Embed Size (px)
Citation preview
May 2013 . Issue No. 1
August 2013 . Issue No. 4
In This Issue
Food Security Outlook
Resources for contract farming
AMA and contract farming
Contract farming review and survey
results
Towards a national contract
farming strategic framework for
Zimbabwe
Articles drawn from presentations compiled by
the following organizations
FAO coordination activities, including the
publication of the ACIF Journal, are funded by
the following Donor Organizations
ACIF Journal is published monthly by FAO Zimbabwe For enquiries relating to this issue please call FAO Zimbabwe on +263 (04) 252021/3
Constance Oka ([email protected]); Caroline Hungwe ([email protected]) Ext 291
A
M
A
Next ACIF meeting
Date: 26 September 2013
Time: 9.00 am
Venue: Celebration Centre
2
Food Security Outlook July 2013– March 2014– FEWSNET
By Daison Ngirazi - tel: (04) 744878 – [email protected]
September 2013 Price Watch (Harare Mbare Market)
Bucket of maize grain (17.5Kg): USD 7.00 Super White maize meal (10Kg): USD 7.00
Roller Meal (10Kg): USD 5.95 Big bundle of leafy vegetables USD 1.00
The Famine Early Warning Systems Network (FEWSNET)
presented the (July 2013 to March 2014) Food Security Outlook
Current Food Security Context
Cereal prices are 17 to 40 percent higher in markets across
the country compared to last season. Current prices range
from USD0.34 to USD0.46/kg for maize grain and
USD0.60 to USD0.65/kg of unrefined maize meal .
Approximately 1 393 962 MT (8 months of national re-
quirement) of cereals are available, this represents 67% of
national requirement.The national cereal balance sheet
shows a 681 555 deficit to meet the 2 075 517 national re-
quirement.
Very poor and poor households in the south western parts
and isolated northern areas have depleted own stocks and
are relying on markets for grain.
The main income sources are casual labour, livestock sales,
self employment activities and gardening.
Livestock condition is fair to good
Humanitarian assistance is yet to start.
Assumptions and analysis through to March 2014
National cereal availability is expected to remain stable while
staple food prices are expected to increase by 4% to 6 % from
current prices. Prices are expected to peak at USD0.40 to
USD0.57/kg for maize and USD0.66 TO USD0.72/kg for maize
meal. Casual labour opportunities are expected to be limited
between July-October but will improve with the start of the
agriculture season. Rates are expected to remain the same.
Income from livestock will be limited by capacity to sell at sus-
tainable levels and anticipated decrease due to poor condition.
Remittances are expected to play a significant role particularly
in south western districts. However exchange rate may reduce
impact of remittances. Livelihood support by organisations will
be very limited. vegetable production is expected to be limited
by water availability.
Regional cereal production
Regional cereal crop production figures stand at 33 287 000 MT
which is an increase of 3% compared to last year. The SADC
Region has a surplus of 2 724 000 MT. Compared to other
countries in the region, Zimbabwe has the highest decrease in
cereal production compared to last year and has the highest
number of people food insecure. Humanitarian assistance in the
form of livelihood support, food support, ongoing safety net
need to be fully funded to ensure coverage of identified needs.
NEWS
Mapping of donor funded programmes for the 2013/14
agricultural season.
Donor organisations supporting agricultural programmes for
the 2013/2014 season include AUSAID, EU, GIZ, USAID
and SDC. Most of the programmes are in low rainfall areas.
Compilation of the 2013/14 Agriculture Atlas has
commenced. FAO will circulate the data collection tool to
capture “Who is doing What Where” to relevant
organisations during the second week of September 2013
World Food Day is commemorated annually on 16 October.
The 2013 theme is “Sustainable Food Systems for Food
Security and Nutrition.” A committee has been instituted to
oversee the commemorations of World Food Day in Zimbabwe
and is chaired by the Ministry of Agriculture Mechanization and
Irrigation Development.
One of the global activities to mark the day is the World Food
Day International Poster Design competition. The competition
is open to all children from all countries world wide. For more
information visit
http://www.fao.org/getinvolved/worldfoodday/wfd-poster-contest/en. .
