The Contract Farming Support Program - SNV€¦ · The Contract Farming Support Programme 2011/2012 • Post-Harvest Study 05 There are a majority of farmers who have not even signed

With support from

The Contract FarmingSupport Program

Post-Harvest Survey Report • 2011/2012 Season

AcknowledgementsSNV is grateful for the unwavering support of the Food and Agriculture Organization of the United Nations, the AGRITEX office, the contracting companies and most importantly the smallholder farmers who gave us their time and volunteered their information.

SNV would also like to acknowledge the individual and collective effort of the Post-harvest Survey team:

• Mr Dowsen Sango (SNV - Monitoring and Evaluation Advisor – Team Leader) • Mr Darlington Sarupinda (SNV - Contract Farming Consultant) • Mrs Linia Ngunguzala-Mawire (SNV - Agriculture Advisor) • Mr Cloffas Nyagumbo (SNV - Agriculture Advisor) • Miss Sibusiso Gaba (SNV - Agriculture Advisor) • Miss Rutendo Mukombe (SNV - Agriculture Advisor) • Mr Assah Mudhefi (AGRITEX - Chief Horticulture Specialist), • Ms Debrah Maleni (AGRITEX - Principal Agribusiness Extension Specialist) • Mr Elton Mudyazvivi (SNV - Economic Development Advisor) and • Mr Brighton Nhau (FAO - M&E Specialist)

SNV would also like to appreciate the Smart Solution Pvt (Ltd) team that did data handling and analysis.

AcknowledgementsTables and FiguresExecutive SummaryIntroduction and Background1.1 The Contract Farming Support Program1.2 Post-Harvest Survey 1.2.1 Survey Objectives 1.2.2 Survey Methodology1.3 Data AnalysisMajor Findings2.1 Demographics 2.1.1 Survey Sample Distribution 2.1.2 Age of Household Heads 2.1.3 Marital Status of Household Head 2.1.4 Education Levels of Household Heads 2.1.5 Household Size 2.1.6 Household Farm Labour2.2 Household Assets 2.2.1 Farming Assets 2.2.2 Livestock Ownership 2.2.3 Access to Arable Land2.3 Contract Farming Arrangementsin the 2011/12 Season 2.3.1 Households’ Experience in Contract Farming 2.3.2 Contracted and Non-contracted Crops2.4 Crop Production 2.4.1 Access to Inputs 2.4.2 Agronomic Issues 2.4.3 Production and Yields 2.4.4 Extension Support 2.4.5 Marketing 2.4.6 Incomes From Crop SalesConclusions & Recommendations

01030406060606070809090910101010111111121313

13141515181921222325

1.0

2.0

3.0

02 The Contract Farming Support Programme 2011/2012 • Post-Harvest Study

Contents

FIGURESFigure 1 HHH SexFigure 2 HHH Marital StatusFigure 3 HHH with Vocational TrainingFigure 4 HH SizeFigure 5 Number of Crops GrownFigure 6 Sources of SeedFigure 7 Sources of Basal FertilizerFigure 8 Sources of Top-dressingFigure 9 Production ChallengesFigure 10 Post-Harvest ChallengesFigure 11 Extension SupportFigure 12 Extension SupportFigure 13 Number of Crop SoldFigure 14 Marketing ConstraintsFigure 15 Income CategoriesFigure 16 Income UseFigure 17 Loan Repayment

03The Contract Farming Support Programme 2011/2012 • Post-Harvest Study

Tables & Figures

TABLESTable 1 Sample DistributionTable 2 HHH Level Of EducationTable 3 HH Members Providing Agricultural LabourTable 4 Farming AssetsTable 5 Farming Assets Bought in the Past 12 MonthsTable 6 Asset Ownership by GenderTable 7 Livestock Ownership and PurchasesTable 8 Arable LandTable 9 Contract Farming ExperienceTable 10 Contracting Companies Table 11 Contract StatusTable 12 Seeds AccessedTable 13 Value of SeedTable 14 Inputs from Contracting CompaniesTable 15 Area Under CropTable 16 WeedingTable 17 Production-Contracted and Non-contracted CropsTable 18 YieldsTable 19 Comparison of Yield Project Vs. National AveragesTable 20 Distance to MarketTable 21 Income (US$)


With funding from FAO, the Contract Farming Support Program (CFSP) of SNV tried to improve the smallholder

farmers’ access to input and output markets as well as extension support through contract growing with

private companies.

A post-harvest survey for the 2011/2012 season found that though contracting companies are attracted to the

land and labour of smallholder farmers, a lot could have been done through specialized and effective exten-

sion services and diversification of contracted crops. Additionally, extension strategies could be developed

around available cell phone technology as 78.7% farmers use cell phones.

Though after SNV’s intervention of contract mentoring and capacity building activities 39.7% of farmers now

keep copies of their contracts, they however need to strengthen their capacities to negotiate win-win terms

with private companies.

Executive Summary


There are a majority of farmers who have noteven signed contracts with companies. Some contracting companies do not provide a holistic package of inputs due to which there is sub-optimal yields. Consequently the farmer has to shoulder the burden of poor returns and poor loan repayments. Sufficient extension advice should be given to farmers so that they can make informed choices.

Development agencies and private companies should work together to address production constraints such as late distribution of inputs and post-harvest problems of pest infestation.

It has been noted that contracted crops receive intense attention or almost always have sufficient inputs. Contract farming has brought the market to the farm gate and this has made farming more viable. This approach boosts and diversifies income sources of the farmers and transfers modern techniques of production to them.

