(SUNDAY MAIL ZW) Contract farmers sing the blues

Contract farmers sing the blues
Sunday, 07 October 2012 00:44
Noah Pito in Hurungwe

Contract tobacco farmers in Hurungwe were shaken by a series of debt recovery exercises that resulted in several farmers losing their equipment after failing to honour agreements of their contracts

With the rains about to start and the 2012-13 crop­ping season ready for take-off, most ill-equipped farm­ers are wishing God had pushed the start of the rainy season by another few months while they put their houses in order.

Within this category are those contract farmers who are yet to receive the inputs promised by different firms while those who lost their agricultural equipment after failing to pay back what they owed these firms are seek­ing alternative ways of replacing the vital lost equip­ment.

In the district of Hurungwe — often dubbed “the breadbasket of Mashonaland West” — all is not well, especially among tobacco farmers.

Recently the district was shaken by a series of debt-recovery exercises that resulted in several tobacco farmers losing their farm equipment.
An assortment of agricultural machinery recovered from hundreds of farmers went under the hammer at the Karoi Messenger of Court’s Chongololo Complex.

Tractors, disc harrows, ox-drawn ploughs, trailers, scotchcarts, irrigation equipment, water pumps, gen­erators, boom-sprays and even cars were auctioned — some for a song — while the owners helplessly watched.

The farmers had failed to pay back what they owed the Mashonaland Tobacco Company (MTC), Zim­babwe Leaf Tobacco (ZLT) and Golden Driven Invest­ments (GDI), among others.

The Food and Agriculture Organisation (FAO) defines contract farming as agricultural production carried out accord­ing to an agreement between a buyer and farmers, which establishes conditions for the pro­duction and marketing of farm produce.

In the agreement, the farmer agrees to provide quan­tities of a specific agricultural product. These should meet the quality standards of the pur­chaser and be sup­plied at the time determined by the purchaser.

In turn, the buyer commits to purchase the product and, in some cases, to support production through, for example, labourers’ wages, the supply of farm inputs, land preparation and the provision of technical advice.

A win-win situation can be achieved since the farm­ers are guaranteed a ready market which reduces uncertainty regarding prices while they also obtain loans in kind through the provision of farm inputs such as seeds and fertilisers.

Purchasing firms, on the other hand, also benefit from having a guaranteed supply of agricultural prod­ucts that meet their specifications regarding quality, quantity and timing of delivery.

Contract farming, like any other contractual agree­ment, can result in dire consequences, especially if the terms of the contract are not respected by one of the parties in the agreement. It is always the affected party that stands to lose.

Upon realising that they have produced only enough to service the loan with no surplus from which to enjoy profits, some farmers resort to selling to a different buyer (side marketing or extra-contractual market­ing).This in most cases becomes the source of trouble that eventually severs the mutual relationship.

On another note, some companies can also refuse to buy the produce at the agreed prices, or can downgrade the produce quality resulting in the farmer and firm also trading accusations.

At times the buying firms, who are invariably more powerful than farmers, may use their bargaining clout to their short-term financial advantage just like in the recent cotton stalemate, although in the long run it is very counter-productive as farmers would cease to sup­ply them.

According to a source from MTC who preferred anonymity, most of the farmers who lost their property in Hurungwe had failed to service their loans after they had side-marketed their tobacco. This, he said, was the source of trouble in their mutual relationship that resulted in legal action being taken.

The affected farmers, on the other hand, accused the firms for buying their tobacco at very low prices result­ing in them failing to clear their loans.

“They took a tractor and all the irrigation equipment that I used on my farm. This had been my lifeline.

“Some of these people who are running these tobacco firms are just happy when the black man remains downtrodden,” said a farmer in the Tengwe area, who preferred anonymity.

A small-scale farmer at Peveril Farm Lot 2, Ngoni Diza, said one of the disadvantages of contract farming is that it did not present a win-win situation as the con­tract companies at times wilfully changed goal posts.

However, a prominent tobacco grower from the Tengwe area, who was also contracted last season, said:

“Most of these farmers that are crying foul take farm­ing as a secondary investment. How can you fly to Vic­toria Falls using funds that have been tagged for agri­culture?

“To be successful farmers, we should be realistic. We must not use money intended for inputs for any other purposes,” the farmer said.
During their annual congress held at Chinhoyi Country Club on August 27 this year, the Zimbabwe Commercial Farmers’ Union (Mashonaland West chap­ter) resolved that all contract-farming agreements

should recognise the farmer as the owner of the land, machinery and labour rather than the present scenario where firms are getting the bigger chunk of the pro­ceeds.

Said the ZCFU Mash West provincial secretary, Mr David Marimo:

“We are not saying the farmers must not pay back, but we want the Ministry of Agriculture to review the current system where the firms are get­ting the greater share of the proceeds, yet the farmer’s contribution is greater than theirs.

“Part of the auctioned equipment like tractors and planters came from the Reserve Bank of Zimbabwe in a bid to enhance agriculture in the country, but now, look, the farmer is back to square one. We are advocat­ing for these agreements to be turned into partnerships because in essence the farmer, being the owner of the land, is contributing not less than 70 percent in the arrangement,” he said.

According to Mr Marimo, these sentiments have also been voiced during their national congress held at Kadoma Training Centre recently.

Although contractual arrangements are more and frequently used in agriculture worldwide, they have often degenerated into contractual disputes that have seen farmers and their contractors trading accusations and even seeking legal recourse — each party blaming the other for not honouring their part of the bargain.

It is crucial for the parties to realise that a contract is a mutual assent manifested by an offer and an accept­ance upon a legal consideration to meet some commit­ments or to desist from doing some acts that damage the relationship.