Provincial ACIF meetings will be held from 16 to 19
September at provincial AGRITEX offices. The dates of the
meetings are indicated in Table1.
Table1: Schedule of Provincial ACIF Meetings
Province Dates Time
Midlands 16 September 09:30
Mashonaland Central 09:30
Mashonaland West 17 September 10:00
Matabeleland North 09:30
Mashonaland East 18 September 09:30
Matabeleland South 10:00
Manicaland 19 September 09:30
Masvingo 09:30
Fig 1 : Food Security Classification
3
The Market Linkage Association presented findings of the
contract farming (CF) review.
Defining contract farming
Contract farming is “a contractual arrangement for a fixed term
between a farmer and a contractor, agreed verbally or in writing
before production begins, which provides resources to the
farmer and/or specifies one or more conditions of production, in
addition to one or more marketing conditions, for agricultural
production on land owned or controlled by the farmer, which is
non-transferable and gives the contractor, not the farmer, exclu-
sive rights and legal title to the crop.” (Prowse et al., 2013)
Why is CF working: local community buy in, limited markets,
profitable value chains, farmer training, extension support,
competent field staff, grower selection
Why is CF not working: Low international prices, culture of
non-repayment, low productivity, side-marketing, input diver-
sion, lack of contractor management capacity, high transaction
costs associated with smallholder programmes, high cost of
supplying input credit, lack of respect for contracts amongst
farmers, incomplete contracts, lack of contract enforcement
mechanisms, drought, a poor legal enabling environment,
farmer exploitation by contractors, late delivery of inputs, lack
of production know-how by farmers, unreliable electricity sup-
plies (at irrigation schemes) and poor irrigation infrastructure.
Recommendations
Design contract agreements so that the benefits of compliance
outweigh the benefits of default.
Contracts must be complete with arbitration clauses and pre-
planting prices.
Government should provide a supportive enabling
environment and training/extension support. Policies should
be predictable and consistent. Existing legislation needs revi-
sion and should be enforced.
A liberalised market environment is essential.
Strategies to increase competitiveness could include; protec-
tion of local players through reduced input/equipment/utility
rates; transparency in issuing import/export permits and relax-
ing exchange control regulations
Agricultural investments: Promote investment by (1) resolv-
ing land tenure issues (2) providing tax concessions and other
incentives (3) supporting establishment of credit bureau to
house database of defaulters (4) support efforts to increase
productivity.
Code of conduct should be instituted at industry and sub-
sector levels. Enforceable laws and deterrent fines need to be
put in place to deal with defaulters and side-marketing.
Contractors and producers must be registered, this will help
in establishing a credit database. Farmer groups should be
legal entities and must have codes of conduct.
Contract Farming Review and Survey results —Market Linkage Association
By Michael Dawes tel: +263(4)744 559— [email protected]
TOWARDS a National Contract Farming Strategic Framework For Zimbabwe
By W Makotose tel: 04– 797443— [email protected]
The Ministry of Agriculture, Mechanization and Irrigation
Development (MAMID) is facilitating the development of a
Contract Farming Policy. MAMID received funding from FAO
to carry out a study to develop a “National Contract Farming
Strategic Framework for Zimbabwe”.
Key activities undertaken by MAMID include:
A study of contract farming in Zimbabwe, based on a
comprehensive desk review and stakeholder consultations;
Preparation of a draft Contract Farming Strategic Frame-
work; and
A consultative stakeholder workshop to discuss the results of
the desk review and stakeholder consultations and obtain
further inputs on the draft Contract Farming Strategic Frame-
work.
Five thematic areas will guide the development of the Contract
Farming Strategic Framework:
1. Crop and Livestock Sector Production Targeting
2. Financing- Review of contract farming financing in
Zimbabwe and provide advice on appropriate insurance
schemes for the agriculture sector. In addition address issues
relating to sustainability of current contract farming
financing arrangements.
3. Regulating Contract Farming- Review the legal and exist-
ing regulatory regime governing commercial contracts and
ascertain whether contract farming is adequately covered and
assess if the provisions are enforceable.
4. Marketing- Analyze the key contract farming marketing
components such as marketing agreements, pricing and pay-
ment terms. As well as provide advice on the appropriate
price determination mechanisms for each crop and livestock
category.
