A farmer sprays thiodan in his
cotton farm. Contract farming could entice more farmers to improve their
production PHOTO BY COSMAS PAHALAH
By Cosmas Pahalah, The Citizen
Reporter
Dar es Salaam. Though the government has firmly emphasised that contract
farming is the way forward in cotton cultivation, there is still uncertainty
as some stakeholders are yet to accept the new system. The disagreement
between those who are for and those against the system was evident in a
meeting of cotton stakeholders held in Mwanza recently.
Looking at intricacies of the
system, it is evident
that it is geared towards
assisting the farmers. It also seeks to improve the quality and quantity of
Tanzania’s cotton at the international market. One wonders then, why do some
people oppose it?
The problem might be that
some of the stakeholders don’t want to invest. This system needs stakeholders,
notably ginners, to invest extensively by assisting farmers during
production. That is why during this season, ginners were asked to deposit
Sh50 million each, so as to ensure availability of inputs to farmers.
It is this amount of
investment which has put cotton stakeholders confused. Listening to those who
are opposed to the system, it is evident that though they say that they are
against it, in fact they are against investing. This is because inspite of
their protests they concur that contract farming is beneficial, not only to
farmers, but to them as well.
Ideally, contract farming is
a private-sector transaction facilitating farmers and ginners in collectively
investing in land, labour, credit, high-value inputs, education and
technology for their mutual benefit. Here ginners form a “platform” from
which rural Tanzanians may secure the means of production to transform
themselves into productive cotton farmers.
This investment ensures
increased production of high quality cotton. While farmers will be direct
beneficiaries of the increased yield, ginners, on their part, would reap
their benefits from the export of the high quality cotton. And the country
will also benefit as it will be famed as origin of high quality cotton.
According to Tanzania Cotton
Board Director General, Mr Marco Mutunga, due to negligence to assist
farmers, cotton farming has taken a hit. This has led to low yields of down
to 300km per acre while there is a possibility of producing up to 1,500kg per
acre.
Speaking during another
meeting in Dar es Salaam last week, Mr Mutunga also indicated that Tanzania
cotton has been getting low prices at the world market due to its inferior
quality. On average, Tanzania cotton is sold at between 4 and 6 US cents
discount.
Lack of investment in cotton
farming has contributed to inadequate research on the crop, Mr Mutunga says
noting that coupled with low level of mechanisation and inadequate extension
services, the crop, which had been the pride of Tanzania few years ago, has
been going down at an alarming rate.
On the contrary, contract
farming is aimed at turning this sorry state to prosperity, according to Mr
Mutunga.
Some stakeholders who spoke in Mwanza were surprised that there were
some people, especially those involved in cotton farming, who oppose the
contract farming system, which, if used effectively, will redeem the crop
which is depended on by more than 16 million people in the country.
A warning has already been sounded
that if something is not done to salvage the contract farming system, the
crop, known as the white gold, would die as people look on. Its demise would
not only affect millions of people from seven regions, but will also have a
hit on the agriculture sector, in which it accounts for 25 percent.
Because agriculture is the
mainstay of the economy, this means that the country’s economy is also going
to be affected.
A cross section of ginners
speaking in Mwanza stakeholders meeting recently, warned that the cotton sub
sector will fall into deep waters if contract farming is halted following a
wide concerted opposition by some ginners.
Speaking at the Mwanza
meeting, a representative of one of the major buyers of the produce, Jagan
Gopinath of Olam Tanzania strongly advised that if the contract farming model
for the cotton sector fails, it would be difficult for private investors to
top up their stakes in the sector.
It was apparent at the
meeting called by the government through Tanzania Cotton Association (TCA)
that ginners that have invested billions in contract farming want the concept
to go on while others who find themselves short of necessary funding, felt
that they were being pushed out of the business because of the heavy
investments required.
“The best way forward to increase productivity and quality of cotton
produced in Tanzania is contract farming, which is win–win for all.
It enables the stakeholders
including the government to keep a watch at the whole value chain. It
is the only viable way. I am telling this based on our experience in Zambia,
Ghana, Mozambique, Zimbabwe, and Ivory Cost,” said Mr Jagan Gopinath.