In addition to the income, small holder farmers also benefit from quality control, marketing and other services. It has a significant impact on rural incomes and leads to increased productivity and increased cash sales. However, more profitable enterprises should be encouraged in smallholder setups.

With 40% of the contracted growers getting into contract farming for the first time, a full and partial repayment rate of 67.3% is quite encouraging. Most farmers showed commitment to honour their contractual obligations. With only 13 companies contracting farmers outside the SNV and FAO programmes, there is indeed a potential for many companies to engage smallholder farmers.

Therefore the study recommends the following:

I. Contract farming should be up-scaled as it has proved to be a viable approach to revive rural agriculture value chains. II. A strict screening mechanism should be implemented for contracting companies on the basis of its ability to engage fully in a contracting scheme from input supply, extension to marketing. Due diligence should be conducted before the company is supported.

III. Contracting companies should continue to be mentored to listen to the voices of farmers and recognize and deal with them as an important business partner. Likewise, farmers should be mentored to realize that they are not an extension of the company workforce.

IV. More effort should be put in for more specialized and effective extension services. Mobile-phone extension strategies should be explored since they are considered to be cost-effective. SNV and other development partners should promote information and communication technologies for development (ICTD4D).

V. SNV should encourage companies and farmers to diversify their enterprises to boost incomes.

With the demise of the commercial farming sector, agro-processing companies in Zimbabwe are increasingly depending on the smallholder farmers for the provision of raw materials. However, the input and output market for smallholder farmers is largely constrained with production and marketing challenges. Due to limited affordable sources of finance a majority of them cannot purchase adequate inputs on time and thus remain unorganized and with limited access to the market.

1.1 The Contract Farming Support Program

The Contract Farming Support Program (CFSP) of SNV with support from FAO sought to improve smallholder farmers’ access to input and output markets and extension support through contract growing with private companies. Under CFSP, smallholders of Tabasco chilli, maize, tea, tobacco, cotton, cowpeas, sorghum, paprika, herbs, flowers, garlic, sugar beans and gooseberry were linked to contracting companies who provided inputs and extension support. The project target is to reach 10,000 farmers through at least 10 contracting companies.

The project already mobilized and linked 8,060 smallholder farmers to 8 private companies with an input credit allowance valued at USD 531,035.4. The same companies accessed inputs

amounting to 1,148.8 metric tonnes and out of these 899.9 metric tonnes were distributed to farmers leaving 245.10 metric tonnes as stock-in-hand held in the storage facilities of participating companies.

The project also had a capacity building component where the farmers were trained in Farming as a Business (FaaB). The contracting companies’ capacity in contracting processes, extension methods, and managing relations with farmers and other stakeholders as well as development of contract farming information management systems were enhanced.

1.2 Post-Harvest Survey

1.2.1 Survey Objectives

SNV, FAO and AGRITEX (a department within the Ministry of Agriculture Mechanization and Irrigation Development (MOAMID)) collaborated and conducted the post-harvest survey to understand the viability of contract farming by evaluating: • Crop Production (productivity, hectares, inputs, extension, types of crops)

• Post-harvest handling-grading, quality,

• Marketing (distances, prices/returns, grading, logistics etc.)

Introduction and Background1.0



Specifically the study sought to: • Assess yields for the various crops • Determine production levels • Determine volumes of produce sold through contracting companies • Determine post-harvest losses • Determine production and marketing challenges • Determine income earned from the contracting arrangements • Assess the viability of the contracted crops • Determine the ability of farmers to repay loans

1.2.2 Survey Methodology

Two main data collection tools were employed in the study: a smallholder farmer household questionnaire and a contracting company questionnaire.

i. Smallholder Farmer Household Questionnaire

A structured household questionnaire with seven main sections was used: 1. Demographic Data (Household characteristics and location) 2. Contracting Arrangements 3. Household assets 4. Crop Production for Contracted Crops 5. Crop Production for Non-contracted crops 6. Crop Sales and Marketing 7. Extension Support Services

Nine data collection supervisors were trained on the data collection tool and survey administration. They were deployed to the provinces to do training of enumerators and supervision of data collection. For enumerator training purposes, Zimbabwe was

divided into mid-west Region (covering Midlands and Matebeleland provinces), Northen Region (covering the Mashonaland provinces) and the Eastern region (covering Manicaland province). FAO liaised with Provincial Agritex officers for the identification of ward-based Agritex officers as enumerators.

The involvement of ward-based AGRITEX officers helped to quickly establish rapport with communities and government officials and to make access easier in the wards. 25 trained enumerators administered the questionnaires at the homestead/farm.

The supervisory teams monitored the data collection process. 9.6% of contracted farmers were interviewed. The sample was representative of the crop and district of contracted farmer population. A total of 771 of household interviews were conducted which represented a 96% response rate.

ii. Contracting Companies Questionnaire

A structured contracting company questionnaire was developed to collect information on contracting processes, inputs distributed, products delivered to the companies and the loan repayment rates.

It was then administered to representatives of contracting companies by SNV Local Capacity Builder (LCBs). This was to collect information on their reach and triangulate farmers’ production and incomes. LCBs were the first choice because they already have a working relationship with the companies therefore it is relatively easy for companies to release otherwise confidential information.

1.3 Data Analysis

A data-entry template was designed using SPSS. Post coding of some of the qualitative responses was done and data was fed in. Frequency, cross-tabulations and variance analyses were conducted and tabulations and illustrations were used in compiling the report.


