Zimbabwe: Contract Farming Real Deal

15 September 2021

Contract farming is the bedrock of the tobacco sector in Zimbabwe, a Tobacco Industry and Marketing Board (TIMB) top official has said, while farmers hailed contractors for giving them access to capital and inputs, which has enabled them to equip their farms and timeously transplant their irrigated crop, as the 2020/2021 season kicks off.

This comes as the Government recently approved the Tobacco Value Chain Transformation Plan to grow the sub-sector to a US$5 billion industry by 2025.

The drive behind the plan is to create opportunities aimed at changing outcomes for all stakeholders in the value chain.

It is envisioned that the plan would not only better the livelihoods of farmers and their families, but will also boost the economy, localise funding and significantly contribute towards the realisation of national Vision 2030.

In an interview in Harare last Friday, TIMB chief executive officer, Mr Meanwhile Gudu, said contractors add value, indicating that the Government was working on replicating the contract model across other crops.

"Contract farming is key to the success of the tobacco industry in Zimbabwe. Without contract farming there is no tobacco to talk about," said Mr Gudu.

He said due mainly to self-funding, the country recorded its lowest output of 48 million kilogrammes in 2008.

"Contractors came on board, and we managed to rebound the national crop to a record 262 million kilogrammes in 2019," Mr Gudu said.

Because tobacco grown under contract adheres to sustainability issues, global trends are shifting towards contract farming. Nonetheless, the issue of funding has always been thorny, particularly where beneficiaries of the post-2000 Land Reform Programme are concerned.

Newly resettled, they found themselves with large swathes of land--the crucial means of production that was envisaged to better their livelihoods. But without resources to take them off the ground in a meaningful way, they remained stark.

Banks closed their doors on them owing to lack of collateral, pointing out that their 99-year leases were not bankable. With the Government unable to punch above its weight, doing only what it could to support the resettled farmers, opportunities were to be sought elsewhere.

Seeing the yawning gap, resource rich contractors came in to fill it, and complement the Government's efforts by providing financial and technical support to farmers as well as create a ready market for their crop.

Dr Howard Marowa (55), a farmer from Mashonaland West Province, said that contract farming was a game changer for him, as it came when he was financially hamstrung.

It has helped him in equipping his two farms; Farm 4 in Chitomborwizi (90 hectares), Makonde District, and the 450ha Lone Calf Plot 4 in Mutorashanga, which he acquired during the land reform programme in 2001, as well as a 250ha farm he is leasing under a partnership.

"Contract farming helped me in more than one way. I was probably one of the first farmers to get equipment under contract with Tian Ze," Dr Marowa, a veterinary surgeon, said.

"Each year, the contractor would give us interest-free capital to buy equipment and inputs, which helped us to grow as farmers.

"I started with one centre pivot in 2009, and the following year, I was given money to buy another one. To date I have about 12 centre pivots (at Farm 4), which are helping me not only in tobacco farming, but also in wheat, soyabeans and maize cultivation."

When Dr Marowa joined contract farming in 2009, he was growing 40ha of tobacco. Due to the support he got, and continues to get from Tian Ze, each year he puts 400ha under wheat, 300ha under maize, with tobacco taking up 200ha.

Since his combined capacity is 270ha, with only 180ha of Lone Calf Plot 4 being arable, Dr Marowa leases about 630ha from other farmers, including the 250ha Banket farm.

With lateral pipes, which were difficult to use, now a thing of the past, he owns 25 centre pivots, 24 tractors and a combine harvester, among other farming equipment, spread across his farms, courtesy of contract farming.

Dr Marowa said contract farming was a good starting point, urging patience and discipline, since farming profits are not "so dramatic".

Concerning debt-traps that are said to waylay many an enterprising farmer, Dr Marowa said:

"If you are a real farmer, you will make it. You should guard against misuse of funds, and side marketing. Money meant for farming should be used for farming, not to buy big cars or going on holiday," he cautioned.

He said he only faltered on his repayments once, due to hail, but synchronisation has helped him a lot, as every six months, he should be selling something.

For 31-year-old farmer, Ms Ordripha Zishiri, who runs Zishiri Farm in Beatrice, Mashonaland East Province, about 54km south-west of Harare, alongside her mother, contract farming is the real deal.

"I am a big fan of contract farming," she said.

"As compared to banks, it has allowed us to borrow at lower interest rates. Banks charge higher interest rates over a short period, which makes it difficult for farmers to repay."

Banks usually set a six-month repayment period, which to most farmers is expensive, considering that they need to grow the crops, harvest them, and make a profit.

"With contract farming, as is the case with Tian Ze, which I work with, repayment becomes due in a year," Ms Zishiri said.

The young enterprising farmer said no money can be made free of debt. What is only required is having a keen eye for a good interest rate, being honest and borrowing within one's means. A farmer should also have an effective team on the ground.

"Whatever you get, you should put it in the soil. You should also avoid side marketing. Once you side market, you are done for," said Ms Zishiri, who already has 60ha under seedlings from a target of 120ha in the 2020/2021 season.

Another young farmer, Mr Aaron Denenga (36) said he had been farming tobacco for 11 years now, six of which were under contract.

"I have been with Tian Ze for six years, after trying my luck with other contractors," said Mr Denenga.

"When I started with Tian Ze, I was at 30 hectares, now I grow 120 hectares of tobacco, owing to the support that I have been given by the firm. It has helped me build a lot of the infrastructure on the farm by providing the finance which comes at zero percent."

The award-winning farmer from Beatrice, also a beneficiary of land reform through his late father, said the contract comes with responsibilities on the farmer on how best to grow the crop, because quality is important.

Mr Denenga said: "Farming can be difficult, that is why some farmers find themselves saddled with debts. I know there is a lot of fear that farmers have of getting indebted with their contractors.

"Contractors will never put you in a place where you are unable to repay. That is now down to our agronomic practices. You must keep in mind that as a farmer you must take the extra responsibility to insure your crop to mitigate against any challenges that may arise in the season, which also limits risks."

On new technologies, Mr Denenga encouraged farmers to adopt new technologies in tobacco farming, particularly in seedbeds, to produce resilient, uniform seedlings and save water, curb diseases and cut labour.

The 36-year-old Denenga won the Overall Best Farmer award at the Tian Ze Annual Contract Tobacco Farmer Awards in March this year. He also won the National Young Farmer of the Year award twice in succession (2018 and 2019) under the auspices of the Federation of Young Farmers Clubs of Zimbabwe of which he is now president.

He is a board member of the Tobacco Research Board (TRB).

Zimbabwe is the largest producer of tobacco in Africa and the 6th globally, rubbing shoulders with leading growers, like China, Brazil, the United States of America and India, with the golden leaf contributing 10 percent of the GDP in 2018.

About 64 percent of agricultural GDP come from maize (14 percent), tobacco (25 percent) and cotton (25 percent). Tobacco, cotton, sugar, horticulture, tea and bananas jointly account for 40 percent of national exports value.

Thus, the country holds its own in the global tobacco industry; a fact that calls for strategies to increase production and productivity by growing the yield per unit, value addition, expanding the area under crop and reducing losses. And one such strategy is contract farming.

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