Private sector not keen on contract farming

Deputy Minister Zhanda

Deputy Minister Zhanda

Business Reporter
GOVERNMENT has expressed concern over the private sector’s reluctance to provide significant funding support to agriculture, which provides a number of key raw materials required by industry for manufacturing processes.

Deputy Minister of Agriculture (Responsible for Livestock) Paddy Zhanda said only a few private sector companies, among them Nestle Zimbabwe and Dendairy, had come on board to complement Government efforts in agriculture.

Deputy Minister Zhanda said private firms were little involved in contract farming or other financing models such as joint ventures, which he said were critical for structured financing and providing assured markets for farm produce, as in tobacco.

“What the farmer does not like is an issue where they produce and do not find a market. The good thing with contract farming is that it deals with two fundamental issues; it deals with issue of funding and assured market,” he said.

“In that model there is structured financing. You find that farmers are provided with capital for tobacco barns for over a year or for five years. This is the model coming out in Dairy farming, where the companies provide funding to farmers to be assured of raw material,” the deputy minister said.

Deputy Minister Zhanda said Government had issues with private firms not keen on investing in agriculture and causing production of raw materials they needed. He also noted Government was not investing in tobacco, Zimbabwe’s single largest foreign exchange earner; raking in over half a billion dollars annually. Tobacco has thus far earned $540 million this season.

The lack of funding support for agriculture comes against the backdrop where the lack of funding is among major factors weighing down on the performance of agriculture with available funding facilities being unstructured and short-term.

Deputy Minister Zhanda said among the major factors constraining optimal performance of the agriculture sector, strategically important to the economy, were efficiency of production, lack of assured markets and climate change.

In berating the private sector, the deputy agriculture minister said most major initiatives relating to supporting production were Government initiated under programmes such as Command Agriculture and Zim-Asset programmes.

“Why did Government come in to institute Command Agriculture? It was simply because of the absence of private sector initiatives,” the deputy minister said.

He said only in milk production, where Dairibord, Dendairy and Nestle have reacted and tobacco growing; was the private sector proactive.

“When you talk about Zim-Asset, it is a Government initiative; Command Agriculture is a Government initiative. All the initiatives are coming from Government; there is (very little) coming from the private sector,” he said.

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  • Trymore Chimurenga

    That headline should read “Private sector not keen on losing money”. That is most likely what always happens with contract farming. One should not blame the private sector for being reluctant…they have been burnt before.