AMA gazettes laws for grains, oilseeds

Agriculture Reporter
GOVERNMENT has gazetted new regulations to guide the production, buying or processing of grain oilseeds and products to promote the orderly marketing and fair trade practices in grain and oilseed industry.
Statutory Instrument 140 0f 2013, Agricultural Marketing Authority (Grain, Oilseed and Products) Regulations, is expected to bring orderliness in the contract farming and encourage many companies to support production of these crops.
The grains include maize, wheat, barley, round nuts, sorghum, millet, sugar beans, cowpeas while oilseeds include soyabeans, sunflower and groundnuts

AMA chief executive Mr Rockie Mutenha in an interview said that only a statutory instrument for guiding cotton and tobacco production existed and the absence of the regulatory framework for grains has been affecting contract farming and production.

Last season a number of companies who were willing to fund wheat production withdrew at the last minute after Government failed to come up with a regulatory framework to guide the contract farming.

Mr Mutenha said now companies could contract farmers to produce not only grains but oil crops as well.
“We are targeting millers, stockfeeds manufacturers and bakers among others. The instrument has clear guidelines on how the contract farming should be conducted protecting both the farmer and the contractor,” he said.

The framework is aimed at providing a mechanism for enforcement of contractual obligations to protect the investment of farmers, contractors and suppliers.

Under the instrument, all buyers, brokers, contractors, processors, traders and their respective associations should be registered with the authority.

“Every contractor shall be required to submit performance guarantee at the time of registration indicating ability to provide inputs and purchase grain or oilseeds.

“The authority shall at the time of registration issue a certificate to the registered buyers, brokers, contractors, processors, traders and or their respective associations upon meeting set requirements and receipt of payment of the prescribed fee,” read the document.

For the purchasing of contract and non- contract grains and oilseeds, a grower and a contractor may by mutual agreement enter into a volume-based contract which should be binding.

The framework states that before the beginning of the production season, the grains and oilseed technical team should determine the minimum input package to be advanced by contractors to growers, and cut off dates from input distribution on recommendation by Agritex.
A contractor should complement Government in the delivery of technical and extension services to contracted growers.

“A contractor who fails to deliver inputs in good time to a grower or fails to pay the purchase price as agreed in the contract within the agreed timeframes, shall be liable for any losses which the grower can show resulted from the late delivery of inputs or the failure to pay the purchase price as agreed in the contract within the agreed timeframes,” read the framework.

The instrument also guides farmers against side-marketing the contracted crop.
In this case, contract grains and oilseeds shall not be purchased by any other person other than the contractor to whom the grower concerned is contracted.

“A contractor and a grower shall agree on a price or pricing model that takes into account the cost of inputs and services of the contract grains and oilseeds. A grower should not divert inputs delivered under contract to any use other than the production of the grain or oilseeds which he or she had agreed to produce exclusively to the contractor.

Any grower who diverts such inputs to the other use shall compensate the aggrieved contractor with an equivalent value of the output or business the contractor would have lost. A grower should sell non-contract grains and oilseeds to any buyer as registered by the authority. Any buyer who purchases contracted grain or oilseeds shall compensate at the price determined by the committee within 21 days of the determination.

Those who breach the contract would be liable to a penalty of US$100.
Offences include operating without a licence, diverting contract inputs to other use, failure to pay contract purchase price, buy or sell grains or oilseeds contracted by another contractor below 10 tonnes among others.