WWW.DISSERTATION.XLIBX.INFO
FREE ELECTRONIC LIBRARY - Dissertations, online materials
 
<< HOME
CONTACTS



Pages:     | 1 || 3 |

«Making money farming in Manica Joseph Hanlon & Teresa Smart j.hanlon 21 May 2013 I earn more from my pigs than from my ordinary salary, a ...»

-- [ Page 2 ] --

It has substantial problems and has a mixed history in Manica. An initial boom in tobacco contract farming petered out as tobacco companies concentrated on Tete and Niassa. At the peak, there were 13,500 families growing burley (air or barn-cured) tobacco, promoted by the tobacco companies. Several other contract projects came and went: 3600 farmers growing sunflower, more than 3000 farmers growing paprika, and over 100 groups were organised to grow baby corn and other export vegetables. All have disappeared, although many of the emergent farmers gained their start through these contract programmes, and some tobacco farmers have moved to soya.

–  –  –

Semoc The biggest remaining contractor is the state seed company, Semoc (Sementes de Moçambique).

Production Inspector Virgilio Pascoal said that Semoc has 141 maize seed producers in Manica province: 70% have more than 10 ha and most are between 10 ha and 15 ha, but the largest has 80 ha. At least one has a tractor and three hire tractors; only eight use animal traction. All the rest do land preparation be hand, which can involve teams of 30 people or more. A few use fertiliser, but most do not. All are individuals; Semoc does not work with associations. Semoc is steadily shifting to larger farmers; in 2012/13 the minimum was 5 ha and in 2013/14 it will be 10 ha. This is a conscious attempt to promote lager farmers, and Pascoal says they hope that smaller farmers will increase their area rather than drop out.

The tractor and animal traction farmers produce between 1.5 tonnes and 2 tonnes per hectare; the others average 1.2 t/ha. Both are above Mozambican average, but not high by regional standards.

Semoc advances money for land preparation, weeding, and harvest. But Pascoal notes that increasingly producers are saving money from one year to the next, so that they can pay their costs without borrowing and paying interest.

Many of these seed outgrowers are now emergent farmers. A famer with 20 ha and 1.5 t/ha would produce 30 t of maize at $300/t, or $9000, of which the profit could be $6000 or more, which is a substantial amount of money. Some are buying motorcycles and other consumers goods. But others are investing. Pascoal reports that one grower has bought two minibuses from seed money and now runs a transport (chapa) service.

AgDevCo The main newcomer in Manica is AgDevCo, a UK based not-for-profit agricultural development company, which directly finances agribusiness hubs which support smallholder farmers either by creating markets or through contract farming.1 Finance is direct investment, long term loans, or support to obtain working capital from local banks. Thus ECA (discussed below) has $323,000 in equity and debt finance from AgDevCo, plus a seasonal loan from Banco Terra for working capital to buy maize.

Several medium-size farms and businesses are supporting contract farmers because it is the only way to obtain money – AgDevCo will provide capital at a reasonable rate, but only in exchange for contracting. When the loan is finished, will the companies drop contract farming, or will they have developed a long term relationship with their suppliers?

In Europe, half of all businesses fail in the first five years. (Eurostat: Business Demography Statistics) Similarly, one must accept a high rate of failure of both emergent farmers and contract farming. Nevertheless, where it works – cotton in Nampula, tobacco in Tete, Semoc in Manica – it has a significant economic impact. Thus, despite its problems, we see contract farming as a very important support mechanism for emergent farmers.

1 AgDevCo (www.agdevco.com) manages a Catalytic Fund (CF) which has recently been registered by the Bank of Mozambique as an investment company, which will take over some of these loans and investments.

