‘We are improving ease of business in agriculture’

13

ACCORDING to the Agriculture Sector Survey for 2021-2022, the most effective way of solving the collateral issues that have blunted agricultural funding is through the use of a guaranteed free market system under contract farming. This has seen the government actively promoting contract farming to help ease capital constraints and boost production. The Financial Gazette’s Senior Staff Writer, Farai Mabeza (FM), spoke to the Food Crop Contractors Association (FCCA)’s chairman, Graeme Murdoch (GM) to find out how the thrust to promote private sector involvement in agriculture production is faring.

FM: Tell us about the Food Crop Contractors Association. Who are you and when were you constituted?
GM: FCCA is a loose and voluntary representative body of private-sector contractors in crop production. Currently, we represent most of the private sector contractors who are contracting mainly grains, in particular maize, wheat and soya bean. The association came to life in 2020 to improve contractors’ representation at the government level, especially in discussions around agriculture. We also wanted to promote contract farming by answering the call by the government for increased private sector involvement in agriculture funding.
FM: What is your major achievement to date?
GM: Complementing the government’s efforts to ensure food, nutrition, and fibre security for the country. This is demonstrated by an increase in area under wheat, maize and soya in the two years we have been in operation. For example, in the 2021 wheat season, the private sector contractor produced 64 percent of total wheat produced. Most importantly, as contractors, we now have a common voice, and this has greatly improved our lobbying capacity.
FM: What are the main crops that have been contracted by your members this season?
GM: Wheat, soya, maize and sorghum.
FM: One of the things that have plagued farmers and blocked their access to funding from commercial banks is lack of collateral. What do you require from farmers for you to enter into contract with them?
GM: Contract requirements are not one size fits all because contracts may either be production or marketing. However, in terms of production contracts, which we are mainly pushing, there are some minimum requirements that every contractor wants to be fulfilled first before working with a farmer.
Here we are talking about background checks in terms of previous production performance, land size, availability of production enablers such as irrigation etc. Farmers who are also organised in production clusters stand a high chance of being contracted.
FM: How are you dealing with the issue of currency and settlements to farmers given the context of the multi-currency system (USD OR ZWL$) in place in the country?
GM: In all cases contractors are financed in ZWL, so although specific inputs are priced in USD, suppliers will accept ZWL. As a result, farmers’ loans are cleared in ZWL.
FM: Can you give an assurance that farmers are getting fair returns on the contracts signed and that their interests are adequately catered for?
GM: There is no pressure on a farmer to be contracted and every contractor has different offerings. However, as FCCA, our members have demonstrated excellent recovery rates and this would indicate that it’s a mutually beneficial arrangement, enabling our contract farmers to produce and grow their farming enterprises; whilst ensuring the contractor as the primary financier and marketing agent remains viable too. Successful contracts are always a win-win.
FM: Do you have a binding code and what are your expectations from your members? What action can be taken against members that fail to adhere to set standards?
GM: As an association we aim at providing a compelling proposition to our members that encourages working together to achieve common goals.
FM: How do you plan to interact and work with the authorities?
GM: We are working hand in glove with the Agricultural Marketing Authority, the regulator of contract farming in Zimbabwe. We want to complement the regulator’s efforts toward promoting order and fairness in agricultural operations in Zimbabwe. We are always urging our members to do their part in terms of submitting returns, giving evidence of support extended and fulfilling their expected duties in general.
FM: Side marketing remains a threat to contract farming. Do you expect the situation to improve this season and why?
GM: Yes. We were invited by the Agricultural Marketing Authority to make our submissions for the amendment of Statutory Instrument 140 (Grains, Oilseeds and Products) regulations. Our submissions were incorporated in the amendment SI, that is 274 of 2021, which was gazetted late last year.
The amendments mainly specify the duties of the contractor. So, it is the strengthening of laws governing contract farming that we hope will attract new players in the sector. We are also working with the authorities to ensure that systems are put in place that improve the ease of doing business and strengthen the monitoring of the legislation.