Success Story

Zimbabwe

New Commercial Markets for Zimbabwe's Small Farmers
Land Reform and Economic Changes Create Opportunities
By Jeannine Kenney

Land reform in Zimbabwe, once an agricultural powerhouse in Africa, has largely decimated commercial agriculture in the small African country. Three years ago, Zimbabwe President Robert Mugabe removed large-scale, white commercial farmers from their land, resulting in what some observers call a full-scale collapse of commercial agriculture. In their place, he put small producers who reporter Peta Thornycroft, reporting for National Public Radio, said, "have neither the skills, nor the background, nor the financial support" to produce for commercial markets.

Meanwhile, inflation rates of some 250 percent and the devaluation of the Zimbabwean dollar has made the few farm inputs that are still available so expensive that they are beyond the reach of many small farmers. High interest rates, coupled with inflation, have made credit, difficult to access before, now nearly impossible for small producers.

With Chaos Comes Opportunity
But the removal of large, commercial farmers from their land hasn't just produced economic turmoil, it has created new opportunities for the country's small farmers who have lacked access to the lucrative commercial markets previously open only to Zimbabwe's largest producers.

"Both the small farmers and the private sector agribusiness firms have been caught unaware by these developments," says Webster Miyanda.Miyanda is the NCBA advisor for a joint project with the local non-governmental organization SAFIRE, funded by the International Fund for Agricultural Development. He says the large buyers now understand the importance of small farmers to their own business viability.

Miyanda agrees with press reports that small farmers are ill prepared for commercial production. "Small land holders have no experience in dealing with the private sector," he says. "They have limited resources to acquire inputs and little capacity to meet demand." But that goes both ways. The large buyers likewise have no idea how to deal with the little guy.

As a result, food and agriculture companies like Cairns and Cargill are turning to Zimbabwe's small farmers served by the NCBA/SAFIRE project. "They get a lot of value out of the it," Miyanda says of the many multinational food companies that now buy from the project's farmer-clients and provide them with inputs and credit. "Because the white commercial farming community is no longer producing, they need the small farmers to pick up the difference." Though the NCBA/SAFIRE project is not working with the farmers placed on appropriated land previously held by white producers, the side effects of land reform have repercussion for farmers throughout the nation.

New Systems for Farmers
That's where the joint NCBA/SAFIRE Market Linkages Project comes into play. Short for Southern Alliance for Indigenous Resources, SAFIRE has worked with NCBA for the last two years to develop systems that help small farmers access not just new commercial markets and the higher prices they bring, but also improved technologies, affordable inputs, and new group business skills that will provide returns in years to come.

The chaos in Zimbabwe's agricultural sector has created some barriers for the project. Low supplies of nearly all types of agricultural supplies are hurting all farmers. "The inputs are just not on the shelf," says Miyanda. He reports that one project had to be terminated because there simply wasn't enough seed to plant even small plots.

Despite the economic and political turmoil, the work of NCBA and SAFIRE is yielding strong results-results that can be attributed to use of a business development model and system for technical assistance that helps the nation's smallest producers begin producing for the now unfulfilled commercial market.

The project creates partnerships between large buyers and farmers. The buyers provide credit, inputs and technical assistance and purchase products like paprika, pineapple, and tomatoes from grower groups under contract.

Training in Business and Production
But before those relationships can be established, the farmers themselves have to be productive, efficient and organized into group businesses that have the ability to negotiate contracts with the multinationals.

To get to that point, SAFIRE and NCBA work to organize small farmers into local groups of 10 to 25 farmers who receive technical assistance from trained field "contact farmers," or extension agents in U.S. agricultural parlance. It's hard to overstate the importance of the training, and how new it is to these farmers. Though, in the past, the Zimbabwean government had an extension system, Miyanda says it was unworkable. "The country had one agricultural extension agent to support up to 450 farmers each," he says. "It was impossible to meet their needs." Now, under the Market Linkages Project, each contact farmer works with just a handful of farmers.

Function, Not Theory
Not only that, but the training is different. "It's functional, not theoretical," Miyanda says of the hands-on technical assistance the contact farmers provide.

The contact farmers are paid by the group to provide training on improved agricultural practices like the drip irrigation system that farmer John Matsangura has adopted. The Market Linkages Project has set up some 20 drip irrigation demonstration sites. Matsangura's drip system has allowed him to increase paprika yields by more than 100 percent, all during the midst of a two-year drought that has crippled many producers. "If drip irrigation had been introduced long back," Matsangura said, "starvation could have been a thing of the past."

With technical training in hand, four to eight farmer groups then form a regional commodity association, which negotiates with large buyers. By aggregating their crops, they offer value to buyers who can no longer turn to single, large commercial farmers. Each association, which functions like a cooperative, is governed by an executive committee made up of representatives from the farmer groups. SAFIRE trains the associations in the business skills they'll need to manage the business and negotiate viable contracts with buyers. In the past, contracts with farmers were loaded with legal terms the growers didn't understand. "In most cases, they were one sided," Miyanda recalls, "addressing mostly what the farmers should and shouldn't do." The program training helps the associations critically analyze new contracts before they're signed.

Credit Where It's Due
In exchange for being able to buy from just one association, rather than individual farmers, the food companies provide inputs, as well as the credit farmers need to buy them. They also commit to providing additional technical assistance to farmers in the field. The system, known locally as an "outgrower scheme" is essentially a sophisticated contract buying arrangement. "Once [these companies] have invested millions of dollars in this project," Miyanda says, "we are assured of their commitment."

So far, the system has worked. Buyers are getting high quality products in the cost-efficient quantities they need, and farmers are getting the credit and training they need to produce better crops with higher yields. To date, credit extended by participating companies has a more than 98 percent repayment rate. And now, farmers can get credit from commercial lenders even without collateral.

Success in Numbers, Meaningful Results
In this market season alone, 65 commodity associations, and their more than 500 groups with some 6,800 farmer-members, have contracts with 6 large companies for 10 different crops. Meanwhile, yields for key crops like tomatoes have grown by some 600 percent in some cases, and the prices they bring have increased by 1,000 percent.

But from Miyanda's perspective, the biggest achievements aren't in the numbers. "Socially, farmers have gained a lot. They have better, more modern houses. They can buy medicine and get health care. And they're able to send their children to school."