Making money farming in Manica - Joseph Hanlon & Teresa Smart - 5 The maize conundrum "Soya is the only profitable crop; maize does not provide enough income," comments Sulemane Hosseni of AgDevCo.2 It is a comment made repeatedly; only seed maize is commercially profitable. Yet for our recent book Zimbabwe Takes Back its Land, we found that emergent farmers just over the border start with maize, the staple food crop they know, and with fertiliser, better seed, and more careful weeding steadily increase production until they earn a significant profit and are largely commercial producers. Then they move to other more profitable crops. That easier transition is not available to Mozambican emergent farmers, so they have to jump immediately into new crops for commercial farming.

We look at this problem in some detail here because of the importance of maize as a staple food, as a peasant crop, and as a stepping stone to commercial production. There are five different problems: price, market, seed, fertilizer and rain.

The world market price for maize has been $280-$320/tonne over the past year. In Zimbabwe the Grain Marketing Board (GMB) is buying at $295/t while private traders are offering $350/t. (Herald, 19 Apr 2013) That is equivalent to a Mozambican price of Mt 9-12/kg. Yet Mozambican traders offer only Mt 3-5/kg. The price for seed paid by the state company Semoc is Mt 10/kg – roughly the world market price for maize for consumption. In Zimbabwe the marketing board (GMB) sets a price near the world market price which acts as a floor price; in Mozambique traders seem satisfied to buy smaller qualities at low price from non-commercial peasant producers selling small surpluses. Price clearly matters – commercial farmers can made a profit at the world market price which is paid for seed maize, but not at less than half as paid in Mozambique.





Three buyers pay somewhat more. The UN World Food Programme pays closer to the world market price, for clean dry maize in larger quantities, which has made maize potentially profitable for Siwana. Agriterra3 is a new large investor, with cattle ranch Mozbife and trading arm DECA which is becoming a large maize buyer to feed their own cattle as well as to sell to others like the World Food Programme. They were offering Mt 6/kg for maize. ECA (see below) was offering Mt 7/kg. But this is still below the world market price.

Insecure markets remain a worry for producers. Although there are increasing numbers of buying posts, there is still no guaranteed market system for maize. Farmers must accept the price offered by the passing buyer, and must wait for a buyer to show up. By contrast, soya has a sure market because of the demand by local chicken producers. Traders buy at Mt 15 /kg ($450/t). For larger farmers, chicken producer Abel Antunes offers Mt 20/kg for larger quantities of good quality, clean soya delivered to the company in Chimoio. This makes soya a much more attractive crop.

Fertiliser is imported into Mozambique in quite small quantities, which means it is not easy to buy and is quite expensive (up to double the cost in neighbouring Zimbabwe).

Hybrid maize seed is available in Manica from Zimbabwean companies Pannar and Seedco, but it is still not widely used. A new local company, Phoenix Seeds, has produced a hybrid seed which is more drought tolerant and more suitable to the climatic conditions of Manica province, and is in use by some farmers, but it has not yet been approved for sale by the Instituto de Investigação Agrária de Moçambique (IIAM). Sementes de Moçambique (Semoc)4 supplies open pollenating varieties 2 Lucas Mujuru of SóSojà estimates that he obtains 1.5 t/ha and that his costs are Mt 13,000 per hectare, including leasing a tractor for ploughing. He sells the soya at Mt 16/kg, earning Mt 24,000 ($800)/ha, giving him a profit of Mt 11,000 ($370)/ha, which would be hard to obtain from maize.

See also Research Report 1 in this series: "Soya boom in Gúruè has produced few bigger farmers – so far".