Female 31%

Male 69%


2.1 Demographics

The table below summarizes the proportion of households sampled from 6 provinces and 15 districts of Zimbabwe.

2.1.1 Survey Sample Distribution

Major Findings 2.0

Province

MANICALAND

MASHONALAND CENTRAL

MASHONALAND EAST

MASHONALAND WEST

MATEBELELAND SOUTH

MIDLANDS

Total

42.6

9.1

27.8

4.6

3.5

12.4

100.0

Percent

1b Distribution By Province

District

CHIKOMBA

CHIMANIMANI

CHIPINGE

GOKWE SOUTH

GOROMONZI

HURUNGWE

HWEDZA

INSIZA

MAKONI

MARONDERA

MAZOWE

MTOKO

MUTARE

MUTASA

NYANGA

Total

4.6

4.6

4.0

12.4

11.1

4.6

4.6

3.5

11.7

5.1

9.1

2.5

3.4

9.7

9.1

100.0

Percent

1a Distribution By District

Table 1a & 1b: Sample Distributions by District & Province

Figure 1: Proportion of Households Interviewed

by Sex of HH Head

2.1.2 Age of Household Heads

The mode year of birth was 1963 while the average age of the sampled household heads was 49.

2.1.3 Marital Status of Household Head

75.5% of household heads, were married, 18.7% widowed, 4.3% single and 1.6% separated or divorced. Table 2 below illustrates the proportion of vocational training of the household heads who participated in the survey.

2.1.4 Education Levels of Household Heads

Table 2 reveals that 3.4% of the sampled household heads had no formal education, while 50% had at least some secondary level education. Only 2.1% of household heads completed tertiary education.

Less than 20% had some vocational training which included motor mechanics, cookery, dress making, brick laying and agriculture. Figure 2 summarizes the proportion of household heads that had vocational training.

2.1.5 Household Size

55% of households had 4-6 household members. The mean household size was 6 people while the sizes ranged from 1 to 21. The mode of the household size was 4 people. Figure 3 below summarizes the proportions of surveyed households that had given ranges of household sizes.


Table 2: HHH Level Of Education

Figure 2: Proportion of HH Heads with Vocational Training

Figure 3: HH Size

No VocationalTraining 81%

VocationalTraining 19%

81%

19%

Education LevelNo formal education

Some primary (but not completedgrade 7 / standard 6)

Completed primary (grade 7/standard 6)

Some secondary (but not completed form 4)

Completed secondary

Completed A’level

Completed tertiary

3.4

20.4

27.1

18.5

27.6

0.9

2.1

Percent


2.1.6 Household Farm Labour

Table 3 below summarizes the number of household members who provided labour for agricultural activities.

However, a closer analysis shows that slightly more women (52%) are involved in agricultural labour than men (48%).

2.2 Household Assets

2.2.1 Farming Assets

Over 50 % of the sampled households, owned ox-drawn ploughs, wheel barrows, sprayers, cell phones and hand hoes. Table 4 shows ownership of farming assets by the survey households. Interestingly, 78.7 % of the households owned cell phones which gives an opportunity to develop extension strategies around available cell phone technology. Hand hoe ownership was reported at 96.4 % and ownership of ox-drawn ploughs was at 64.3% of surveyed households.

Table 5 summarizes the statistics on purchases of farm implements by surveyed households during

Table 3: HH members providing agricultural labour

Male

Female

Total HH Labour

MEAN

2

2

4

MODE

1

1

2

RANGE

0-8

0-10

0-15

SD

1.23

1.17

1.87

Table 4:Farming Assets

Table 5:Farming AssetsBought in thepast 12 Months

% Owning

Mean

Median

Mode

Std. Deviation

MINIMUM

MAXIMUM

64.30

1.20

1.00

1.00

0.617

1.00

11.00

24.30

1.06

1.00

1.00

0.258

1.00

3.00

25.80

1.06

1.00

1.00

0.229

1.00

2.00

9.70

1.08

1.00

1.00

0.319

1.00

3.00

78.70

1.28

1.00

1.00

0.612

1.00

5.00

7.80

1.05

1.00

1.00

0.220

1.00

2.00

41.20

1.06

1.00

1.00

0.263

1.00

3.00

52.00

1.11

1.00

1.00

0.370

1.00

3.00

45.10

1.21

1.00

1.00

0.591

1.00

6.00

96.40

5.88

5.00

6.00

3.170

1.00

30.00

Ox-drawnPlough

Ox-drawnHarrow

Cultiva-tors

WaterPumps

CellPhones

Solar Driers

Scotch Carts

Wheel Barrows

Sprayers Hand Hoes

% Who Bought

Mean

Median

Mode

Std. Deviation

MINIMUM

MAXIMUM

3.10

1.04

1.00

1.00

0.204

1.00

2.00

0.90

1.00

1.00

1.00

0.000

1.00

1.00

0.10

1.00

1.00

1.00

----

1.00

1.00

2.10

1.06

1.00

1.00

0.250

1.00

2.00

11.40

1.17

1.00

1.00

0.485

1.00

4.00

0.60

1.00

1.00

1.00

0.000

1.00

1.00

28.40

0.10

0.00

0.00

0.301

0.00

1.00

4.40

1.00

1.00

1.00

0.000

1.00

1.00

5.10

1.28

1.00

1.00

0.999

1.00

7.00

17.80

2.42

2.00

2.00

1.513

1.00

10.00

Ox-drawnPlough

Ox-drawnHarrow

Cultiva-tors

WaterPumps

CellPhones

Solar Driers

Scotch Carts

Wheel Barrows

Sprayers Hand Hoes

the past 12 months. 28.4% of surveyed households bought scotch carts, 17.8% bought hand hoes, 11.4% bought cell phones, 5.1% bought sprayers and 4.4% bought wheel barrows.

