Sunflower Value Chain Development in Tanzania: The case of SHADECO in Village Based Contract Farming Arrangement in Iringa Region -Tanzania

Transcription

1 Sunflower Value Chain Development in Tanzania: The case of SHADECO in Village Based Contract Farming Arrangement in Iringa Region -Tanzania A PRESENTATION AT MULTI-STAKEHOLDER CONFERENCE ON AGRICULTURAL INVESTMENT GENDER AND LAND IN AFRICA. CAPETOWN- RSA, 5-7 MARCH 2014 Enock A. Ndondole, CEO SYNOPSIS About SHADECO LTD Introduction Agriculture and Gender SHADECO s Business Model-Contract Farming Lessons learnt What must be included/recommendations 1

2 About SHADECO Background - SHADECO an acronym of Southern Highlands Agricultural Development Company Limited. Address: Kibwabwa Industrial Area, PO Box 2457 Iringa, Tanzania. shadecoltd@yahoo.com. -Established in 2008, Certificate of Incorporation No A private company, Employs 12 people. Products - Sunflower edible oil Services - Offer crushing services - Supply and distribution of agricultural inputs INTRODUCTION Sunflower is one of the main cash crops in semi-arid areas of Tanzania including selected districts of Iringa region. About 8 million smallholder farmers are involved in sunflower production in Tanzania Domestic demand for edible oil stands at 350,000MT second after fossil fuels in foreign exchange consumption (RLDC, 2010 and TEOSA, 2012). Tanzania has a history of state controlled business and marketing of agriculture commodities. Private sector in the agriculture sector is rudimental. Processing sector is just unfolding small and medium processing units are emerging. Women are the majority involved in processing of sunflower oil. 2

3 Agriculture and Gender The sector employs over 80 per cent of the workforce. It contributes around 28 per cent of the GDP and 30 percent of the export earnings. Agriculture is an important sector due to its potentiality to reduce poverty. Women produce about 70 per cent of all food crops. Land is an important asset but-most women don t have access and control over it. Gender inequalities -responsible for poverty among women and underperformance of the agricultural sector. Issues Women play major role in rural economy but to a large extent denied access to resources. Marketing structure for sunflower is based on farmers producing first and start looking for the buyers. A number of middle men exist who take advantage of uninformed farmers on sunflower market. Sunflower producers do not benefit from engaging in sunflower production as a business. Farmers do not participate in price setting for sunflower seeds Farmers are using outmoded seeds and poor agronomic practices leading to low production and seeds of poor quality. Existing processing units do not get enough supplies for processing, hardly reach 60% of installed capacity. 3

4 Village Based Contract Farming Arrangement: The case of SHADECO in Iringa Region In 2012 SHADECO in collaboration with SNV-Tanzania, IFAD funded MUVI programme introduced Village based contract farming arrangement of inclusive business model. The objective was to institute structured market for sunflower seeds in Tanzania. Contract farming can be understood as a firm lending inputssuch as seeds, fertilizer, credit or extension services to a farmer for exclusive purchasing rights over a specified crop. It is a form of vertical integration within agricultural commodity chains so that the firm has greater control over the production process and final product Martine Prowse (2012). Village-Based Contract Farming Model Source: SNV Tanzania. 4

5 Covering in 10 villages of Iringa Engaging in Contract Farming arrangement with 371 farmers out of whom 111 are women. Farmers are organised in 30 producer groups. The contract includes: Resource-providing contracts, commonly known as embedded services i.e seeds, fertilizer, extension services, loan. Production-management contracts, where the firm (SHADECO) stipulates and enforces conditions of production. Producers actively participate in price setting through producer Groups involved in collective bargaining. SHADECO and Producers meeting 5

6 LESSONS LEARNT Results Sunflower production has increased from to 8-10 bags per acre of 65kg each. Farmers access to structured and reliable market Sunflower seeds price has increased from TZS 30,000 to 40,000 Farmers income has increased substantially from an average of TZS 120,000 to 320,000 per acre. Producers are now engaged in sunflower production as a business District Council has now integrated promotion of sunflower in their Council plan. Contract farming-improved cultivation of sunflower 6

7 Challenges The supervision costs are high and not recoverable/can not be costed into the final product. Most farmers do not honor their contractual obligation, SHADECO managed to get only 50% of projected produce. Side selling is the major constrain as the crop has multi buyers. The village leadership and group leaders being partners in this arrangement do not assist to enforce the contract. Distortion of the market price by other buyers to disrupt the contract arrangement. A number of development policies and legislations (agriculture, land etc.) in regard to women and rural poor but implementation remains a challenge. Weak producer group leadership Communication problems among the group members/farmers. Lack of trust - farmers believe SHADECO or any other buyer is there to rip them off. 7

8 What must be included/recommendations Domestic Policy to create enabling environment for producers to link with processors, Council planning to integrate the crop in their council plan to provide for example extension services. Producers actively participate in price setting through collective bargaining (producer Groups). Contract farming arrangement needs a third party to overseer the arrangement, as mediator. Women are better compared to men in honoring their commitments, special focus be put on them as change agents Leadership skills for the producer groups and Councilors for Council resource allocation, especially sunflower CESS. Review gender laws for women property ownership and economic democracy policies (voice and participation of stakeholders) Build capacity skills at grassroots in management, governance, transparency and accountability. 8