Tanzania: Earning a good income with soybeans through contract farming

June 05, 2017
A translation for this article is available in French

It is a long, muddy walk from the centre of Lungo village to Elikuna Emanuel Kuamjama’s fields. Mr. Kuamjama’s maize stands tall beside his three acres of soybeans. The 49-year-old also grows rice and sunflowers in Mvomero district, in Tanzania’s Morogoro Region.

Mr. Kuamjama makes the long walk to check on his soybeans. He expects a good harvest at the end of June. Because he and other farmers in the village have already negotiated a price for their beans, he knows the harvest will fetch him a good profit.

After the harvest, farmers in Lungo will store their soybeans in a blue building in the middle of the village. From there, the beans will be transported to Tanfeeds International, which has agreed to pay the farmers 1,100 Tanzanian shillings ($0.50 US) per kilogram as the farm gate price.

If they arrange transport to Tanfeeds International, a three-hour trip, the farmers would receive 1,200 Tanzanian shillings per kilogram.

By marketing their beans as a group, the farmers have more negotiating power.

soybean storage

Soybean storage in Lungo, Tanzania.

Several years ago, soybeans did not fetch such a good price. Buyers in Morogoro weren’t interested in purchasing from the farmers because their production volume was too small. In 2014, buyers wanted 30 tonnes, but Mr. Kuamjama and his neighbours had just 10 tonnes of soybeans.

So Mr. Kuamjama and other soybean farmers paid to transport their product to Dar es Salaam—200 kilometres away. They got a better price, but had to pay more for transportation.

This year, they have already negotiated a contract before harvest time.

Faustin Lekule is the managing director of Tanfeeds International, one of the companies in Tanzania which processes soybeans. The company uses soybeans, as well as maize and fish meal, to produce feed for chickens, fish, pigs, and other animals. They also produce soy oil for human consumption. Both the animal feeds and the oil are good sources of protein.

Mr. Lekule explains that the company purchases 300 to 400 tonnes of soybeans each year to produce about 2,000 tonnes of animal feed.

He negotiates with farmer groups in Turiami, Songea, Mikumi, Njombe, and other  parts of southern Tanzania. They agree on price, buying season, packaging, mode of payment, and timing of payment. Mr. Lekule says they also negotiate on the quality of the product, including the acceptable number of broken seeds and impurities.

Mr. Lekule says he doesn’t like to purchase from individual buyers because their product often has more impurities, such as soil mixed in with the beans. Soil damages the processing machines. So he negotiates with farmer groups.

Mr. Lekule

Faustin Lekule shows off the animal feed produced with soybeans.

Mr. Kuamjama is happy with the price he will receive for his soybeans. He expects to harvest 10 100-kilogram bags. He had hoped to harvest 18, but lost some bean plants to disease.

Ramadhani Athimani is a field extension officer with Women and Poverty Alleviation in Tanzania, an NGO that supports soybean farmers in Morogoro. He says that the farmer group in Lungo will receive a good price for their product—higher than other farmer groups have negotiated. He says this is because of the “nature of the leaders of the farmer groups.” The Lungo group held out for a higher price than farmers in Njombe, located southwest of Morogoro. By negotiating a contract, they know even before they harvest that they can get a good income.

For farmers like Hidya Muhidini Kipila, this means peace of mind. Mrs. Kipila grows one acre of soybeans. She started in 2013, when she saw how important soy could be as a commercial crop. She says that they had good weather this year, after poor rains last year.

She expects to harvest at least six 100-kilogram bags, so her income will be good. She will use her income to purchase food, household needs, and to pay school fees for her five children.

This work was carried out with the aid of a grant from the International Development Research Centre, Ottawa, Canada, www.idrc.ca, and with financial support from the Government of Canada, provided through Global Affairs Canada, www.international.gc.ca

Photo:  Elikuna Emanuel Kuamjama shows his soybeans.