Table 6 compares ownership of implements between female and male headed households. Using the Pearson Chi-square test, the study found a significant difference on asset ownership. In most cases male headed households had more assets than female headed households with the exception of solar driers.

2.2.2 Livestock Ownership

The majority of the contracted farmers owned cattle, goats and poultry. Less than 10% owned donkeys, sheep and pigs and less than 10% of the surveyed contracted farmers managed to buy more livestock in the past 12 months. The table below summarizes the statistics on livestock ownership and purchases in the past 12 months.


Table 6: Asset Ownership by Gender

Asset

Ox-drawn plough

Ox-drawn harrow

Cultivators

Water pumps

Cell phones

Solar driers

Scotch cart

Wheel barrow

Sprayers

Hand hoes

% ofmale-headedhouseholds

who own asset (N=530)

% offemale-headed

householdswho own asset

(N=236)

66.4

27

29.2

11.3

82.3

7.0

44.3

51.5

50.0

97.5

61.8

18.6

18.6

6.4

72.5

9.7

35.2

54.2

35.2

95.8

Table 7: Livestock Ownership and purchases

% Owning/Buying

Mean

Median

Mode

Std. Deviation

MINIMUM

MAXIMUM

61.7

5.3

4.0

4.0

4.5

1.0

32.0

7.3

1.8

1.0

1.0

1.6

1.0

9.0

3.9

2.9

2.5

2.0

1.6

1.0

7.0

0.1

1.0

1.0

1.0

1.0

1.0

1.0

1.3

2.5

2.0

1.0

1.7

1.0

6.0

70.7

3.9

3.0

0.0

3.6

0.0

22.0

5.6

1.9

1.0

1.0

1.7

1.0

10.0

6.5

5.6

2.0

2.0

9.1

1.0

56.0

0.9

2.0

1.0

1.0

1.3

1.0

4.0

86.9

132

10.0

10.0

16.2

1.0

204.0

Cattle Owned

Cattle Bought in the Past 12 Months

Donkeys Owned

Donkeys Bought in the Past 12 Months

Sheep Owned

Goats Owned

Goats Boughtin the Past 12 Months

Pigs Owned

Pigs Boughtin the Past 12 Months

Poultry Owned

8.4

9.6

3.0

2.0

15.5

1.0

85.0

Poultry Owned in the Past 12 Months

Mean

Median

Mode

Std Deviation

Minimum

Maximum

ArableLand

OwnedHa.

ArableLand

AccessedHa.

3.30

2.40

2.00

3.40

0.00

40.00

0.46

0.00

0.00

0.83

0.00

6.00


2.2.3 Access to Arable Land

The mean land ownership was 3.3 hectares while the mode was 2. This is slightly lower than the national average (3.6ha) for poor households�. Table 8 summarizes land access statistics.

2.3 Contract Farming Arrangements in the 2011/12 season

2.3.1 Households’ Experience in Contract Farming

More than 40% of surveyed households had around 1 year experience, 46% had 2-5 years’ experience and 12% had more than 5 years of contract farming experience. On average, the surveyed households had 3 years in contract farming with a mode of 1 and a range between 1 and 38 years. Figure 4 shows the proportion of households with given levels of contract farming experience.

In this survey 93.6% of farmers had a formal contracting arrangement for the 2011/2012 season while 6.4% did not have a contract. Tables 9a and 9b below summarizes the proportion of sampled households that were contracted by given companies that were supported by SNV and FAO during the 2011/12 agricultural season.

Table 8: Arable Land

Figure 4: Proportion of Farmers withContract Farming Experience

�ZIMDAT 2011 Average Landholding ZIM Stats

Capsicum

Leo Marketing

Boost Africa

HVSDC

Romsdal

Kaite

Fresh Trade

NTS

Ingwebu ¹

31.00

15.20

5.60

4.80

10.30

22.30

4.00

0.13

6.70

Percentage ofHouseholds

9a Companies Supported by SNV & FAO

Company

It has been observed over years that farmer are unaware that they enter into provisions and obligations of contract arrangements. The study tried to ascertain the number of farmers who keep their contracts and know the provisions and obligations thereof. The following table, Table 10, illustrates the findings.

Only 23.8% of the surveyed farmers had signed a contract and were in possession of the signed contract at the time of the interview. 32.5% did not have a signed contract but they believed that they were contracted to a company. In some cases

the companies did not leave a copy of the signed contract and in other cases they had a verbal agreement.

2.3.2 Contracted and Non-Contracted Crops

Due to arable land limitations and labour constraints, only smallholder farmers who have an optimal number of crops can be contracted. 85.4% of surveyed farmers were only contracted to grow only one crop during the 2011/12 season. About 10% were contracted to grow two crops. More than 80% of the surveyed farmers managed to grow one contracted crop while 10% had two crops. For non-contracted crops, more than 55% of surveyed households grew two or more crops.