5. Policies on Contract Farming- Review the current policies
regulating contract farming and harmonize laws and policies
on contract farming and create an enabling environment for
investment.
A Consultant has been engaged to facilitate the process and is
working closely with officers from MAMID and the
Agricultural Marketing Authority (AMA). New partners are
welcome to bankroll the process and participate in the exercise.
4
GIZ has developed a contract farming hand book that provides
a practical framework for linking small-scale producers and
buyers through business model innovation. The farming hand
book has been developed to serve practioners involved in start-
ing up and managing the implementation of contract farming
schemes. Copies of the handbook are available from GIZ
Highlights from the Handbook
Each contract farming case must be assessed individually of the
reality on the ground and a corresponding contract farming
business model based on fairness and transparency be devel-
oped. The contract must be mutually beneficial (incentive for
compliance) with an agreed dispute settlement system.
Conditions for success:
Trust and scope of negotiation: Trust builds on a fair
“give-and-take” relationship and equal voice.
Economic viability and incentives: It is a commercial agree-
ment that can only be viable and sustainable if farmers and
buyers realize a cost-benefit-‘plus’.
Contract Farming arrangements and risks: Contract farm-
ing bears risks requiring arrangements for sharing ownership
as well as distributing and minimizing risks of conjoint
investments
Technology transfer and innovation: Adoption of technolo-
gies and innovations can stimulate productivity and chain
efficiency. Provision of embedded or external services contrib-
ute to building required capacities
Investment climate and external support
Frequent reasons of failure:
Ill-informed investment decision-making and lack of aware-
ness on business risks
Producers/buyers relying on development partners for
business decision-making
Low productivity and trade-off between household food
security and contract farming crops
Uneven negotiation power and untransparent communication
by buyers.
Contract default by farmers or buyers due to lack of trust,
short-sighted opportunistic behavior overriding possible long-
term benefits
Failure to build solutions for contract default into contracts
Role of AMA
AMA’s role in contract farming is largely regulatory and stems
from the need to:
maximize or widen the convergent zone between contractor
and producer needs,
minimize illegal practices,
foster alternative mechanisms of financing production,
lower risks of contract farming by enforcing rules and
regulations mutually beneficial to both farmers and contrac-
tors,
attract, retain and protect investment in agriculture,
enhance competitiveness of the farmer, contractor and nation
by promoting consistency in quality, quantity and presenta-
tion of product.
The Agricultural Marketing ACT Cap 18:24 section 5 subsec-
tion (d) empowers AMA to :-
promote contract farming of crops and livestock,
establish regulations by way of statutory instruments that
provides incentives or penalties for good and bad behavior
respectively,
registration of both contractors and producers in contract
farming for statistical and planning purposes,
AMA seeks not to control but regulate contracting parties in
the agricultural industry for purposes of:
correcting weaknesses and emerging vulnerabilities in
production and marketing systems,
influencing efficient pricing of production and marketing
risks management tools,
Encouraging innovation and sustainable production
Key Aspects of Contract farming Checklist
Written Contract– must meet national legal requirements,
clearly understood by both parties and each should retain a
copy of the signed document.
Production quotas– minimum volume of product expected
from the producer and/or maximum quantities to be bought
by contractor should be stated.
Quality standards– expected quality should be stated and
number of grades kept to a minimum.
Inputs and technical support– the contract should specify
agreed input quantities and technical support.
Pricing of inputs, services and produce and their grades
should be specified.
Payment and repayment timeframes and methods should be
clearly stated.
Provision for verification of weights and grades should be
availed.
Marketing– transportation arrangements and marketing
stations should be stated.
Responsibilities and obligations of each party should be
clearly outlined, including timeframes where applicable
Enforcement and arbitration– authorities to enforce or
arbitrate on disputes should be mutually agreed.
Contract duration- Contract period should be clearly stated
e.g. short term (one season), medium term (2-4 seasons) or
long term (five or more seasons).
The Role of the Agricultural Marketing Authority in Contract Farming
By M Chikanda — [email protected]
Business Planning for Viable Contract Farming Arrangements
By C. Pannhausen (GIZ) tel: +263 20 61484 — [email protected]
