The Sunday Mail
Tafadzwa Kadani and Livingstone Marufu
Small-scale farmers in Zimbabwe have done a sterling job in tobacco farming, with the golden leaf contributing significantly to the country’s fiscus.Of course, only profits have been motivating them. Sadly, not all of them are smiling all the way to the bank.
Mr Zingwani Mpofu had a rude awakening when he came to the floors with his tobacco, only to be told by his contractor that the money realised was not even enough to cover his debt. Mr Mpofu is not the only farmer who has had to toil without realising any profit from his sweat.
Contract farmers have called for some sort of regulation in the sector.
According to Food and Agriculture Organisation (FAO), contract farming is defined as agricultural production that is carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products.
The farmer agrees to provide agreed quantities of a specific agricultural product. Farmers’ organisations like Zimbabwe Commercial Farmers’ Union (ZCFU) and Zimbabwe Farmers’ Union (ZFU) believe that contract farming should help farmers grow if conducted properly.
Of the $534 million earned through tobacco so far, more than $445 million worth of tobacco was under contract farming. But ZCFU president, Mr Wonder Chabikwa, argued that contract farming is not assisting farmers.
“Despite the millions in tobacco earnings, the truth is that the ordinary farmer is left with nothing to show for his hard work. At first the (contract farming) system was very clear as it would deduct what was owed according to deliveries but now it’s taking everything from the farmer,” said Mr Chabikwa.
He said contract farming has become a debt trap for most farmers as they incur various expenses during the production of the crop.
“Even after the total sales, most farmers are trapped in debts, resulting in attachment of some personal belongings.”
The farmers argue that the contracts should be more flexible, giving farmers enough time to settle debts. Under contract farming, market forces of demand and supply do not come into play as the contractors have their rigid prices set from the start of the marketing season to the end. The contract buyers decide the price.
However, in most cases, their price is higher than the auction price. Average price per kilogramme stands at $3,03 against while the auction price is $2,94 per kilogramme. The highest price of contracted tobacco is at $6,25 per kg against an auction floor price of $4,99 per kg.
Saratoga farmer, Mr Aloius Nyarambi, said if contract farming is to become a successful model across Zimbabwe’s agricultural economy, contract farmers’ plights must be addressed.
“As long as the contractors continue making deductions everything without considering the farmer’s needs, side marketing will prevail. Their prices (contractors) are quite competitive but they must revise their payment system in order to attain desirable results,” said Mr Nyarambi.
Farmers also claimed that contractors are inflating the prices of inputs, thereby compromising their profitability. The contract farmers are required to buy all their inputs from the buyers’ own stocks, even if they could find cheaper inputs from other sources.
Boka Tobacco Floors operations director, Mr Moses Bias, said his company deducts an amount from every sale, leaving the farmer with a reasonable amount.
“We take 60 percent of the total money on the first sale, leaving the farmer with the remaining 40 to help pay his labour and other outstanding costs. On the second sale onwards, we share 50/50 with the farmer,” he explained.
“This mutual relationship must benefit both the farmer and the contractor,” added Mr Bias.
One of the contractors who spoke on condition of anonymity said they only award a bonus to the farmer when they service their credit in full.
“At our company we deduct until the farmer has finished servicing his or her credit. When he or she does that, we give them an incentive but if it’s the other way round, we attach property,” he said.
Tobacco contract farmers include Boka Tobacco Floors, Chidziva Tobacco Processors, Curveid Tobacco, Gold Driven Investments, Intercontinental Leaf Tobacco Companies, Manrova Estates, and Mashonaland Tobacco, among others.