BAT

Cargill

Chidziva

COTTCO

KM

Matanuska

MTC

Northern Farming

Paprika Zimbabwe

Retail

TRIBAC

Windmill

ZLT

0.5

0.1

0.9

2.0

0.1

2.2

0.3

2.5

0.1

0.1

0.1

0.1

0.1

Percentage

9b Companies With No WorkingRelationship With SNV & FAO

Company

Table 9a & 9b: Proportion of Farmers withContract Farming Experience

Farmers with a valid physical signed group contract

15.9

Other 13.5

Farmers who had a valid physical signed contract but could not locate it

14.3

Farmers with a validphysical signed contract

23.8

PercentageStatus of Contract

Farmers with no physical signed contract butcontracted to a company

32.5

Table 10: Contract Status


2.4 Crop Production

2.4.1 Access to Inputs

As expected, the most common source of seeds for contracted crops was the contracting company. However, it can be noted that farmers also purchased a significant amount of seeds. There is need to further investigate why farmers make other contributions. This may be because farmers fear the debt burden or that contracting companies inflate input prices. Therefore, farmers find it economic to do direct purchases.

For onion and groundnuts, the contracted farmers also accessed the seed through their own purchases. Some also used retained seed for groundnuts and garlic. Figure 6 shows that for non-contracted crops the surveyed farmers used a wider variety of sources that included purchases, retained seed, carry-over, gifts/remittances, NGOs, Presidential Well Wishers’ Scheme and contracting companies.

Sources of Basal FertilizersThe most common source of basal fertilizer was the contracted company. For contracted OPV maize, sugar beans, cotton, tobacco and garlic

Figure 5: Number of Crops Grown

Figure 6: Sources of Seed • Figures 7 & 8: Sources of Basal Fertilizer

Figure 6

Figure 7

Figure 8

less than of 10% of the surveyed farmers made direct purchases for the basal fertilizer. .

Sources of Top-Dressing FertilizerAs with the other inputs top dressing fertilizer for most contracted crops were provided by contracting companies. Figures 9 & 10 show that for non-contracted crops the surveyed households accessed the top dressing through purchases, gifts/remittances, government, carryover and NGOs.

Quantities and Value of Seed Received From Contracting CompanyFor maize and cotton the private companies distributed seed that could cover more than a hectare. Table 11 summarizes the quantities of seed inputs received by surveyed households from companies on loan.

On average the value of maize seed received was $41 while that of cotton seed was $15. The average value of sugar bean seed received per farmers was $54. The table below shows the average value of seed received per participating household by crop.

Inputs from Contracting CompanyThe survey revealed that 57% of the surveyed households received top dressing from contracting companies, while 65% received basal fertilizer and 35.4% received lime. On average the surveyed households received 124 kilograms of top dressing fertilizer, 116 kilograms of basal fertilizer and 119 kilograms of lime. Table 12 summarizes the proportion of surveyed households that accessed the inputs, the quantities received and the value of fertilizer accessed per household.


Figure 9

Figures 9 & 10: Sources of Top-dressing

Figure 10


Table 11:Seeds Accessed

Table 12:Value of Seeds

Table 13:Inputs fromContractingCompanies

Mean

Median

Mode

Std Deviation

Minimum

Maximum

27.30

25.00

25.00

7.39

10.00

50.00

Maize(Hybrid)

18.20

14.00

14.00

7.45

10.00

28.00

SugarBeans

0.80

0.50

0.50

0.92

0.00

8.00

Paprika

21.70

20.00

15.00

12.10

6.00

60.00

Cotton

0.010

0.005

00.005

0.009

0.005

0.050

Tobacco

0.0200

0.0000

0.0000

0.0658

0.0000

0.6000

Chillies

3.900

5.000

5.000

1.711

0.000

5.000

Garlic

50

50

50

0

50

50

SoyaBeans

Mean

Median

Mode

Std Deviation

Minimum

Maximum

40.8

57.5

62.5

30.2

0.0

114.0

Maize(Hybrid)

53.6

39.0

39.0

20.2

39.0

78.0

SugarBeans

9.5

5.0

5.0

8.5

0.0

48.0

Paprika

39.1

35.5

27.0

21.8

5.0

118.0

Cotton

15.9

25.0

25.0

12.6

0.0

25.0

Tobacco

7.1

0.5

0.5

17.5

0.0

105.0

Chillies

19.6

25.0

25.0

8.4

5.0

25.0

GarlicUS$

Mean

Median

Mode

Std Deviation

Minimum

Maximum

FarmersAccessing

124.2

100.0

50.0

90.9

5.0

500.0

56.9%

$

$

$

$

$

$

116.8

100.0

100.0

138.8

10.0

900.0

64.7%

119.7

75.0

50.0

116.7

0.0

500.0

35.4%

Topdressing

accessed

(kg)

Topdressingvalue of

inputaccessed

(US$)

Basalfertilizer

accessed

(kg)

Basalfertilizervalue of

inputaccessed

(US$)

Limeaccessed

(kg)

Limevalue of

inputaccessed

(US$)

81.00

62.00

38.50

59.50

6.20

350.00

$

$

$

$

$

$

56.60

38.00

10.00

52.60

0.00

372.00

$

$

$

$

$

$

14.50

0.00

0.00

22.70

0.00

150.00

2.4.2 Agronomic Issues

Area Under CropThe table below compares area under contracted and non-contracted crops. The survey confirms that more land is committed when there is a contracting arrangement than when there is no contract.


