Obert Chifamba Agric-Insight
MOST contract farming arrangements have in recent years been riddled with legal battles and disputes that have given the farmer more sorrow than the joy and peace of mind expected.

In essence, contract farming is a sponsorship arrangement between a farmer and another party that will give the farmer easy access to funding or inputs.

It is a way of making funding or input resources available to a farmer, but with a clause on how they repay after harvesting.

The contractor provides funding, inputs and in some cases the market.

It has to be structured in a way that promotes a win-win situation that sees both parties walking out with something as outlined in the deal.

When done properly, the arrangement can allow a farmer timeous access of inputs, as well as a guaranteed market.

Some contract arrangements even go the extra mile to bring on board an agronomist to help the farmer with technical extension services.

This can help farmers a lot, especially those in the small-scale category that cannot afford to outsource such services owing to limited funding opportunities.

This arrangement can also enable farmers to grow high-value crops that they usually do not consider because of their enormous demands for technical knowledge or funding.

Contract arrangements usually go awry when the contractor wants to make more money than the farmer or when the latter ditches the contractor for a better paying buyer, a problem that essentially emanates from the way the contract would have been drawn.

If the farmer does not get adequate advice before signing the deal, then there are chances unscrupulous contractors may try to exploit that loophole to make a  killing.

Some contractors can even inflate costs of inputs while some may not be transparent in terms of the pricing structures to be used after the farmer harvests and delivers the crops.

There are usually pricing terms that the farmer and the contractor must agree on before the signing of the contract, but these easily become redundant once a greedy contractor realises that the other party does not understand the repayment modalities to the last letter.

Such scenarios are common especially when the market responds positively at the end of the season and the contractor can easily snatch all the profits and just give the farmer what they would have agreed on or even less.

Contract arrangements for crops such as cotton are a bit complicated, as farmers and ginners cannot negotiate on the same platform after the Competition and Tariffs Commission issued an order barring farmers’ unions and ginners from meeting and negotiating contracts on their own purportedly on behalf of farmers.

The development gave contractors the leeway to just talk to farmers and convince them to enter some kind of agreement yet most of the farmers might not understand what would be contained in the contracts without expert guidance.

The reality is that some contractors are not giving farmers adequate inputs to guarantee decent and viable yields, but still proceed to demand to be repaid for services that they would not have sufficiently delivered or inputs they would not have provided in totality.

This scenario has naturally forced many farmers to look elsewhere for better paying markets to remain in business so they end up guilty of side marketing.

The Agricultural Marketing Authority (AMA) is the regulator of contract arrangements and is supposed to go through the contracts to see if contractors are meeting all their obligations and not just exploiting the farmers or even short-changing them from the start.

Farmers are in business and can see where they are being short-changed so they end up seeking better markets so that they get profits from their enterprises and make up for the deficits induced by the inadequate inputs delivered by the                                 contractor.

The unfortunate thing is that farmers in most cases cannot afford to get legal representation in the event of disputes with the contractors, so they eventually lose out on technicalities. To avoid getting into such unholy unions farmers must approach farmers’ unions or agricultural extension officers for advice on the nature of contracts they will be signing and not just do it because others will be doing it.

Farmers’ unions have economists that can advise them on the contents and special clauses within a contract and how they can react to them before they commit themselves to deals that will impoverish them in the end.

Agritex or farmers’ unions can also help verify on the genuineness of the would-be contractors and their history in the industry.

The problem at the moment is that farmers are desperate for funding and can easily fall prey to marauding fly-by-night contractors capitalising on the desperate economic situation.

Some contractors even ask for administration fees, which farmers are not supposed to be paying and so they are fleeced of their hard-earned cash in the                                             process.

Contractors are licensed on a sector-by-sector basis by AMA so the farmers can also help their situation by asking potential contractors to show them their licences and other credentials.

They are licensed for various crop categories, for instance cotton, grain and horticulture so farmers need to verify all those details before plunging into the signing ceremonies.

Cotton farmers have the Government to thank after the latter roped in the Cotton Company of Zimbabwe (Cottco) to support production as well as buying the cotton.

The arrangement was arrived at in the wake of yearly price wars that nearly crippled the cotton and textile industries, as farmers struggled to finance the production of the crop and later secure viable  prices.

For tobacco there is the Tobacco Industry and Marketing Board (TIMB) that licenses contractors so when farmers are not very sure about a contractor the best way to solve that is by seeking information from TIMB, which licenses contractors every                                                                                   year.

Ultimately, there is need for a legal regulatory framework to protect farmers in contract arrangements.

The last time I checked there was just a draft contract legal framework that had been done by the Ministry of Agriculture’s economics and marketing department, which creates a gap that is being exploited by both farmers and contractors since there is not policy empowering AMA to arrest and lay charges based on a statutory stating that anybody caught doing side-marketing or side-buying would be given what penalty.