Agricultural financing system on the cards

An organisation that caters for the needs of smallholder farmers will in the next few months introduce a warehouse receipting system through which farmers deposit produce and use a receipt to obtain financing from banks.

VICTORIA MTOMBA
BUSINESS REPORTER

The Farmers’ Association of Community Self-Help Investment Groups (Fachig) is pioneering the system to alleviate the plight of smallholder farmers.

Fachig director Thomas Mupetesi said the warehousing receipting system would start in April or May this year.

“Farmers will deposit their products into a warehouse. This will help in that the goods that will be in the warehouse have a value which can be used to secure loans from the bank. Fachig will then go to the bank to borrow against this inventory stock and get loans that will assist farmers,” he said.

Mupetesi said the idea of the warehouse would help the farmers in that they would be able to sell their produce at better prices later on in the year after harvest.

Mupetesi said 30% of agricultural produce was lost during post-harvest handling process which can be reduced if the warehousing receipting system is used.

“We will start with 86 tonnes of maize and the seed capital for the maize will be $24 000.The warehousing receipting system will be handled by our co-operative unit. Funds that we are using were acquired from donors and some of our services,” he said.

Mupetesi said the idea of the warehouse was still within the organisation’s scope as it is allowed by law to provide microfinance services.

“We are completing one of our warehouses in Muzarabani and in other areas there are some warehouses already that can be used,” he said.
He said $33 750 would be used for the rehabilitation of warehouses countrywide.

Farmers were producing surplus, but they did not have the markets to sell their produce.

“There are layers of costs that smallholder farmers have to carry if they want to sell livestock, for instance, Zimbabwe Republic Police clearance, veterinary services costs, transport costs, Environmental Management Agency waste disposal fees,” he said.

Mupetesi said farmers were being shortchanged by middle men who came to buy cattle as the market is limited.

“There is need to look at other avenues to market cattle as farmers,” he said. Mupetesi said the prices of cattle depend with the size of the beast and they vary from animal to animal.

He said Fachig has worked with the rural district councils so that they revive the auction markets for cattle.

Mupetesi said Fachig helped the rural local authorities revive the existing auction facilities so that farmers could use them.

He added that when the beasts are not of the right sizes the farmers can keep them in a pen and feed them for some time before reselling.
“We have realised more sales, and better prices would be realised as farmers would be selling at bigger markets. This also pushes out middlemen.”

Mupetesi said market forces of supply and demand determine cattle prices.

He said major players for the cattle business were based mainly in Harare and were reluctant to go to the farms, preferring to use the middlemen.

“We should have many market options, abattoirs and big companies should come and buy the cattle from the farmers. This will create better incomes for the farmers.”

Mupetesi said the Zimbabwe Agricultural Competitive Programme (ZIMACP) has capacitated farmers in various ways including the idea of coming up with a warehousing system. The programme came in and introduced capacity building issues of advocacy and training in different aspects of farming.

Fachig supports smallholder farmers in Mt Darwin, Muzarabani, Guruve and Bindura. Mupetesi said the organisation was formed in 1999 with the support of the government of Denmark. However, the government of Denmark pulled out of Fachig in 2002.

Mupetesi said 73% of farmers in Fachig were women. Government last year said the smallholder farmer in Zimbabwe contributed 80% to the country’s maize production for the 2013/2014 season.

Government has been urged to put in place legislation which boosts agricultural production and financing.