the coming together of the right minds.

David Mutori is curious about whether corporate farming can open the way for Zimbabweans in the Diaspora to participate in agro businesses. 

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