Turning green into gold

Although experts see cooperatives as key to helping farmers to get the most out of their produce, there are fundamental problems in Malawi’s agribusiness that need to be addressed. What are these issues? EPHRAIM NYONDO writes.

So, how can farmers get the most out of their farm produce?

The answer, says agribusiness specialist Chifuniro Somanje, lies in cooperatives to help farmers to enhance their bargaining power.

Somanje’s idea has been tested elsewhere, and it has made a difference.

Take Balaka, for example. Tomato is a magnet that has pulled many farmers in the district into agribusiness.

“I have been growing tomato since 1991,” said Mercy Malindima, a farmer at Ulongwe in the district.

For years, tomato farming could not give Malindima much joy. Prices for tomato in the area were poor, a situation complicated by the isolated location of her village where the transport network is bad.

But 2004 brought her some hope. Through fair trade initiatives championed by some non-government organisations (NGOs), Malindima and 18 other local tomato farmers came together and formed a co-operative.

“What happens is that after harvesting the crop, we do not sell it as individuals. We put it together and designate somebody to lead us in bargaining for good prices from buyers.

“Collective bargaining gives us the power to reject buyers who offer prices that do not meet the cost of production,” said Malindima.

Through the cooperative, Malindima and other members of the cooperative have been able to realise some benefits from tomato farming.

“I am able to pay school fees for my children, buy them good clothes and provide for the home,” she said.

As is the case with Malindima, cooperatives give farmers across the country some light at the end of a tunnel of sweating and toiling.

Government follows this philosophy through the One Village One Product (Ovop) project.

The Farmers Union of Malawi (FUM) also champions the idea of cooperatives.  Recently, FUM chief executive officer Prince Kapondamgaga argued that cooperatives are key to agricultural commercialisation in the country because farmers’ voices are easily heard when they work in organised groups.

“Cooperatives are capable of lifting farmers out of poverty and the price of coffee in Kenya went up from 30 shillings to 140 shillings per kilogramme soon after farmers formed cooperatives. In Zambia as well, they are far ahead of us because their cooperatives are very vibrant,” said Kapondamgaga.

Fair stuff, but some experts believe that there is a lot more that needs to change to make agribusiness a vibrant industry.

Political economist Michael Jana argues that there is need of radical changes in the way agriculture is practised in Malawi.

“Let us look at the farmer who is at the heart of agricultural production in Malawi. The farmer uses a hoe, does not have access to credit, does not use improved seeds, has a small piece of customary land and, to cap it all, is helpless and does not even have a strong bargaining position on the market. Surprisingly, our hope of agriculture is dependent on such a farmer. Are we serious?” wondered Jana.

He said all the talk about agribusiness will yield nothing if small-scale farmers are left alone to face the hurdles affecting agricultural production.

Jana’s point resonates with the experiences of soya farmers in Dedza, Ntcheu and Ntchisi who have dedicated their lives to soya production, but have struggled to reap tangible benefits from the crop.

The more than 35 000 metric tonnes of soya that Malawi produces in a year offers plenty of opportunities. As a crop rich in protein value, soya is currently being processed into a number of products such milk, tofu, yogurt and breakfast cereal.

Soya milk is produced on a small scale but there is great potential for additional investment.

“We have a ready market for our soya here. There is a company which buys our soya. But we do not produce enough to meet the needs of the buyer because we do not have the resources to grow the crop to a level that would satisfy the demand,” said Jonasi Ulemu, a soya farmer in Matinga Village, Traditional Authority Kaphuka in Dedza.

In its August-September 2013 cover story, the Africa Business magazine noted that “one reason why government and multilaterals fail to give agriculture and agribusiness the support they require is that the projects are not high profile.”

The magazine explains why Africa should invest in agriculture and agribusinesses.

“At the current rate of global population growth and given the fact that arable land worldwide cannot be expanded, many experts are predicting that food will become more valuable than oil in the decades to come.

“Africa is the only region with vast tracts of unexploited or underused arable land. In addition, most African farming is still at a subsistence level. By opening up virgin farmland and improving African yields through better techniques, the continent could not only meet its own needs but also be a net exporter of agricultural produce,” reads the article titled Putting Business into Agriculture.

The article says African agribusiness could be worth $1 trillion [K390 trillion] by 2030.

“Given that most Africans are already involved in the food supply chain in one way or another, the possibilities of a dramatic rise in the incomes and living standards of the ordinary person are very real. The opportunities are endless: from exporting fresh produce to overseas markets, to canning fruit to provide year-round supplies and exporting processed food to nearby cities,” adds the article.

Joseph Dzanja, a lecturer at the Lilongwe University of Agriculture and Natural Resources (Luanar), said there is need to boost the capacity of small-scale farmers to improve agribusiness in Malawi.

In an article titled Microfinance and the growth of small-scale agribusinesses in Malawi, he said although agricultural productivity has increased in the past 10 years, a lot needs to be done to improve the country’s agribusiness potential.

“However, lack of value addition activities and access to markets hinders the growth of the agribusiness sector. Having access to credit is one proven way through which the agribusiness sector could be enhanced since this would facilitate value addition processes.”

Dzanja also said the majority of smallholder farmers have no access to the formal financial sector.

“Financial institutions in most African countries, in particular commercial banks, and also microfinance institutions in general, lack the skills to assess and manage risks related to lending to agricultural production, processing and related enterprises,” he said.

As a response to the problem, government has been mulling the idea of establishing a bank for agriculture.

Principal Secretary in the Ministry of Agriculture and Food Security Dr Jeffrey Luhanga told journalists in Blantyre last week that most agricultural activities require investment and medium to long-term loans.

“Within government, this issue is being discussed with the private sector interested to set up this facility. It something that is seriously under consideration,” said Luhanga.