Ensure contract farming benefits producers, manufacturers

the Zimbabwe Commercial Farmers Union last week urging those firms who process agricultural products to contract farmers to grow their requirements.
Several factors drive the switch to contract farming.
First, as VP Nkomo noted, Zimbabwe is not able to raise much in the way of international finance and our own resources are too little to provide a large enough pool of cash to lend to farmers to buy required inputs.
Secondly, the switch from a few thousand large commercial farmers to tens of thousands using far smaller farms, the direct result of resettlement, makes it difficult and expensive for banks to offer credit, especially when there is so little security on offer.
Thirdly, there is a tremendous amount of successful experience in Zimbabwe when it comes to contract farming.
Cottco has led the way for decades, now obtaining more than 98 percent of its cotton from farmers on contract. Cottco has complex mechanisms in place that ensure very low rates of bad debt yet allowing new farmers to enter the system, basically on the sayso of more established farmers.
Finally the manufacturers who need Zimbabwean crops need assured sources of supply, and contract farming offers them this, without having to go through middlemen.
At its best contract farming benefits both the producers and the buyers.
The producers know in advance roughly what sort of price they can expect, and have inputs, or the money for inputs, up front.
The manufacturers know how much it will cost them to buy the crop and roughly how large the harvest will be.
But there are dangers, and Vice-President Nkomo noted these when he warned farmers not to accept too low prices for their crops.
The ZCFU president, Mr Donald Khumalo, expanded on the dangers when he said that some contractors offered inadequate inputs but then demanded the whole crop at a low price.
Clearly, the contract deals must benefit both parties and must be something more than sharecropping.
There have been problems of contractors cheating by offering too little, as the ZCFU has noted, and there have, on the other hand, been cases of farmers cheating by taking the inputs, signing a contract and then selling their produce to another buyer.
Pirate buyers are not unknown, companies that encourage farmers to cheat without having put in a cent of their own money into the inputs.
All this cheating will destroy what should be a good system.
The unions have been intervening, helping to negotiate decent deals for their members and then encouraging their farmers to obey the rules.
But there may well be need for arbitration at times; unions are an interested party in that they represent the farmers and while the unions can negotiate with associations of manufacturers, someone in the end has to help the two parties to reach a decent agreement and then help ensure that it is enforced.
One way might be to borrow the successful systems set up by trade unions and employers associations through national employment councils.
These have allowed workers and employers to hammer out deals, and have a system of bringing in suitable arbiters when there is deadlock.
Final agreements, by negotiation or arbitration, are then enforced through statutory instruments.
A similar system could well be the best way forward to negotiate rational final prices for crops and reasonable values placed on the required inputs.
Making these deals cheaply and easily enforceable will prevent cheating.
The alternative, of using expensive court hearings to enforce deals that may not be in everyone’s best interest, is slow and cumbersome.
An agricultural tribunal would replace the Labour Court when there was a dispute.
Such a system would remove many of the present problems with contract farming and help ensure what all desire, deals that are good for both farmers and buyers and deals that allow zero cheating.