FACTORS driving the emergence and expansion of contract farming are not new to Zimbabwe.
It began in the 1950s, usually linked to state-owned or state-controlled estates, with sales going through the state marketing boards.
Private-led contract farming arrangements began to take-off again following ‘dollarisation’ and the re-liberalisation of markets in 2009.
Contract farming in Mazowe was in decline during the hyperinflationary period; it increased rapidly in the years since, especially for tobacco farming.
Two waves of private-led contract farming have unfolded in Zimbabwe since 1980.
The first wave gained momentum in the 1990s, alongside economic and structural adjustment policies, and shortly after the first phase of the Land Reform and Resettlement Programme came to an end.
Throughout the 1980s and 1990s, farmers (large and small) were growing sugar, tea and cotton under various forms of contractual agreements, as well as burley tobacco, vegetables, sugar beans and, to a lesser extent, dryland castor.
Flue-cured tobacco was also increasingly being grown by farmers in the original resettlement areas.
In 1990, Zimbabwe agreed to implement the Economic and Structural Adjustment Programme (ESAP) due to the recognition that economic growth rates could no longer sustain the post-independence improvements in health and education.
Beginning in 1991, a series of marketing reforms resulted in the liberalisation of trade and foreign exchange controls as well as the removal of price and wage controls.
These reforms were crucial in dismantling the monopolistic commodity marketing system, which saw Zimbabwe move away from a single channel of marketing to multiple channel arrangements.
The parastatal marketing boards, such as the Cold Storage Commission (CSC), the Cotton Marketing Board (CMB) and the Dairy Marketing Board (DMB), were privatised and obliged to compete with other private commodity traders.
Moreover, Government spending was also reduced as a result of ESAP and many formerly state-funded parastatal marketing outlets were closed, primarily in marginal producing areas.
In response to these reforms and the closure of local outlets, many small-scale farmers began to turn away from the parastatals to other marketing outlets.
Throughout the 1980s, the state-controlled Grain Marketing Board (GMB), and CMB (now COTTCO) were the major buyers of grain and cotton.
However, the proportion of farmers using these outlets fell dramatically by the end of the 1990s as private traders increased in importance.
This represented the decline of an older, state-controlled form of contracting, and the emergence of private-led contract farming in Zimbabwe.
Thus, the stage was set in the 1990s for the rapid expansion of contract farming that was to take place after 2009.
However, the Fast Track Land Reform Programme (FTLRP), which began in earnest soon after the constitutional referendum in February 2000, represented a major shift in agricultural policy in Zimbabwe.
The loss of the farms that the banks had previously accepted as collateral, but which were now being occupied and redistributed under FTLRP meant that financial institutions were unwilling to lend to those who had taken over the former commercial farms.
In particular, the reintroduction of price controls under ESAP led to input supply shortages which forced farmers onto the black market where inputs were being sold at prices far higher than the official gazetted prices.
Therefore, while the ‘structural adjustment programme’ era set the stage for the expansion of private-led contract farming in Zimbabwe, it was the so-called ‘crisis decade’ (2000-2010), that ultimately created the conditions that almost made it an imperative if agriculture was to return to its economic significance prior to 2000.
The second wave of contract farming thus began to unfold in the years after 2009.
Whereas FTLRP disrupted agricultural production and marketing channels, which had a devastating impact on the wider economy, the establishment of a Government of National Unity (GNU) in 2008, and the ‘dollarisation’ of the economy and the re-liberalisation of markets in 2009 resulted in renewed opportunities for the further expansion of contract farming.
Given the challenging conditions of the ‘crisis decade’, many felt it was not surprising that private capital became increasingly important in rebuilding the agricultural sector after 2009, asserting that: contract farming became central to the financing of smaller and middle-scale farmers, who joined export production to gain access to inputs and increase their earnings.
This move shifted pre-2000 agrarian relations from the dominance of private capital relationships between large-scale farmers and banks towards bonding more farmers with contracting intermediaries.
Prior to 1986, the Government of Zimbabwe had been the major lender.
In 2009, after foreign currency and agricultural markets were re-liberalised, agricultural contractors increased such pre-financing arrangements.
In 2010, private bank credit to agriculture increased to over US$300 million; over 60 percent of this amount went to contractors
According to the Tobacco Industry Marketing Board (TIMB 2014), the number of private registered tobacco contractors rose from three in 2003 to 15 in 2014. Similarly, the number of private cotton contractors increased to 13 in 2011.
Due to finance provided by contract providers, tobacco production has recovered in recent years.
Prior to 2000, some 97 percent of the tobacco delivered to the sales floors was produced by white commercial farmers.
Tobacco production made significant contributions to GDP and export revenues throughout the 1990s.
Currently, the bulk of the national tobacco and cotton crop is being sold by small-scale farmers to private-led contract farming companies and other private traders, including local firms and entrepreneurs, as well as foreign-based multi-national corporations from the US, China and India
Since 2009, tobacco national output has increased steadily; in 2014, the tobacco output returned to pre-2000 levels, reaching 216 million kg.
In contrast to the situation prior to 2000, over 90 percent of tobacco farmers are now indigenous small-scale producers, and of all tobacco sold to the market in 2014, 76,5 percent was sold by smallholders to private buyer-processors (TIMB 2014).
In addition to tobacco and cotton, a variety of other crops were also being grown under contract in Zimbabwe.
Overall, an estimated 50 firms contracted approximately 328 000 small-scale farmers to produce a variety of crops on approximately 628 000 hectares of land during the 2011-2012 agro season.
Assuming these figures are correct, it meant about 2-3 percent of smallholder land was being farmed under contract in the 2011-2012 agro season, and up to
25 percent of Zimbabwe’s small-scale farmers were farming under contract during this season; a significant percentage of the farming population.
Dr Michelina Andreucci is a Zimbabwean-Italian researcher, industrial design consultant, lecturer. She is a published author in her field. For comments e-mail: email@example.com