Crop

Maize (OPV) - Contract

Maize (OPV) - Non-contracted

Maize (Hybrid) - Contract

Maize (Hybrid) - Non-contracted

Sorghum - Contract

Sorghum - Non-contracted

Sugar Beans - Contract

Sugar Beans - Non-contracted

Paprika - Contract

Paprika - Non-Contracted

Cotton- Contract

Cotton - Non-Contracted

Tobacco - Contract

Tobacco - Non-Contracted

Tea - Contract

Tea - Non-Contracted

Chillies - Contract

Chillies - Non-Contracted

Herbs & Spices - Contract

Herbs & Spices - Non-Contracted

Garlic - Contract

Garlic - Non-Contracted

Onion - Contract

Onion - Non-Contracted

Soya Beans - Contract

Soya Beans - Non-Contracted

Finger Millet - Contract

Finger Millet - Non-Contracted

Pearl Millet - Contract

Pearl Millet - Non-Contracted

Ground Nuts - Contract

Ground Nuts - Non-Contracted

Cow Peas - Contract

Cow Peas - Non-Contracted

Tomatoes - Contract

Tomatoes - Non-Contracted

1 Group

71

76

584

1

24

21

69

220

1

103

6

30

31

35

0

174

4

3

0

103

29

1

33

3

7

0

13

0

20

2

246

0

42

0

29

N

1

0.10

0.00

0.04

0.50

0.01

0.10

0.00

0.03

0.40

0.40

1.00

0.01

0.10

0.09

---

0.00

0.10

0.0001

---

0.001

0.01

0.04

0.001

0.50

0.10

---

0.01

---

0.10

0.60

0.01

---

0.01

---

0.01

Minimum

1

2.00

4.00

6.00

0.50

1.50

0.60

7.00

6.00

0.40

6.00

2.50

2.00

1.50

9.50

---

0.30

0.60

0.10

---

0.01

0.20

0.04

0.08

0.50

0.40

---

0.50

---

4.00

0.60

4.00

---

3.00

---

0.30

Maximum

1

0.58

1.27

0.87

0.50

0.40

0.29

0.32

0.50

0.40

1.54

1.28

1.05

0.65

1.44

---

0.10

0.35

0.04

---

0.01

0.04

0.04

0.03

0.50

0.24

---

0.28

---

0.89

0.60

0.38

---

0.28

---

0.11

Mean

---

0.35

0.69

0.69

---

0.32

0.13

0.84

0.67249

---

0.98

0.60

0.35

0.33

1.65

---

0.09

0.21

0.06

---

0.00

0.04

---

0.02

0.00

0.13

---

0.17

---

1.01

0.00

0.44

---

0.46

---

0.07

Std. Dev Table 14:Area Under Crop


WeedingThe study showed that the surveyed households weeded their contracted sugar beans, tobacco, OPV seed maize, maize, cotton, paprika, organic herbs, organic chillies and paprika crops two times or more.

2.4.3 Production and Yields

Quantities Produced Under Contract and Non-Contract ArrangementsIn general because most surveyed households planted larger areas to the contracted crops. They produced more for the contracted crops compared to the non-contracted crops.

Table 16 on the following page compares the production in kilograms of the contracted and non-contracted crops.

Yields of Contracted CropsYield rates are generally higher than national average for communal production. Table 17 below shows the mean, minimum and maximum yields for the various contracted crops. The project beneficiaries are realizing a better yield rate than the national average for communal production. Figure 11 illustrates the findings. Number of Times Crop Weeded

Crop

Maize (OPV)

Maize (Hybrid)

Sorghum

Sugar Beans

Paprika

Cotton

Tobacco

Tea

Organic Chillies

Organic Herbs & Spices

Garlic

Soya Beans

Minimum

2

0

1

2

0

0

0

0

0

3

0

2

Maximum

2

4

1

10

10

6

5

7

10

16

8

3

Mean

2

2

1

3

4

3

3

2

3

8

4

3

Table 15: Weeding

Table 17:Yields

Crop

Garlic

Soya Beans

Ground Nuts

Maize (Hybrid)

Sugar Beans

Paprika

Cotton

Tobacco

Tea

Organic Chillies

Organic Herbs

AverageYield

forProject

Beneficiaries

(kg/ha)

12,203

832

2,625

2,334

1,412

914

866

2,543

2,471

474

1,000

Yield: National Average

(kg/ha)

10,000

1,356

414

1,029

1,200

1,200

800

1,418

1,566

1,500

1,300

% of Contracted

FarmersObtaining

ABOVE National Average

Yields

37.5%

33.3%

100.0%

74.0%

65.0%

26.1%

56.1%

65.5%

64.7%

9.7%

33.3%

Numberof

FarmersObtaining

ABOVE National Average

Yields

259

133

2,568

74

325

378

561

66

657

135

348

Numberof

FarmersProducing

Crop

700

400

2,568

100

500

1,447

1,000

100

1,018

1,396

1,046

Gar

lic

Soya

Bea

ns

Gro

und

Nut

s

Mai

ze (H

ybrid

)

