GOVERNMENT says it will keep the contract farming concept in place as the country’s agricultural sector is battling for financial injection.
Currently, contract farming is being touted as a viable funding and marketing solution for farmers who are unable to secure bank financing and enter the marketplace on their own. This is because farmers that engage in contract farming typically have access to credit to pay for production inputs.
Apart from complementing government and banking sector financing initiatives, contract farming also enables contractors to influence the production process by, for instance, providing yield-boosting inputs.
Addressing journalists on the sidelines of the Regional Strategic Analysis and Knowledge Support System (ReSAKSS) conference in Harare last week, Agriculture, Fisheries, Water and Rural Resettlement deputy minister Vangelis Haritatos said financing agriculture remained the sector’s biggest challenge.
“We as the government have to provide an enabling environment for the private sector to come in and take over the financing of the agricultural economy,” Haritatos said.
“If we say we are moving away from contracting, now we are actually going backwards. We need to promote more contracting. The yields that must come are to do with productivity and production so what we are saying is that the cost of producing crop is not relative to the inputs that person has been given.”
He continued: “On a normal package, whether it’s coming from a contractor or it’s the farmer buying himself, or it’s a presidential input programme, what we expect from the Agriculture ministry regardless of whether it’s PIP or self-finance, is a certain tonnage”.
With contract farming, the buyer is almost always required to provide some level of production support, such as the provision of technical guidance and the delivery of materials.
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Such agreements are based on the farmer's commitment to providing a certain commodity in the quantities and to the quality standards specified by the purchaser, and the company's commitment to support the farmer's production and to buy the commodity.
In Zimbabwe, this has usually taken the form of agricultural input support from private lenders approved through ongoing government farming schemes.
“The rains are not a threat yet; these are the rains that warn of bigger rains. What we are saying to all our farmers is that let us get harvesting that wheat off. What we have seen around the country is that most wheat, a high percentage of our wheat, is ready to be harvested. Let’s get our combine harvesters out there,” Haritatos said.
“Our farmers really need to harvest now and get the grains away from the field into storage so that we can protect the quality of the grains.”
Haritatos, however, said while it was still early days, the current rains were a warning to start and finish pre-combining so that the country prepared for the planting of the new season.
According to research on Zimbabwe’s contract farming published in the Journal of Agrarian Change, by American publishers, Wiley, released last December, contract farming while providing opportunities to improve livelihoods had its challenges.
“Contract farming provides the opportunity for some to improve livelihoods and accumulate through access to finance and inputs, but this depends on contingent conditions and contexts. For many, access to private sector-led contract finance has been vital to improve the production of tobacco, especially in the post-2000 period when bank finance was not available and the wider economy was in a dire state,” part of the research report read.
“The results have been accumulation from below and growth in incomes and asset ownership for a significant group, especially in the A1 areas (although some A2 and CL farmers too). As for State-led contracting through the CA (command agriculture) programme, if political connections allow you to avoid repayment, the deal is a good one, but being in the favour of the political-military elite may suddenly shift, given the changing of political factions, and this too is a risky option even if for a time it is a profitable route to ‘accumulation from above’.”
The research found that other farmers preferred not to be bound to a contract as some could not afford to independently finance their operations.
Back in 2019, the World Bank reported that Zimbabwe's agricultural sector loses US$126 million to climate change annually showing that farmers are in need of serious financial support.
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