3 It is too early to say much about Agiterra.

4 Semoc was renationalised in 2012 following the failure of the 2000 privatisation, and is only now restructuring Making money farming in Manica - Joseph Hanlon & Teresa Smart - 6 (OPV) of maize, mainly Matuba. It sells primarily to the state, which distributes free or cheap seed via district administrators. Thus farmers do not have the habit of buying seed, instead receiving it free and keeping their own OPV seed for subsequent years. The cost of hybrid seed and fertilizer combined with market and weather risk clearly puts off small farmers. Also, Virgilio Pascoal of Semoc told us that whereas Matuba can be easily stored for three months or longer, hybrid maize is less easy to store and must be sold more quickly, which is seen as a disincentive.5 Agriculture in Manica is largely rain-fed and the average rainfall is good. But the rainfall can be very variable, with gaps of one or two weeks of no rain in the middle of the rainy season, as well as drought years. Scientists predict that climate change will make rainfall more variable, and there are hints that this may already be happening in Manica. Commercial farming will require irrigation, at least to fill the rainfall gaps. The capital costs of irrigation can be $3000 per hectare or more. That is not unreasonable because extra production will more than justify the cost. But there are no soft loans for farmers to install irrigation.

Selling maize at half the world market price can still be profitable in good years, even with more expensive inputs. But once the farmer factors in the risk of poor rain and unsure markets, it is simply not worth investing significant money in ploughing and buying improved seed and fertiliser.

Without a floor price close to the world market price, maize will never be a commercial crop in Mozambique.

ECA – can contract maize work?

There is one experiment under way with small scale maize growers (not emergent farmers) with an average of.75 ha. ECA (Empresa de Comercialização Agrícola) is trying to apply the tobacco outgrower model to maize; it had 936 growers in the first year (all using credit) and 2200 in the second year (half using credit)6.

ECA is building its own warehouse and supporting communities to build local grain stores. It has a contract to sell maize to Cervejas de Moçambique (SAB Miller) for Chibuku beer; the brewery wants "grits" which is high quality ground maize with husks and germ removed (which in turn can be used for animal feed). But the miller in Beira produced poor quality grits, so ECA is installing its own mill. Partly because of the beer contract, ECA paid Mt 7/kg for good quality maize – clean, undamaged, with moisture below 12.5%.

AgDevCo is providing much of the funding. Grant and Allison Taylor, who run ECA, do not have their own farm; Grant says "managing outgrowers is a full time job and you cannot do both".

ECA provides three packages: good seed only (either OPV or hybrid; Mt 850/ha, $28), good seed plus top dressing fertiliser (MT 3120/ha, $100), and good seed plus basal and top dressing fertiliser (Mt 5200/ha, $175). Because of very high interest rates in Mozambique, farmers who take the packages on credit and pay at the time of sale pay 27% interest and fees. Farmers are in credit groups and in the first season there was a 100% repayment rate. Inputs cost about 20% less than if bought from local dealers.

5 We could not confirm this.

6 Conservation agriculture has become fashionable with donors, and ECA contract farmers must practice a zero tillage form of conservation agriculture which involves digging holes on a 45 cm by 50 cm grid, putting three seeds and fertilizer in each hole, and removing one plant if all three germinate. ECA provides measuring ropes and cups. The problem so far is that maize is normally weeded once or twice during the season, whereas this zero tillage method requires weeding three or four times during the season, and some farmers fell behind, leading to reduced maize production. Weeding is mostly done by women, so conservation agriculture increases women's labour; many farmers hire labour, but not all have the money to do it Making money farming in Manica - Joseph Hanlon & Teresa Smart - 7 The best farmers are raising their production to 3 t/ha. Most are doubling production, from 0.7t/ha to 1.5t/ha.7 But is it profitable? Our calculations sugest that maize is marginal, even with ECA support. The full package, on credit, costs Mt 6600 ($220)/ha which at a maize sale price of Mt 5/kg requires an extra 1.3t/ha; even at the higher Mt 7/kg ECA pays, it still requires producing 950 kg extra. And that does not take into account the cost of weeding, which is often done with hired labour. At these levels ECA contract maize may not be profitable for most farmers. The Taylors say that some of these farmers should be able to produce 6t/ha, at least in good rainfall years, but is that enough to make maize profitable at substantially below world market prices?

