adminAgriculture Specialist Writer
IN a move that buttresses Government’s push for farmers to adopt a business approach in their activities, a Chegutu company has entered a joint venture arrangement with citrus farmers from the district to use its pack house before exporting produce.
The company, Sable, has adopted an inclusive business model that allows the farmers access to its state-of-the art pack house and as they ready their citrus products for the export market.
Sable inclusive business model lawyer Mr Rangu Nyamurundira disclosed this during an interview with The Herald yesterday saying the arrangement with the smallholder farmers in the horticulture export business was designed in the ‘hub and spoke’ model.
“A1 and 2 farmers in the Chegutu area are invited to partner Sable (the investor) in citrus production for the export market. Farmers can offer up to 50 hectares of their farm and will get rentals for the use of their land. So far eight farmers have expressed their willingness to participate in the project, while three are already doing it 25ha each. Our initial target was 1 500ha, but we now plan to expand it to 10 000 ha with time,” said Mr Nyamurundira.
Under the joint venture, the investor brings in all the business capital requirements, manages the venture, provides citrus production expertise and has a state-of-the art pack house with the farmer expected to provide land. The joint venture will be run in a business model with the farmer owning 51 percent of the shares and the investor 49 percent.
The investor will not wholly-own the business but seeks to increase citrus production and fully utilise the productive capacity of the installed pack house and push to satisfy the export market demands.
Mr Nyamurundira pointed out that adequately resourced farmers can pay for the 51 percent share while those who are not can do so through retained dividends, as citrus is a long-term crop with the first harvest coming after five years.
“The farmer has the option to buy-out the investor’s 49 percent share and make the business totally his/her own,” further disclosed Mr Nyamurunda.
For citrus production all year water supply is crucial. Sable has since acquired 35-year water rights from Zimbabwe National Water Authority (ZINWA). Water from the nearby Mupfure river can be channelled into night storage dams for use in irrigation.
The success of the citrus joint venture rests in the state-of-the art packhouse with a capacity of 300 tonnes per day as well as access to seedlings from Dodhill, an internationally recognised nursery with access to royalties and certification.
All A-grade oranges from the pack house are exported with local sales coming from the B-grade. The establishment of a joint venture for transparency and guarantee to both the parties (farmer and investor), needs the endorsement of Ministry of Lands, Agriculture, Fisheries, Water and Rural Development.
Sable applied for investor’s licence from Zimbabwe Investment Development Authority (ZIDA) for a US$13, 5 million investment into commercial citrus production, which was granted in November 2021. The firm is now applying for special economic zone (SEZ) status from ZIDA for increased benefits such as waiver of import duty on various equipment used for citrus production, waiver on tax charged for processing services provided at pack house, tax breaks equivalent to five percent of citrus revenue generated, waiver of remittances on export of citrus for first ten years from planting of citrus and guaranteed long term water security citrus to cover for potential drought by ZINWA.
Global citrus export market grew by 14, 1 percent to US$16, 3 billion between 2019 and 2020. South Africa accounts for 11 percent of global trade, valued at US$1, 84 billion in 2020, from its estimated 82 000 hectares citrus land. Zimbabwe only has an estimated 3 200 ha for export citrus. There is great opportunity to recover and grow citrus production for export on the backdrop of the country signing citrus trade protocol with China.
The volume of citrus exports rose from 59 million kilogrammes in 2020 to 76 million kilogrammes in 2021 representing a 30 percent annual growth.
Ministry of Lands, Agriculture, Fisheries, Water and Rural Development permanent secretary Dr John Basera recently disclosed that 2 000 joint ventures had been signed covering 200 000ha.
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