$200m investment for contract farming

Source: $200m investment for contract farming | The Herald September 7, 2016

Conrad Mwanawashe : Business Reporter

Grain millers and oilseeds traders will invest about $200 million into 150 000 hectares of land under contract grain farming to scale up agro processing in Zimbabwe. The initiative by the private sector being implemented under a project code named Joint Contract Farming Operation 2016 /7 Plan for the Grain Millers Association of Zimbabwe and the Grain and Oilseeds Traders Association, said their commitment aims at increasing capacity utilisation of grain milling in Zimbabwe to sustainable economic levels and protecting the local grain value chain from the “marauding cheap imports”.

This came out after a meeting between members and affiliates of the two in Harare on Tuesday where maize, soya beans and wheat contract farming plans for the forthcoming season were some of the topical issues under discussion.

But the agro processors and traders have asked for some reciprocation from Government through a variety of interventions aimed at securing their investment and the farmer.

GMAZ and GOTA members committed to finance contract farming of soya beans and maize in all traditional farming districts across the country of 100 000 hectares for summer farming season of 2016/ 7.

They also committed to contract farming of wheat in all traditional farming districts across the country of 45 000 hectares for the winter season.

The commitment by the private sector agro companies feeds well into the recently launched $500 million Command Agriculture initiative where Government intends to achieve self-sufficiency in the provision of food for the next three to four years with 400 000 hectares throughout the country dedicated to grain production for a yield of at least two million tonnes of grain per season.

GMAZ and GOTA said their support to agriculture is born out of a realisation of the role of private sector in agriculture development and the need to increase cooperation and strategic alliance by and between primary and secondary industries.

But for the joint operation to succeed and realise its targets, the agro processors requested a few interventions from Government.

They want fertiliser importing companies to be allowed to import without limitation in order to provide for both summer and local winter farming.

“There is need to import fertilisers, especially Ammonium Nitrate and Urea. Local fertiliser manufacturing companies have seemingly no capacity to provide for this season as their current carrying stocks stands at 10 000 metric tonnes of Ammonium Nitrate against an immediate demand of 150 000 metric tonnes. Sadly, Sable Chemicals remains mothballed and there is no production,” the organisations said in a joint statement presented to Government.

Also, GMAZ and GOTA said in line with Zim-Asset’s target to stop grain imports in the end, which will be replaced by increased local grain production, it is key that the process starts by making compulsory that importers of wheat and maize commit at least 30 percent of their requirement to local contractors in order to support local production.

Furthermore, in order to enhance the bankability of contracting farming and allow parties to it to ascertain the viability of the project before commencement, the joint operation proposed that the contractor and the farmer be allowed to com-

pute and agree on pre-­planting prices that will not be affected by any future control and regulation.

“In the past, we have seen 80 percent of the yields of contracted grain falling below set target, consequently assuming serious losses in the process leading to litigation against farmers.

“In order to capacitate farmers so that they meet their own obligations, it is prudent that contractors must be allowed to set up residence at the contracted farm for purposes of providing extension services and supervisory functions,” they proposed.

On incidents of inputs abuse and side marketing that have dogged all forms of contract farming leading to banks and other financiers shying away from funding the programme the agro dealers want more deterrent and punitive laws in place.

“These offences must receive the same severity and gravity as stock theft. Regrettably, it has become a venture for some unscrupulous farmers and the levels of recidivism are worrying,” GMAZ chairman Tafadzwa Musarara said.

“There has been a worrying trend of litigation against failing farmers leading to attachment of their valuable assets including livestock. This has left farmers incapacitated to continue farming.

“In order to resort to a fairer and just manner of settlement of outstanding debts that does not disenfranchise the farmer and also allow the contractor to recover their funds, we propose that, in the event of default by a farmer, contractor must be allowed to operate on the farm for a certain period in order to recuperate or recover loss so incurred without making any remittances to the farmer.

“Contracted farms must be protected against illegal settlements/invasions, as it is the case with dairy farms,” said Mr Musarara.

Moreover, the joint operation said for contract period of five years and more where capital investment is involved, Government must provide guarantee to the contractor of the farmer’s uninterrupted stay and tenure at the farm.

Some of the interventions that have been proposed by the joint GMAZ and GOTA operation include banning of imported finished products such as maize meal, wheat flour, maize grits, soya meal in order to create a secure market for the produce grown under contract farming.

They also requested for concessionary low rates of water and electricity charges which constitute 40 percent of the production costs of growing grain.

“In order to attract significant capital into contract farming, we propose that consideration be made in respect of tax incentives such as tax holidays which mirror those provided under the Export Processing Zone,” they said.