ECA is clearly successful in that small farmers want to join the programme, they repay their debts, and this year many are using their own money. It is worth noting that ECA farmers report a higher than average income before joining the programme, and unusually many already used fertiliser on maize (perhaps because of a history of having fertiliser for tobacco). But they are also small and many take only small quantities of fertiliser and seed – these are not emergent farmers. Is this a case of small farmers earning a bit of extra money, or does it provide a route to commercial farming?

New contract farming Although a few farmers have been able to pull themselves up by their bootstraps and fund their own expansion through reinvestment. most have needed outside help. One of the biggest drivers has been contract farming, where the contract company provides market, inputs, technical assistance and credit. Most use outgrowers who farm their own land, but some now use what they are calling "ingrowers" who farm on contract company land, often just for a year or two as part of training. The contract farming companies below show huge variation. Some, but not all, are supported by AgDevCo.

Frutimanica Malcolm Clyde-Wiggins at Frutimanica is a highly successful famer who produces his own bananas and has 9 ingrowers on 5 hectares. His own banana plantation is a complex mix of himself, a Mozambican partner, and Matanuska (the banana company of the Zimbabwean company Rift Valley Holdings which has extensive interests in Mozambique), using land that was once part of a Lonrho gold mining venture. Bananas are normally picked green and then ripened;



Pages:     | 1 || 3 |


Similar works:

«How to Upscale Deep Renovations using Financial Mechanisms: Insight from Best Practice Jurisdictions on Incentives and Drivers —Transcript of a webinar offered by the Clean Energy Solutions Center on 10 December 2014— For more information, see the clean energy policy trainings offered by the Solutions Center. Sophie Shnapp, Policy Analyst, Global Buildings Performance Network Presenter Rod Janssen, Independent Energy Consultant and editor of the blog, “Energy in Demand” Adrien Bullier,...»

«NCG Corporation Minutes of Meeting held on 9 December 2014 3632 Present Les Abernethy Joe Docherty Chief Executive Francesca Giuliani Caroline MacDonald Jamie Martin Chair of the Corporation Peter Michell Nigel Mills Matthew Terry Alex Turner John Turner 3633 In Attendance Louise Dawson Group Director of Quality and Standards (for Self Assessment Report presentations) Andy Dobson Principal of Kidderminster College Steve Gibson Principal of Newcastle Sixth Form College Maria Gilling Principal of...»

«AUSTRALIAN NATIONAL UNIVERSITY Budy Prasetyo Resosudarmo College of Asia and the Pacific Crawford School of Public Policy Arndt-Corden Department of Economics Email: budy.resosudarmo@anu.edu.au Academic Qualifications 1986 BSc in Electrical Engineering Bandung Institute of Technology, Indonesia 1991 MSc in Operations Research University of Delaware, USA 1996 PhD in Economics of Development Cornell University, USA Academic Awards and Distinctions 2015 Indonesia Research Scholarship, awarded by...»

«M.COM (BUSINESS FINANCE) DEGREE PROGRAMME (CBCS PATTERN) COURSE STRUCTURE AND SYLLABUS (BASED ON UGC MODEL SYLLABUS) DEPARTMENT OF COMMERCE SCHOOL OF MANAGEMENT PONDICHERRY UNIVERSITY DEPARTMENT OF COMMERCE (SOM) PONDICHERRY UNIVERSITY M.COM (BUSINESS FINANCE) DEGREE PROGRAMME (CBCS) COURSE STRUCTURE (2011-12 BATCH ONWARDS) LECTU MARKS HARD/ COURSE RE CRE (UETITLE OF THE PAPER SOFT CODE HOURS DITS 60+IAOPT P/W 40) FIRST SEMESTER MCOM 411 MANAGEMENT CONCEPTS AND ORGANISATIONAL 4 H 4 100...»