Suga

r Bea

ns

Papr

ika

Cotto

n

Toba

cco

Tea

Org

anic

Chi

llies

Org

anic

Her

bs

10,0

0012

,203

1,35

683

2 414

2,62

51,

029

2,33

41,

200

1,41

21,

200

914

800

866 1,

418

2,54

31,

566

2,47

11,

500

474 1,

300

1,00

0

ProjectBeneficiaries

NationalAverage

Figure 11:Comparisonof YieldProjectVs.NationalAverages


Crop

Maize (OPV) - Contract

Maize (OPV) - Non-contracted

Maize (Hybrid) - Contract

Maize (Hybrid) - Non-contracted

Sorghum - Contract

Sorghum - Non-contracted

Sugar Beans - Contract

Sugar Beans - Non-contracted

Paprika - Contract

Paprika - Non-Contracted

Cotton- Contract

Cotton - Non-Contracted

Tobacco - Contract

Tobacco - Non-Contracted

Tea - Contract

Tea - Non-Contracted

Chillies - Contract

Chillies - Non-Contracted

Herbs & Spices - Contract

Herbs & Spices - Non-Contracted

Garlic - Contract

Garlic - Non-Contracted

Onion - Contract

Onion - Non-Contracted

Soya Beans - Contract

Soya Beans - Non-Contracted

Finger Millet - Contract

Finger Millet - Non-Contracted

Pearl Millet - Contract

Pearl Millet - Non-Contracted

Ground Nuts - Contract

Ground Nuts - Non-Contracted

Cow Peas - Contract

Cow Peas - Non-Contracted

Tomatoes - Contract

Tomatoes - Non-Contracted

270

0

250

0

150

20

0

0

0

134

100

3

1

1

0

---

0

16

0

---

0

2

---

0

150

2

---

1

---

1

300

0

---

4

---

0

Minimum

500

2,000

25,000

8,000

150

450

950

75

3,200

134

6,800

9

18,000

1,500

14,000

---

452

116

60

---

1,344

37

---

30

950

50

---

50

---

10

2,850

1,080

---

720

---

6,000

Maximum

385.0

727.6

2,757.9

1,359.2

150.0

190.8

402.7

9.414

262.2

134.0

1,306.7

4.7

2,743.4

181.2

3,534.7

---

29.5

43.2

28.0

---

60.7

8.5

---

11.8

416.7

12.6

---

7.2

---

4.0

1,575.0

153.1

---

129.3

---

1,037.9

Mean

162.6

500.8

3,133.9

1,251.3

---

133.7

258.4

13.2

345.5

---

1,219.4

2.4

3,391.1

374.3

3,358.3

---

63.0

48.5

30.1

---

133.1

8.1

---

6.8

461.9

17.4

---

13.1

---

2.5

1,803.1

177.5

---

147.0

---

1,245.2

Std. Dev Table 16:Production -Contracted andNon-contractedCrops


2011/2012 Season Production Challenges50% of the majority of surveyed households, reported late distribution of inputs, followed by 45% who reported pests and diseases and 35% reported inadequate inputs as a challenge. Figure 12 below summarizes the production challenges that were reported by surveyed households.

Post-Harvest Challenges The main post-harvest challenges were inappropriate preservation techniques (5%), inappropriate/inadequate storage (14%), inadequate knowledge/skills on grading and preservation (12%) and pest infestation 28%).

2.4.4 Extension Support

Sources of Extension Services forSurveyed FarmersExtension plays a pivotal role in disseminating information on agricultural practices to farmers. 70% of surveyed households received extension support for the 2011/12 season from government extension workers, private companies (45%), NGOs (20%) and other farmers (10%). In some cases contracting companies, NGOs and AGRITEX were also collaborating in providing technical support to the farming households. Figure 14 summarizes the proportion of farmers accessing extension services from different sources.

Type of Extension Support Received Figure 15 explains the proportion of surveyed households who received different types of extension support from the main sources of extension like on land preparation (75%) and pest and disease control (60%). Around 30-40% of the surveyed households received supporton seed choice (40%), fertil izer use (42%), conservation agriculture principles (30%), marketing (30%) and farming as a business (35%). Only 25% of the surveyed farmers

MinimumFigure 12: Production Challenges

Figure 13: Post-Harvest challenges

Figure 14: Extension Support

received extension support on post-harvest management water use (10%), and value addition (5%).

2.4.5 Marketing

Number of Crops Sold Per FarmerThe majority of surveyed farmers (62.7%) sold one crop, while 23.7% sold two crops and just over 10% managed to sell three or more crops. However, it is important to note that 3% of farmers did not sell anything.

Distance to Market and/or Buying PointDue to the auction system in the tobacco sub-sector, farmers travelled the longest distance to the market (143kms). The average distance covered by the surveyed farmers who sold cotton was 12.6km, 5.5km for maize farmers, 4.6km for garlic farmers, 2.7km for organic chillies farmers, 2.7km for groundnuts farmers and 1.3km for soya beans farmers.

In general the contract farming schemes ensure that the buying points is closer to the production locations. 6 of 15 crops are now being bought at the farm gate.


Figure 15: Extension Support Received

Figure 16: Extension Support Received

Crop

Maize (OPV)

Maize (Hybrid)

Sorghum

Sugar Beans

Paprika

Cotton

Tobacco

Tea

Organic Chillies

Organic Herbs & Spices

Garlic

Onion

Soya Beans

Ground Nuts

Tomatoes

Average Distance

0.2

5.5

0.5

0.2

5.2

12.6

142.7

0.2

2.7

2.0

4.6

0.9

1.3

2.7

0.5

(Farm gate)

(Farm gate)

(Farm gate)

(Farm gate)

(Farm gate)

(Farm gate)

Table 18: Distance to Market


Major Marketing Challenges65% of surveyed households, reported low prices of produce as a challenge followed by its late collection (15%), late payment (15%) and long distance (12%). Figure 17 highlights the major marketing challenges farmers met during the 2011/12 season.

