Tinaye Agere
Nixon Chekenya
“We got to do things that are real and tangible and tough to do.” – Doug Munatsi
In its simplest terms, contract farming describes an agreement between a grower and a processor concerning the production of a particular agricultural commodity.
In reality, the nature, form and specific terms of these contracts can vary considerably.
In Zimbabwe, the terms “contract farming” and “outgrower scheme” are often used interchangeably.
In some cases, people choose to distinguish between these two: contract farming to mean private schemes and outgrower scheme to describe arrangements which involve Government agencies or non-governmental organisations (NGOs).
Contract farming involves the contracting out by the processor of the production of a particular agricultural commodity to a grower.
This constitutes the initial step in a vertically coordinated and modern agricultural value chain. In some technical agricultural economics language, contract farming is a necessary condition for the structural transformation of a developing country to happen.
Agriculture plays an important role in Zimbabwe’s economy and accounts for an estimated 16 percent of the country’s gross domestic product (GDP) and 30 percent of the nation’s total exports.
The sector provides income to 70 percent of the country’s population.
Instead of relying solely on foreign direct investment, Zimbabwe can rely on agricultural value chains.
Supermarkets in the country and other food stores can enter into agreements with farmers through which commodities are produced under contract.
This implies the delegation of the production of agricultural commodities to growers.
In 2023, Sub-Saharan Africa’s population had reached 1,2 billion.
Of this, about 62 percent currently reside in the rural areas with no access to credit or brick-and-mortar banking (AfDB, 2024; World Bank, 2024).
In the same year, Zimbabwe had 16,6 million people, with 67,6 percent of these people living in the country’s rural areas (World Bank, 2024).
While others may see these statistics as depressing and inspiring fear and despair, I choose to see this as potential to create shared value.
Yes, these figures are real and a sad account of the current situation in the country.
This has led others to argue that low-income households have no money.
There are lots of people in rural areas.
Lots of them with very little money but they are generally honest, hardworking and available to work.
Collectively, the combined income potential of this bottom-of-the-pyramid group is massive.
If one is clever, innovative and persistent, they can be able to invest in rural markets, build a sustainable business and value chains and make money in the process.
By financing the development of modern agricultural value chains, Zimbabwe can be on a path to steady structural transformation in which the economy will go from relying primarily on agriculture and natural resources to rebuilding its manufacturing sector.
It is hard but doable.
As Barrack H. Obama II would put it, “Yes We Can!”
*Nixon Chekenya is a Ph.D. student, distinguished graduate student fellow, teaching and research assistant at Texas Tech University.
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