«IW CAPITAL SUMMER NEWSLETTER 2016 LUkE DAvIS: CEO COMMENT 2016 – A Year Like No Other for British Business In one of the most momentous years in the history of British politics, 2016 has delivered a spate of hugely significant events that have permanently altered the way in which we as a nation are governed, and equally, the way in which we conduct business. Labelled by our then Prime Minister David Cameron as the “biggest democratic exercise” in UK history, on 23 June more than 33...»

«FRBSF Working Paper 2002-01 DRAFT Please do not quote without permission Operating Performance of Banks Among Asian Economies: An International and Time Series Comparison Simon H. Kwan Federal Reserve Bank of San Francisco January, 2002 Abstract After controlling for loan quality, liquidity, capitalization, and output mix, per unit bank operating costs are found to vary significantly across Asian countries and over time. Further analysis reveals that the country rankings of per unit labor and...»

«ESSAYS IN LABOR ECONOMICS A Dissertation Submitted to the Graduate Faculty of the Louisiana State University and Agricultural and Mechanical College in partial fulfillment of the requirements for the degree of Doctor in Philosophy in The Department of Economics by Sukriye Elif Filiz B.A., Yildiz Technical University, 2005 M.A., Marmara University, 2008 M.Sc., Louisiana State University, 2011 August 2015 This dissertation is dedicated to my parents Yusuf and Halise Filiz. ii ACKNOWLEDGEMENTS I...»

«Back to Business Wall Street Pursues Profit in Bundles of Life Insurance By JENNY ANDERSON Published: September 5, 2009 After the mortgage business imploded last year, Wall Street investment banks began searching for another big idea to make money. They think they may have found one. Enlarge This Image Michael Appleton for The New York Times Rating the New Products: Jan Buckler and Kathleen Tillwitz of DBRS, which is reviewing proposals for lifeinsurance securitizations. Back to Business...»

«∗ Firm Age, Investment Opportunities, and Job Creation Manuel Adelino Song Ma Fuqua School of Business Fuqua School of Business Duke University Duke University David T. Robinson Fuqua School of Business Duke University and NBER March 14, 2014 Abstract This paper measures how startups and mature firms react to changing investment opportunities. We use regional industrial structure and national changes in manufacturing employment to identify exogenous shocks to local income, and examine...»

«Journal of Integrated Social Sciences www.jiss.org, 2009 1(1): 48-56 Commentary: THE PSYCHOANALYTIC PRODUCTION OF PATHOLOGY: A COMMENTARY ON THE RE-SIGNIFICATION OF SEXISM IN THE FABRIC OF INTERNALIZED SEXISM Jessica L. Willis, Ph.D. St. Lawrence University Abstract The study of social, psychological, cultural and economic modes of oppression is an area of research that merits serious attention. In medical, criminal and legal contexts, knowledge claims made by researchers remain central to...»

«The Annals of “Dunarea de Jos” University of Galati Fascicle I – 2009. Economics and Applied Informatics. Years XV – no 2 ISSN 1584-0409 Employees Misbehaviour: Formes, Causes and What Management Should do to Handle With Edit LUKÁCS „Dunărea de Jos” University of Galaţi elukacs@ugal.ro Gheorghe NEGOESCU Ovidius University Constanta Sofia DAVID sofia.david@ugal.ro „Dunărea de Jos” University of Galaţi Abstract In many organizations there are employees who sabotage processes,...»

«Curriculum Vita Susan C. Borkowski, Ph. D. Updated November 2009 Transfer-pricing related items marked with asterisk * La Salle University, Philadelphia PA 19141 215.951.1491 Office Lindback Professor of Accounting and Joint 215.951.1886 FAX Faculty, Integrated Science, Business and borkowsk@lasalle.edu Technology EDUCATION: Temple University, Philadelphia, PA (Ph.D., May 1988) Major: Accounting Minor: Operations Research Dissertation: An Empirical Study of the Divergence of Transfer Pricing...»





 
<<  HOME   |    CONTACTS
2016 www.dissertation.xlibx.info - Dissertations, online materials

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.