Smallholder tea, coffee farmers see red
Friday, 06 May 2011 09:17
By Obert Chifamba recently in CHIPINGE
THE cool climate and the undulating plains of Manicaland have seen generations of people coming and going. For years they have nurtured thick bushes of lush green tea and coffee and have acted as the watershed of economic development and empowerment for many people.
Today, places like Honde Valley, Katiyo, Tanganda, Cashel Valley and Chipinge, traditional heavyweights in tea and coffee production, have experienced waning fortunes owing to a plethora of challenges.
The woes of the tea industry mirror the broad challenges afflicting the Zimbabwean economy at the moment and chief among them liquidity constraints, limited lines of credit and a capacity utilisation of around 60 percent.
This is not so because of lack of markets but lack of vibrant crop yields due to erratic rainfall patterns and the liquidity constraints on the back of the global economic recession.
Tea prices are beginning to firm internationally but this is only felt by large-scale producers like estates, which leaves the new farmers most of whom are in outgrower schemes still waiting on the fringes to get a bite of the cherry.
The price of tea is currently swinging between US$1,80 and US$2 for a kilogramme locally while the international markets are offering US$3 per kilogramme.
On the other hand, coffee prices are ranging from US$3,50 to US$4 on the local and international markets respectively.
Producers however feel the prices fall short of upsetting the high costs of production, which leave them unable to sustain their operations without seeking financial aid from other sources. They also find it difficult to penetrate the lucrative international markets.
"Our biggest undoing at the moment is the slow cash inflows that have left us unable to manage the leaf properly after harvesting and as a result the quality has not been good. This has also translated into very low prices," a farmer contracted to Tanganda's outgrower scheme Lloyd Nemadire said.
He added that it would only be fair if the farmers were able to sell their produce direct to the international markets and not go through middle buyers, which would mean less profit accruing to them.
Another farmer who requested anonymity said the fact that they did not have the resources to diversify into other activities made their situation more precarious as they did not have a fallback position in times of hardship.
Big players like Tanganda, have diversified into the agro and beverages business and have even received a PTA Bank certificate of effectiveness, which enables them to commence drawdown on their facility.
This is actually the second after the first disbursement of US$1,7 million two years ago that was directed to the agricultural division while the latest allocation is meant for tea processing, tractor purchase, factory equipment, beverages division and mechanical tea harvesters.
Tanganda has also ventured into producing macadamia avocado and vegetables to raise income streams that complement the tea cycle.
"We have engaged the University of Zimbabwe Department of Statistics to conduct research into the woe area of efficiencies, which though not complete, has shown that cost containment must be accompanied by other proactive measures to improve competitiveness.
"In addition, a Sri Lankan consultant was able to assist the team to ‘relearn' what the local team already knows, but which knowhow had receded owing to pressures on Zimbabwe's economy," explained Tanganda chief executive Andy Mills.
Places like Chipinge have unique weather patterns lending them to tea and coffee production as well as avocado and macadamia. Ultimately Chipinge is able to retain and employ indigenous people and even attract skills from neighbouring Mozambique.
The Herald recently established that it takes a year or so to establish a coffee or tea nursery, followed by land preparation, then planting after which the farmer starts reaping profits only in the fifth year. This is generally a period of heavy financial and input investment into the crop yet dry in terms of income for the farmer.
"Many farmers involved in outgrower schemes find it difficult to pull through this stage as there will be no income to support their families yet they will be investing a lot of time and human resources into the project. Some have even opted out of the schemes," a manager at Clear Water Tea Estates commented.
He added that most of the small-scale farmers did not have electricity and found it difficult to cure their tea and get good quality and competitive prices in the end.
"Even the big guys are suffering from power cuts at the moment. Tea should be plucked at three leaves and a bud after every 14 days and if it goes beyond this, the quality is grossly compromised.
"Our business is ruined if there is no power. From the field the leaves are withered, crushed, fermented and then dried using electricity so if supplies are erratic as has been the case recently, then we suffer heavy quality losses," he further explained.
Similarly, a manager at Chipinge Holdings Company where they grow coffee, macadamia and avocado pears said coffee production was capital intensive.
"The crop is highly susceptible to fusarium wilt, which if not controlled can cause severe damage and losses. It requires a lot of spraying and is labour intensive right from the nursery, planting, weeding, irrigation, fertilization and harvesting.
"Coffee prices have been very low in recent years. They are only beginning to firm but that is countered by high fertilizer costs. Compound J that is needed for the crop is locally very expensive with the price ranging between US$34 and US$36 per bag," he said.
Many players in the tea and coffee industry have since broadened their scope to accommodate alternative crops to raise their revenue levels.
Tanganda is replacing tea with macadamia and introducing avocado in areas where tea yields are falling below minimum thresholds.
There are already 120 000 hectares under macadamia, a hectarage that will be increased to 150 000ha by year-end while another 120 000ha will be put under avocado.
At the moment macadamia and avocados are making their debut on the markets but are not bringing much as they are being sold locally and unprocessed.
Macadamia nuts can be processed into soap, body lotions and cosmetics while the crushed nut can also be put on cakes.
Zimbabwe has just started exporting the product to South Africa, which in turn exports to Europe and England.
Locally, Chinese business people are buying the crop and sending to China but in both situations the producer is getting the least profits.
Avocados are also sold to markets in Bulawayo while Lever Brothers also absorbs part of the produce.
Producers would be comfortable selling a processed product that fetches a better price.
Tanganda has an outgrower scheme of approximately 1000 farmers.
These farmers benefit from a ready market for their product, and get quick payment for their commodity. The two parties have cultivated a win-win partnership.
obert.chifamba@zimpapers.co.zw
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