eBusiness Weekly
Business Writer
Rampant side marketing of crops grown under contract is the biggest threat to the horticulture industry in Zimbabwe, a new entrant into the sector rolling out a multimillion dollar scheme has said.
Side-marketing, alternatively known as side-selling, refers to a situation where a producer or cooperative does not comply with a contract and chooses to sell their produce to someone else who did not finance the crop.
When farmers or their cooperatives decide to side sell, they risk not being able to fulfil their contracts. This erodes their reputation, ability to receive credit and fully participate in the market.
While it is understandable that the farmers desire increased incomes in the short-term by following the highest market price, the long-term cost of losing key market relationships (contract funding) may be far greater over time.
Teallach Group, which has partnered local firm Cashbox Financial Services (CFS) for a US$25 million sesame seed contract farming scheme for the 2020/2021 season, warned it would pull out instantly if farmers side-sell the contracted crop.
Sesame seed outgrower schemes are a novel phenomenon in Zimbabwe, but the olive oil and low cholesterol seed has huge global demand, with estimated market value of US$7,5 billion worldwide in its raw state, while also having potential to add value by 25 percent.
CFS Agro began distributing seed on December 4, 2020 to farmers in Lusulu in Matabeleland North. The scheme will run till the harvesting season in August and will be an annual programme.
Areas targeted include Tsholotsho, Lusulu, Binga, Gwayi, Checheche, Muzarabani, Mushumbi and the rest of the lowveld, mostly arid to semi-arid places, because the crop requires little rainfall.
The initial buying scheme started in 2020 and saw CFS Agro purchasing seed from smallholder farmers in many regions. Seventy-three percent of the farmers were from female headed families.
“We have already recruited 345 lead farmers around the country and those are the ones leading the land preparation because we have already started distributing sesame seed,” he said CFS group chief executive Benjamin Chimutengo.
While contract farming is not new in Zimbabwe’s farming industry, the two investors are pioneers of sesame seed contract growing in the country and have already enlisted 30 000 farmers for the current season and have promised to up scale the numbers significantly going forward.
Clifford Herbertson, the Teallach Group chairman, said re-establishing Zimbabwe as the breadbasket of Africa is well within reach, but pointed out that while safeguards have been put in place, side marketing was their biggest risk fear.
Herbertson said the prevalence of violations of contract farming agreements through side selling was the biggest threat to Zimbabwe having a successful horticultural contract farming industry.
“Side marketing is one of the biggest roadblocks to Zimbabwe having a successful horticultural contract system and as an investor I am genuinely concerned at investing money, time, resources and back up into supporting a farmer and they then sell to someone else; that abhors me,” he said.
Herbertson said that side marketing was a practice that reflects short-term focus in order to make a few extra dollars but with unpleasant and costly consequences in the long term.
“We are genuinely concerned by the ability to find trustworthy, hard working farmers that are willing to earn a profit income.
“If we have a million farmers, we will be bigger than Tanzania because (the farmer) is hard working, trustworthy and she is not doing side marketing; that is the kind of deserving people,” he said.
According to ZimTrade, the country’s trade and development agency Zimbabwe is exporting between US$120 million and US$122 million worth of horticulture products annually, which is lower than the US$143 million the country managed at its peak in 1999.
The Teallach group chairman said to counter the risk of side marketing, the investors had organised farmers into groups of 40 lead by a lead farmers that has been imparted with all relevant technical expertise to produce the seed crop.
This arrangement, Herbertson expressed hope, will ensure that other group members will keep each other under constant check to prevent misconduct that could cost the entirety of the members further support from the investors.
The European Union is the largest market for Zimbabwe’s horticultural products.
The main EU markets include Netherlands, which accounts for 43 of total horticulture exports, according to Trade Map. Other importers are United Kingdom Portugal, Italy, Spain, Ireland, Sweden, Belgium, Malta, Romania and Greece. Major export crops are citrus, macadamia, avocado, peas, stone fruits, berries and flowers.