2.4.6 Incomes From Crop Sales

Farmers contracted for tea realized that it generates most income on an average, probably because tea is an all year round crop. Tea is followed by maize, tobacco and cotton. Farmers growing soya beans realized very little income.

It is critical for the contracting companies to go for a combination of crops so that farmers realize better income. Table 19 summarizes the survey findings with respect to mean, minimum and maximum incomes realized per crop by the sample households.

Almost a third of the surveyed farmers failed to realize any income mainly due to crop failure as a result of the poor season quality, low prices and the failure by the company to buy their produce. Close to a quarter of the surveyed households managed to get incomes ranging from $1 to $50.

A combined 12% of the surveyed households realized more than $400 from their crop sales. Over a tenth, 12%, earned $51 to $100 while another 11% realized incomes in the range of $201 to $400. Another 10% earned incomes in the range of $101 to $200. The pie chart (Figure 18) presents survey findings in respect of the proportion of contracted farmers who were in the various income categories.

Figure 17: Marketing Constraints

Income from Crop Production

Garlic

Onion

Finger Millet

Ground Nuts

Maize (Hybrid)

Sugar Beans

Paprika

Cotton

Tobacco

Tea

Chillies

Herbs

Table 19: Income (US$)

Minimum

6.00

1.50

10.00

12.00

2.00

2.80

2.40

1.30

0.455

0.455

9.00

3.00

3.00

Maximum

9,000.00

1,350.00

450.00

180.00

200.00

9,000.00

2,500.00

4,261.50

2,030.00

2,030.00

5,760.00

750.00

750.00

Mean

376.97

96.64

117.83

96.00

43.32

444.65

168.31

306.96

336.45

336.45

378.37

59.96

59.96

Std. Deviation

784.20

206.70

90.60

118.80

58.60

1,182.20

377.60

497.10

407.40

407.40

1,006.00

121.20

121.20

Use Of Income From Crop SalesThe surveyed household allocated 38% of their income to domestic consumption (groceries), 20% to education expenses, 15% to farming inputs and 12% to household assets.

The bar graph, Figure 19, below highlights the major uses of the income from crop sales.

Loan RepaymentFindings from this survey reveal that more than 57% of the contracted farmers experienced difficulties in repaying the loans, 42.2% paid their loans in full. The reasons given by the respondents for failing to repay loans included low yields/crop failure (45%), low prices (21%) company failing to buy as per contract (17.5%), and other (28%).Figure 20 below illustrates the findings.


Figure 18: Income Categories

Figure 19: Income Use

Figure 20: Loan Repayment


Conclusions & Recommendations 3.0

The majority of smallholder farmers with their land and labour are targeted by contracting companies. But more effort should be put in with specialized and effective extension services and diversification of contracted crops. The widespread use of cell phones presents an opportunity to develop extension strategies around available cell phone technology.

After contract mentoring and capacity building activities provided by SNV’s LCBs, there is an increase in proportion of farmers who keep copies of their contracts. However, some of their contract negotiation capacities still need strengthening. Some contracting companies do not provide a holistic package of inputs.

The net effect however, is sub-optimal yields and then the farmer has to shoulder the burden of poor returns and consequently poor loan repayments. Development agencies and private companies should work together to address production constraints such as late distribution of inputs and post-harvest problems of pest infestation because farmers ranked these as their major challenges.

Yield rates are generally above average for crops that are under contract farming. This is due to the intense attention given to contracted crops and or the fact that contracted crops almost always have sufficient inputs.

Advantages of contract farming include:

1. Bringing the market to the farm gate. This has reduced costs for the farmer and made farming more viable for most farmers. 2. Boosts and diversifies the income sources of the farmers and transfers the modern techniques of production to smallholder farmers. 3. Smallholder farmers get the benefits of quality control, marketing and other services. This has increased the rural incomes, productivity and cash sales.

A contract will be more successful when it works for a longer period. With 40% of the contracted growers getting into contract farming for the first time, a full and partial repayment rate of 67.3% is quite encouraging. Most farmers showed commitment to honour their contractual obligations. With 13 companies contracting farmers outside the SNV and FAO programmes, there is indeed a strong business case for companies to engage smallholder farmers.

Therefore the study recommends the following:

VI. Contract farming should be up-scaled and more companies supported as it has proved to be a viable approach during


this transition period until rural agriculture value chains are revived. For the foreseeable future smallholder farmers will rely on contract farming for inputs and markets.

VII. A strict screening mechanism should be implemented for companies so that farmers are not disappointed. The criteria should look at the company’s ability to engage fully in a contracting scheme from input supply, extension to marketing. Due diligence should be conducted before the company is supported.

VIII. Contracting companies should continue to be mentored to listen to the voices of farmers and recognize farmers as an important business partner and to deal fairly with them. Likewise, farmers should be mentored to realize that they are not an extension of the company workforce.

IX. More effort should be put in improving the efficiency of smallholder farms. This could be done through more specialized and effective extension services. Mobile-phone extension strategies should be explored since they are considered to be cost effective. SNV and other development partners should promote information and communication technologies for development (ICTD4D).

X. SNV should encourage companies and farmers to diversify their enterprises to boost incomes.



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Documents

The Contract Farming Support Program - SNV€¦ · The Contract Farming Support Programme 2011/2012 • Post-Harvest Study 05 There are a majority of farmers who have not even signed