He added that it is contract
farming that has revived cotton successfully in Mozambique, Zambia, and
Zimbabwe. Added Mr Gopinath: “This is going to be the same case in Tanzania,
but if we allow the non investing ginners to conduct a free for all buying
without supporting farmers with inputs, we will be taking steps backwards.”
Sunday Mtaki, a consultant to the
cotton industry, also felt that a lot of efforts invested to revive the crop
will be futile if cotton farming is thrown out and the nation will have to go
back to the drawing board.
“Without implementation of
contract farming, Tanzania’s cotton sector will be in peril. Record levels of
planted acreage achieved this season will not be repeated as without
organised support of ginners in securing and distributing significant
levels of inputs on a credit basis, farmers may not be able to make it,”
said the chief executive officer of Singida-based Biosustain
Ginnery, Dr Riyaz Haider.
While others are hesitant,
about 13 ginners and four cooperative unions have already invested in
contract farming and facilitated distribution to farmers of most of the
record quantities of pesticide and about 30,000 tonnes of seeds.
The contract farming system,
which is supervised by TCB, is coordinated by the Cotton Development Trust
Fund (CDTF), a private-sector agent facilitating input procurement on behalf
of farmers, ginners and the TCB. The investment and other actions of
these 17 ginners and coops have supported the lion’s share of a record amount
of acreage devoted to seed cotton production (estimated at nearly 1.4 million
acres this season).
Despite the achievement,
farmers groups said there was still a shortage of inputs. Last year, these
same 17 ginners and coops purchased over 80 per cent of the crop while still
reporting significant under-utilisation of their ginneries. This
season, they have signed production contracts with nearly 4,000 farmer
business groups (FBG) comprising nearly 250,000 Tanzanian cotton farmers.
In contrast, about 18
ginners who have not invested in contract farming have signed production
contracts with only about 1,000 FBGs representing less than 80,000
farmers. Despite not having invested in the system, these ginners have
distributed only a small fraction of seeds and pesticides in this season.
Ginners supporting contract
farming want the government to maintain an enabling environment for
investment by maintaining the rules of contract farming as stipulated by the
TCB as they feel that allowing “free rider” ginners, who have not invested in
contract farming, will just kill the sector.
Some non-investing ginners want
free riders to buy the crop from anyone, which encourages side buying from
contracted farmers and leads to lowering the balance of scale.
Accordingly, if the ability of invested ginners to collect on loans extended
to farmers is inhibited by government’s licensing of “free-riding”
non-investing ginners, then investing ginners cannot be held accountable for their
input-related obligations.
Implementation of contract
farming has been opposed to the Minister of Agriculture, Food Security and
Cooperatives by a group of ginners, who have failed to invest in contract
farming as stipulated by the TCB.The 18 ginners that have not invested in
contract farming this season purchased only about 17 per cent of last year’s
crop. Several of these 18 ginners are currently on the “default list”
of the International Cotton Association. Some have managed to negotiate and
removed from the list and are now paying European buyers for them to be able
to continue with the business.
Inclusion on such list indicates
that these ginners have defaulted on significant contracts with international
cotton traders and that these ginners will not likely be able to access
international cotton markets in selling the product of whatever level of seed
cotton they might purchase if licensed. Here it is not only the reputation of
the ginners which is in line, but also Tanzania fame as a producer of quality
cotton is at stake.
Furthermore, continuing inclusion
of these defaulting ginners in Tanzania’s cotton sector may be detrimental to
the sales efforts of Tanzania’s non-defaulting ginners among international
cotton buyers.
This situation calls for
immediate government intervention. To abandon contract farming seem not to be
good option as it will increase the risk of demise of the crop.
Failure of Government to
act to uphold the rules of contract farming will result in significant
hardship for Tanzanian farmers.
For his part, TCA Chairman
Mwita Gachuma, speaking during the Mwanza Stakeholders meeting, called upon
ginners that have not yet invested in contract farming to meet their related
obligations immediately. He said their failure to do so would mean that they
were not going to be licensed to buy cotton this season.
“We hope that our colleagues will
appreciate the grave situation we are in and do something to rescue cotton
which supports millions of people and accounts for substantial percentage of
agricultural economy in the country,” he said.
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