Thandi Moyo tried to sell her chickens to supermarket chains for several years, but without success. Zimbabwe was flooded by imports of meat and horticultural products, mainly from South Africa. The situation limited Miss Moyo and other local farmers to local markets.
Miss Moyo raises poultry in Mahatshula, a densely populated suburb of Bulawayo. But her situation changed for the better recently, after a shift in government policy.
In an attempt to promote local farmers, the Zimbabwean government banned the import of all perishable agricultural produce. Miss Moyo says, “I am happy about the ban, as it has opened doors for us. I have clinched a deal to supply one supermarket with chickens.”
Large supermarket chains had resisted buying local produce, preferring South African imports. But since the ban on importing fresh food, supermarkets have had to rely on and invest in local farmers. Miss Moyo and her co-operative colleagues are filling the gap through contract farming.
Contract farming involves an agreement between a farmer and a contractor, whereby farmers consent to sell all their produce to one buyer. Contractors assist farmers to produce the high-quality produce that supermarkets require.
Under contract agreements, contractors supply farmers with inputs and technical expertise to produce food to the right standards. In return, the farmer supplies the contractor with produce at an agreed price.
The benefits to farmers are clear. Miss Moyo says, “This has given us an opportunity to produce more, knowing that we don’t have to worry about finding a market.”
The contractor buys chickens from Miss Moyo’s co-operative at $2 US each. The meat is then sold for $3.50 US per kilogram. Everyone profits from the arrangement.
The arrangement has helped the co-operative create a “brand” for its products, according to Miss Moyo. This is something that had eluded them for years. She explains: “It was difficult to sell our produce to the supermarkets … their thinking was that it is not safe to buy chickens from ‘unbranded’ farmers because of health issues.”
Davison Masendeke is the provincial agronomist in Matebeland North’s Department for Agricultural, Technical and Extension Services. He feels that contract farming is currently the only viable source of funding for farmers.
In Mr. Masendeke’s opinion, all parties benefit from contracting. Farmers are able to finance their production and enjoy a guaranteed market, and contractors are assured of a steady supply of produce. He says: “At the same time, both parties can plan their cash flow well because there is no fluctuation of pricing [because they] have signed the buyer-seller price in advance.”
It should be noted that contract farming can have drawbacks for small-scale farmers. When farmers negotiate contracts with supermarkets and other organizations, they must be properly organized to overcome the disadvantages associated with their smaller size and lesser market power. Farmers organized into co-operatives stand to achieve better deals than individual farmers.
Judith Maphosa is the chairperson of the Women in Farming Association of Zimbabwe. She says contract farming has helped her better finance her business and provided her with a guaranteed market. She has also gained invaluable agricultural expertise.
Ms. Maphosa supplies cabbages to supermarkets at 20 cents each. The supermarkets send experts to assist her in farming tasks, from land preparation to harvest. She says: “I can now produce high quality cabbages as a result. There are no risks incurred because you will [get paid] once you produce … the agreed quality.”